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2009 Federal Tax Forms

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2009 Federal Tax Forms

2009 federal tax forms Publication 547 - Main Content Table of Contents CasualtyFamily pet. 2009 federal tax forms Progressive deterioration. 2009 federal tax forms Special Procedure for Damage From Corrosive Drywall Theft Loss on Deposits Proof of Loss Figuring a LossGain from reimbursement. 2009 federal tax forms Business or income-producing property. 2009 federal tax forms Loss of inventory. 2009 federal tax forms Leased property. 2009 federal tax forms Exception for personal-use real property. 2009 federal tax forms Decrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Deduction Limits2% Rule $100 Rule 10% Rule Figuring the Deduction Figuring a GainPostponement of Gain When To Report Gains and LossesLoss on deposits. 2009 federal tax forms Lessee's loss. 2009 federal tax forms Disaster Area LossesDisaster loss to inventory. 2009 federal tax forms Main home in disaster area. 2009 federal tax forms Unsafe home. 2009 federal tax forms Time limit for making choice. 2009 federal tax forms Revoking your choice. 2009 federal tax forms Figuring the loss deduction. 2009 federal tax forms How to report the loss on Form 1040X. 2009 federal tax forms Records. 2009 federal tax forms Need a copy of your tax return for the preceding year? Postponed Tax Deadlines Contacting the Federal Emergency Management Agency (FEMA) How To Report Gains and LossesProperty held 1 year or less. 2009 federal tax forms Property held more than 1 year. 2009 federal tax forms Depreciable property. 2009 federal tax forms Adjustments to Basis If Deductions Are More Than Income How To Get Tax HelpLow Income Taxpayer Clinics Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. 2009 federal tax forms A sudden event is one that is swift, not gradual or progressive. 2009 federal tax forms An unexpected event is one that is ordinarily unanticipated and unintended. 2009 federal tax forms An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged. 2009 federal tax forms Generally, casualty losses are deductible during the taxable year that the loss occurred. 2009 federal tax forms See Table 3, later. 2009 federal tax forms Deductible losses. 2009 federal tax forms   Deductible casualty losses can result from a number of different causes, including the following. 2009 federal tax forms Car accidents (but see Nondeductible losses , next, for exceptions). 2009 federal tax forms Earthquakes. 2009 federal tax forms Fires (but see Nondeductible losses , next, for exceptions). 2009 federal tax forms Floods. 2009 federal tax forms Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses , later. 2009 federal tax forms Mine cave-ins. 2009 federal tax forms Shipwrecks. 2009 federal tax forms Sonic booms. 2009 federal tax forms Storms, including hurricanes and tornadoes. 2009 federal tax forms Terrorist attacks. 2009 federal tax forms Vandalism. 2009 federal tax forms Volcanic eruptions. 2009 federal tax forms Nondeductible losses. 2009 federal tax forms   A casualty loss is not deductible if the damage or destruction is caused by the following. 2009 federal tax forms Accidentally breaking articles such as glassware or china under normal conditions. 2009 federal tax forms A family pet (explained below). 2009 federal tax forms A fire if you willfully set it, or pay someone else to set it. 2009 federal tax forms A car accident if your willful negligence or willful act caused it. 2009 federal tax forms The same is true if the willful act or willful negligence of someone acting for you caused the accident. 2009 federal tax forms Progressive deterioration (explained below). 2009 federal tax forms However, see Special Procedure for Damage From Corrosive Drywall , later. 2009 federal tax forms Family pet. 2009 federal tax forms   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. 2009 federal tax forms Example. 2009 federal tax forms Your antique oriental rug was damaged by your new puppy before it was housebroken. 2009 federal tax forms Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. 2009 federal tax forms Progressive deterioration. 2009 federal tax forms   Loss of property due to progressive deterioration is not deductible as a casualty loss. 2009 federal tax forms This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. 2009 federal tax forms The following are examples of damage due to progressive deterioration. 2009 federal tax forms The steady weakening of a building due to normal wind and weather conditions. 2009 federal tax forms The deterioration and damage to a water heater that bursts. 2009 federal tax forms However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. 2009 federal tax forms Most losses of property caused by droughts. 2009 federal tax forms To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. 2009 federal tax forms Termite or moth damage. 