I filed a homeowners/flood insurance claim for $500 this year. Can I claim that on my taxes?
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Asked December 31, 2012
If you itemize your tax return, you can include the deductible from a homeowners or flood insurance claim. The key would be whether a $500 deductible would be worth claiming on your taxes at all, in a majority of cases it would not. This is because the deduction alone is not being claimed, but a formula which includes that deductible.
The basic way it works is that you would take the amount of the loss and then subtract any money received from the insurance company from that. Next, you would subtract $100. Finally, subtract 10% or your adjusted gross income. Any remainder after this process is the full amount you are allowed to deduct.
In the case of a $500 deductible, you will almost certainly have a lower amount for your deduction than if you took the standard, non-itemized deduction. Unless you have other deductions that will increase your itemized deduction value, claiming the deductible on your taxes would be counter-productive, resulting in a higher taxable income than if you simply filed a non-itemized return.
Since the AGI will vary from person to person, the amount of the insurance-related deduction will vary as well. If you have very little income to claim, it could be worth your time to claim the deductible, but if you make an average or higher income, you will generally be better off financially to absorb the out of pocket expenses rather than list them.
Answered December 31, 2012 by Anonymous