To fill out Form 4684, you first identify what kind of property you lost and to what kind of event, then complete the section of the form that matches: Section A for personal-use property, Section B for business or income-producing property, or Section C for a Ponzi-type investment fraud loss under the IRS safe harbor. Each section walks you through the loss calculation line by line, and the final figures move to Schedule A, Form 4797, or Form 1040 depending on the type of loss. You attach the completed form to your Form 1040 for the year the loss was sustained.
One threshold point before the mechanics. For tax year 2026, the Tax Cuts and Jobs Act restriction that limited personal casualty deductions to federally declared disaster areas has expired, so personal losses from any qualifying casualty or theft are deductible again, subject to the floors described below.
What to Gather Before You Open the Form
Every entry on Form 4684 rests on two numbers for each damaged or stolen item: the adjusted basis (usually what you paid, plus improvements, minus any prior depreciation) and the decrease in fair market value (what the property was worth immediately before the event minus what it was worth immediately after). For stolen property, the decrease in fair market value is the full pre-theft value.
Professional appraisals or repair estimates from a qualified contractor are the strongest evidence for the change in fair market value, and you should get them as close to the event date as possible. Photographs of the damage, police reports for thefts, and insurance company documentation all support your figures if the IRS questions them later.
If the property was insured, you must file a timely insurance claim. Skipping that step disqualifies the portion of the loss your policy would have covered; the deduction is only for the amount that genuinely was not reimbursable. Your insurance deductible is still deductible on Form 4684, because the policy would never have paid that amount.
The loss also has to be finalized. If a claim is still pending, reduce your loss by the reimbursement you reasonably expect, even if the check hasn’t arrived. And remember that a theft loss is treated as sustained in the year you discover it, not necessarily the year the property was taken.
Which Section You Use
Section A is for personal-use property: your home, your car, your furniture, your jewelry. Section B is for property used in a trade or business and for property held to produce income, such as a rental house or investment real estate. Section C is only for theft losses from Ponzi-type investment schemes when you qualify for and elect the safe harbor under Revenue Procedure 2009-20 (as modified by Revenue Procedure 2011-58).
Property that serves both personal and business purposes, like a home office, is split between Section A and Section B according to the percentage of each use.
Section A: Personal-Use Property, Line by Line
Each casualty or theft event gets its own set of lines 1 through 4. A single storm that damaged your house and your car is one event on one set of lines. A theft months later is a separate event on a separate set of lines.
For each event, you enter a description of the property on line 1, the cost or adjusted basis on line 2, the insurance or other reimbursement received or expected on line 3, and any gain on line 4 (which arises when the reimbursement on line 3 exceeds the basis on line 2).
If the loss came from a federally declared disaster, enter the FEMA disaster declaration number in the space above line 1. You can look up the correct number at fema.gov/disaster. The number is still required for disaster-related losses even though the disaster-area restriction on personal losses has expired, because those losses may qualify for special treatment.
After lines 1 through 9 are done for each property, the form calculates the unreimbursed loss on line 10. Line 11 then applies the per-event floor: subtract $100 from each event’s loss. Line 12 combines all your reduced personal losses for the year. Line 13 brings in your adjusted gross income and line 14 calculates 10 percent of it. Only the amount above that 10 percent AGI threshold is deductible.
The deductible figure lands on line 18 and flows to Schedule A (Form 1040), line 15, as an itemized deduction. If you take the standard deduction, you generally cannot claim a personal casualty loss. The exception is a qualified disaster loss, covered below.
Section B: Business and Income-Producing Property
Losses on business property and income-producing property are not subject to the $100 per-event floor or the 10 percent AGI threshold. The calculation follows the same basic logic (adjusted basis minus insurance reimbursement), but the results route differently. Gains and losses from business property on line 31 carry to Form 4797, line 14. Losses on income-producing property held by individuals carry to Schedule A (Form 1040), line 16.
Business inventory is a specific exclusion: if inventory is lost in a casualty or theft, you do not report it on Form 4684 at all. You deduct it through cost of goods sold on Schedule C, Schedule F, or whichever business form you use.
Section C: Ponzi-Type Investment Fraud
Section C is a streamlined alternative to proving a Ponzi theft loss through the standard calculation. Under the safe harbor, you compute the deduction from your qualified investment (cash and property you actually put in, plus amounts reinvested, minus amounts withdrawn) rather than trying to substantiate an exact loss amount from years of fictitious statements.
The deductible percentage depends on your recovery posture. If you are not pursuing third-party recovery, you deduct 95 percent of your qualified investment. If you are pursuing or intend to pursue third-party recovery, the figure drops to 75 percent. From either result you subtract actual recoveries already received and any potential insurance or SIPC recovery.
Section C walks the calculation line by line, starting with your initial investment on line 40, additional investments on line 41, fictitious income reported on prior returns on line 42, and withdrawals on line 44. If you do not meet the Revenue Procedure 2009-20 requirements, you report the theft loss through Section B using the standard calculation.
Qualified Disaster Losses
Losses from specifically designated disasters get better terms than ordinary casualty losses. A qualified disaster loss bypasses the 10 percent AGI floor entirely, and the per-event reduction rises from $100 to $500. The Form 4684 instructions for the relevant tax year identify which disasters qualify.
You can claim a qualified disaster loss even if you take the standard deduction. To do it, file Schedule A and enter both your standard deduction amount and the net qualified disaster loss amount on line 16, add them together, and put the total on Form 1040, line 12e. It is one of the few cases where Schedule A helps you without your itemizing the rest of your deductions.
Where Each Number Ends Up
- Personal-use losses from Section A, line 18: Schedule A (Form 1040), line 15.
- Qualified disaster losses claimed with the standard deduction, from Section A, line 15: Schedule A (Form 1040), line 16, added to your standard deduction.
- Business property gains and losses from Section B, line 31: Form 4797, line 14.
- Income-producing property losses for individuals from Section B, line 32 or 38b: Schedule A (Form 1040), line 16.
Tax software handles these transfers automatically. If you file on paper, you carry the numbers by hand and attach the completed Form 4684 to your return.
Choosing to Deduct a Disaster Loss on the Prior Year’s Return
If your loss is attributable to a federally declared disaster, IRC Section 165(i) lets you deduct it on the return for the tax year immediately before the disaster occurred. That can get money back sooner than waiting to file for the disaster year.
The election deadline is six months after the due date (without extensions) of the return for the disaster year. For a disaster in 2026, that is generally October 15, 2027, to elect the loss on your 2025 return. You make the election by attaching Form 4684 to an amended Form 1040-X for the prior year.
You can revoke the election within 90 days after the election deadline. You cannot claim the same loss in both years, so if you already deducted the loss on the disaster year’s return, amend that return to remove the deduction before or at the same time as you make the prior-year election.
What to Keep After You File
Hold your supporting documentation for at least three years after you file the return claiming the deduction. That includes insurance claims and correspondence, repair estimates and contractor invoices, appraisals, photographs, police reports, and any FEMA correspondence for declared disasters.
If an insurance settlement arrives after you have already filed and it reimburses part of a loss you deducted, your deduction was too large and you correct it by filing Form 1040-X. If you reduced your loss by an expected reimbursement that never came, you can amend the other direction and claim the additional deduction.