How to Deduct Theft Losses

It can be tough to qualify for this tax write-off. Here's what you need to know.

I had a car stolen from me this past year. My insurance gave me a fair reimbursement for my vehicle, but I also lost personal items and had rental car expenses related to this theft (I had to rent a car after it was stolen before I bought a new one). The items in the car were valued at approximately $4,550 -- for electronics, CDs, clothes, etc. -- of which the insurance only reimbursed $200. What am I allowed to deduct on my income taxes for loss of personal property and expenses related to the theft?

You can deduct theft losses on your taxes, in theory, but it can be extremely difficult to qualify for this write-off.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.