2009 federal tax forms The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. 2009 federal tax forms However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. 2009 federal tax forms Special Procedure for Damage From Corrosive Drywall Under a special procedure, you can deduct the amounts you paid to repair damage to your home and household appliances due to corrosive drywall. 2009 federal tax forms Under this procedure, you treat the amounts paid for repairs as a casualty loss in the year of payment. 2009 federal tax forms For example, amounts you paid for repairs in 2013 are deductible on your 2013 tax return and amounts you paid for repairs in 2012 are deductible on your 2012 tax return. 2009 federal tax forms Note. 2009 federal tax forms If you paid for any repairs before 2013 and you choose to follow this special procedure, you can amend your return for the earlier year by filing Form 1040X, Amended U. 2009 federal tax forms S. 2009 federal tax forms Individual Income Tax Return, and attaching a completed Form 4684 for the appropriate year. 2009 federal tax forms Form 4684 for the appropriate year can be found at IRS. 2009 federal tax forms gov. 2009 federal tax forms Generally, Form 1040X must be filed within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later. 2009 federal tax forms Corrosive drywall. 2009 federal tax forms   For purposes of this special procedure, “corrosive drywall” means drywall that is identified as problem drywall under the two-step identification method published by the Consumer Product Safety Commission (CPSC) and the Department of Housing and Urban Development (HUD) in their interim guidance dated January 28, 2010, as revised by the CPSC and HUD. 2009 federal tax forms The revised identification guidance and remediation guidelines are available at www. 2009 federal tax forms cpsc. 2009 federal tax forms gov/Safety-Education/Safety-Education-Centers/Drywall. 2009 federal tax forms Special instructions for completing Form 4684. 2009 federal tax forms   If you choose to follow this special procedure, complete Form 4684, Section A, according to the instructions below. 2009 federal tax forms The IRS will not challenge your treatment of damage resulting from corrosive drywall as a casualty loss if you determine and report the loss as explained below. 2009 federal tax forms Top margin of Form 4684. 2009 federal tax forms   Enter “Revenue Procedure 2010-36”. 2009 federal tax forms Line 1. 2009 federal tax forms   Enter the information required by the line 1 instructions. 2009 federal tax forms Line 2. 2009 federal tax forms   Skip this line. 2009 federal tax forms Line 3. 2009 federal tax forms   Enter the amount of insurance or other reimbursements you received (including through litigation). 2009 federal tax forms If none, enter -0-. 2009 federal tax forms Lines 4–7. 2009 federal tax forms   Skip these lines. 2009 federal tax forms Line 8. 2009 federal tax forms   Enter the amount you paid to repair the damage to your home and household appliances due to corrosive drywall. 2009 federal tax forms Enter only the amounts you paid to restore your home to the condition existing immediately before the damage. 2009 federal tax forms Do not enter any amounts you paid for improvements or additions that increased the value of your home above its pre-loss value. 2009 federal tax forms If you replaced a household appliance instead of repairing it, enter the lesser of: The current cost to replace the original appliance, or The basis of the original appliance (generally its cost). 2009 federal tax forms Line 9. 2009 federal tax forms   If line 8 is more than line 3, do one of the following. 2009 federal tax forms If you have a pending claim for reimbursement (or you intend to pursue reimbursement), enter 75% of the difference between lines 3 and 8. 2009 federal tax forms If item (1) does not apply to you, enter the full amount of the difference between lines 3 and 8. 2009 federal tax forms If line 8 is less than or equal to line 3, you cannot claim a casualty loss deduction using this special procedure. 2009 federal tax forms    If you have a pending claim for reimbursement (or you intend to pursue reimbursement), you may have income or an additional deduction in a later tax year depending on the actual amount of reimbursement received. 2009 federal tax forms See Reimbursement Received After Deducting Loss, later. 2009 federal tax forms Lines 10–18. 2009 federal tax forms   Complete these lines according to the Instructions for Form 4684. 2009 federal tax forms Choosing not to follow this special procedure. 2009 federal tax forms   If you choose not to follow this special procedure, you are subject to all of the provisions that apply to the deductibility of casualty losses, and you must complete lines 1–9 according to the Instructions for Form 4684. 2009 federal tax forms This means, for example, that you must establish that the damage, destruction, or loss of property resulted from an identifiable event as defined earlier under Casualty . 