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Tax Deduction Allowed for Theft

Tax breaks are available for both individuals and business taxpayers who have experienced a loss from a theft.   To qualify as a theft for tax purposes, the event must be illegal under your state’s laws; this can include burglary, robbery and blackmail (including a theft by an employee). The tax deduction for your business-related property may provide some relief.
The theft has to be substantiated: 
  • you must explain when you noticed that your property was missing
  • you need to show it was actually stolen and that you didn't lose or misplace it
  • you need to show you owned or leased the property
    You will need to subtract any amount of insurance reimbursements you receive from the deductible amount.  Unlike personal losses, there are no other deduction limits for business theft losses.  Personal theft losses are subject to a threshold of 10% or adjusted gross income after each loss is reduced by $100.
    Be sure to keep copies of police reports and other supporting documentation; and speak with your accountant about the proper filing.
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