What should the insured do before attempting to claim a casualty loss on taxes?

Before claiming a casualty loss on taxes, obtaining appraisals and supporting documentation is essential because these documents serve as evidence to substantiate the loss amount and its validity. Accurate records, such as photographs of the damage, receipts for repairs, and appraisals, will support the taxpayer’s claim, ensuring they can prove the amount of the loss to tax authorities. This documentation is crucial for both tax reporting purposes and for potential audits.

While assessing the significance of the loss might help the insured gauge whether they should file a claim, it does not establish the facts needed for a tax claim. Consulting a family member may provide emotional support or different viewpoints but does not provide the necessary documentation or professional opinion needed for tax claims. Filing for an insurance payout is often a step that occurs after assessing the damage and determining the loss; however, it does not replace the need for extensive documentation that is the focus of this question. Having thorough documentation prior to filing aids in ensuring the process is handled smoothly and accurately.