2009 federal tax forms Furthermore, you must have proof that shows the following. 2009 federal tax forms The loss is properly deductible in the tax year you claimed it and not in some other year. 2009 federal tax forms See When To Report Gains and Losses , later. 2009 federal tax forms The amount of the claimed loss. 2009 federal tax forms See Proof of Loss , later. 2009 federal tax forms No claim for reimbursement of any portion of the loss exists for which there is a reasonable prospect of recovery. 2009 federal tax forms See When To Report Gains and Losses , later. 2009 federal tax forms Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. 2009 federal tax forms The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. 2009 federal tax forms You do not need to show a conviction for theft. 2009 federal tax forms Theft includes the taking of money or property by the following means. 2009 federal tax forms Blackmail. 2009 federal tax forms Burglary. 2009 federal tax forms Embezzlement. 2009 federal tax forms Extortion. 2009 federal tax forms Kidnapping for ransom. 2009 federal tax forms Larceny. 2009 federal tax forms Robbery. 2009 federal tax forms The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. 2009 federal tax forms Decline in market value of stock. 2009 federal tax forms   You cannot deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. 2009 federal tax forms However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. 2009 federal tax forms You report a capital loss on Schedule D (Form 1040). 2009 federal tax forms For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. 2009 federal tax forms Mislaid or lost property. 2009 federal tax forms    The simple disappearance of money or property is not a theft. 2009 federal tax forms However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. 2009 federal tax forms Sudden, unexpected, and unusual events were defined earlier under Casualty . 2009 federal tax forms Example. 2009 federal tax forms A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. 2009 federal tax forms The diamond falls from the ring and is never found. 2009 federal tax forms The loss of the diamond is a casualty. 2009 federal tax forms Losses from Ponzi-type investment schemes. 2009 federal tax forms   The IRS has issued the following guidance to assist taxpayers who are victims of losses from Ponzi-type investment schemes: Revenue Ruling 2009-9, 2009-14 I. 2009 federal tax forms R. 2009 federal tax forms B. 2009 federal tax forms 735 (available at www. 2009 federal tax forms irs. 2009 federal tax forms gov/irb/2009-14_IRB/ar07. 2009 federal tax forms html). 2009 federal tax forms Revenue Procedure 2009-20, 2009-14 I. 2009 federal tax forms R. 2009 federal tax forms B. 2009 federal tax forms 749 (available at www. 2009 federal tax forms irs. 2009 federal tax forms gov/irb/2009-14_IRB/ar11. 2009 federal tax forms html). 2009 federal tax forms Revenue Procedure 2011-58, 2011-50 I. 2009 federal tax forms R. 2009 federal tax forms B. 2009 federal tax forms 847 (available at www. 2009 federal tax forms irs. 2009 federal tax forms gov/irb/2011-50_IRB/ar11. 2009 federal tax forms html). 2009 federal tax forms If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. 2009 federal tax forms Skip lines 19 to 27, but you must fill out Section B, lines 29 to 39, as appropriate. 2009 federal tax forms Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. 2009 federal tax forms You do not need to complete Appendix A. 2009 federal tax forms For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. 2009 federal tax forms   If you choose not to use the procedures in Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. 2009 federal tax forms Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. 2009 federal tax forms If you incurred this type of loss, you can choose one of the following ways to deduct the loss. 2009 federal tax forms As a casualty loss. 2009 federal tax forms As an ordinary loss. 2009 federal tax forms As a nonbusiness bad debt. 2009 federal tax forms Casualty loss or ordinary loss. 2009 federal tax forms   You can choose to deduct a loss on deposits as a casualty loss or as an ordinary loss for any year in which you can reasonably estimate how much of your deposits you have lost in an insolvent or bankrupt financial institution. 2009 federal tax forms The choice generally is made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. 2009 federal tax forms If you treat the loss as a casualty or ordinary loss, you cannot treat the same amount of the loss as a nonbusiness bad debt when it actually becomes worthless. 2009 federal tax forms However, you can take a nonbusiness bad debt deduction for any amount of loss that is more than the estimated amount you deducted as a casualty or ordinary loss. 2009 federal tax forms Once you make the choice, you cannot change it without permission from the Internal Revenue Service. 