How Do I Report Property Insurance Reimbursement on My Tax Return?

by Alia Nikolakopulos

    Property insurance reimbursements can result from either an overpayment of premiums or a payout from a claim. If you overpaid your premiums, you’ll report the reimbursement only if the policy covers business property and you deduct the insurance costs as a business expense. However, you’ll report insurance reimbursements for both business and personal property when the reimbursement covers a loss from fire, theft, accident or natural disaster.

    Business Expense Reimbursement

    Step 1

    Gather reimbursement documents. These might include a check stub from the insurance company for the reimbursement amount, or a statement that shows the reimbursement.

    Business Expense Reimbursement

    Step 2

    Calculate your insurance expense for the year. If you’ll deduct a business expense for property insurance in the year you receive the reimbursement, subtract the reimbursement amount from your insurance expense deduction. The result is your new insurance expense deduction for the year.

    Business Expense Reimbursement

    Step 3

    Calculate your business income for the year. If you don’t deduct property insurance expenses in the year you receive the reimbursement, you won’t have an expense to offset. In this case, you’ll claim the refund as income on your business tax return.

    Casualty or Theft Reimbursement

    Step 1

    Download Form 4684 from the Internal Revenue Service website.

    Casualty or Theft Reimbursement

    Step 2

    List information about personal property in Section A. Use line 1, part A, B, C or D to describe the property. Write the amount of your insurance reimbursement on line 3. Use the letter column that corresponds to the property description on line 1. Complete the rest of the personal property section to figure your gain or loss from the casualty or theft.

    Casualty or Theft Reimbursement

    Step 3

    List information about business property in Section B. Use line 19, part A, B, C or D to describe the business property. Report the insurance reimbursement on line 21 and report other applicable Section B items to figure your business gain or loss on the reimbursement.

    About the Author

    With a background in taxation, Alia Nikolakopulos specializes in business and personal finance topics. She is an IRS enrolled agent pursuing a Bachelor of Science in accounting and journalism at the Metropolitan State University of Denver.

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