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)
The information in this guide has been gathered from many sources, including the Internal Revenue Service, the Social Security Administration, state agencies, professional organizations and members of the NJCPA. The COVID-19 pandemic has prompted the majority of state agencies to offer more online and prerecorded services. Though offices have reopened after the COVID-19 shutdown, it’s best to check online or call before you visit.
Material contained within this guide should be augmented by, and used in accordance with, a certified public accountant's professional judgment. Your CPA can properly apply the tax laws and regulations to the facts and circumstances of your particular situation. For help with locating a CPA, visit findacpa.org.
The New Jersey Society of Certified Public Accountants is not responsible for any claims arising as a result of this information or its usage.
This guide was updated in October 2023. Future users of this material are cautioned that some portions, particularly tax-related information, may become outdated.