Tax Implications (New Jersey and Federal)
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October 11, 2023
New Jersey State Taxes
New Jersey is considered a "gross income tax" state, meaning individuals are taxed on gross income with no itemized deductions allowed. For this reason, casualty losses are not deductible on state income tax returns.
Federal Taxes
Although losses cannot be deducted on New Jersey tax returns, they may be deductible for federal tax purposes. IRS Publication 547, Casualties, Disasters and Thefts (Business and Nonbusiness), explains:
- How to determine what is deductible
- To what extent a loss is deductible
- How to claim a deduction on your tax return
In order to report and deduct losses, access the following forms:
There are two other helpful IRS forms that can be accessed at irs.gov/forms-instructions:
- IRS Publication 584, Casualty, Disaster,
and Theft Loss Workbook (Personal-Use Property)
- IRS Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook (Business Property)