2009 federal tax forms   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. 2009 federal tax forms The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. 2009 federal tax forms Your loss is subject to the 2%-of-adjusted-gross-income limit. 2009 federal tax forms You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. 2009 federal tax forms Nonbusiness bad debt. 2009 federal tax forms   If you do not choose to deduct the loss as a casualty loss or as an ordinary loss, you must wait until the year the actual loss is determined and deduct the loss as a nonbusiness bad debt in that year. 2009 federal tax forms How to report. 2009 federal tax forms   The kind of deduction you choose for your loss on deposits determines how you report your loss. 2009 federal tax forms See Table 1. 2009 federal tax forms More information. 2009 federal tax forms   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684. 2009 federal tax forms Deducted loss recovered. 2009 federal tax forms   If you recover an amount you deducted as a loss in an earlier year, you may have to include the amount recovered in your income for the year of recovery. 2009 federal tax forms If any part of the original deduction did not reduce your tax in the earlier year, you do not have to include that part of the recovery in your income. 2009 federal tax forms For more information, see Recoveries in Publication 525. 2009 federal tax forms Proof of Loss To deduct a casualty or theft loss, you must be able to show that there was a casualty or theft. 2009 federal tax forms You also must be able to support the amount you take as a deduction. 2009 federal tax forms Casualty loss proof. 2009 federal tax forms   For a casualty loss, you should be able to show all of the following. 2009 federal tax forms The type of casualty (car accident, fire, storm, etc. 2009 federal tax forms ) and when it occurred. 2009 federal tax forms That the loss was a direct result of the casualty. 2009 federal tax forms That you were the owner of the property, or if you leased the property from someone else, that you were contractually liable to the owner for the damage. 2009 federal tax forms Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 2009 federal tax forms Theft loss proof. 2009 federal tax forms   For a theft loss, you should be able to show all of the following. 2009 federal tax forms When you discovered that your property was missing. 2009 federal tax forms That your property was stolen. 2009 federal tax forms That you were the owner of the property. 2009 federal tax forms Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 2009 federal tax forms    It is important that you have records that will prove your deduction. 2009 federal tax forms If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. 2009 federal tax forms Figuring a Loss To determine your deduction for a casualty or theft loss, you must first figure your loss. 2009 federal tax forms Table 1. 2009 federal tax forms Reporting Loss on Deposits IF you choose to report the loss as a(n). 2009 federal tax forms . 2009 federal tax forms . 2009 federal tax forms   THEN report it on. 2009 federal tax forms . 2009 federal tax forms . 2009 federal tax forms casualty loss   Form 4684 and Schedule A  (Form 1040). 2009 federal tax forms ordinary loss   Schedule A (Form 1040). 2009 federal tax forms nonbusiness bad debt   Form 8949 and Schedule D (Form 1040). 2009 federal tax forms Amount of loss. 2009 federal tax forms   Figure the amount of your loss using the following steps. 2009 federal tax forms Determine your adjusted basis in the property before the casualty or theft. 2009 federal tax forms Determine the decrease in fair market value (FMV) of the property as a result of the casualty or theft. 2009 federal tax forms From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. 2009 federal tax forms For personal-use property and property used in performing services as an employee, apply the deduction limits, discussed later, to determine the amount of your deductible loss. 2009 federal tax forms Gain from reimbursement. 2009 federal tax forms   If your reimbursement is more than your adjusted basis in the property, you have a gain. 2009 federal tax forms This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. 2009 federal tax forms If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. 2009 federal tax forms See Figuring a Gain , later. 2009 federal tax forms Business or income-producing property. 2009 federal tax forms   If you have business or income-producing property, such as rental property, and it is stolen or completely destroyed, the decrease in FMV is not considered. 2009 federal tax forms Your loss is figured as follows:   Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive   Loss of inventory. 2009 federal tax forms   There are two ways you can deduct a casualty or theft loss of inventory, including items you hold for sale to customers. 2009 federal tax forms   One way is to deduct the loss through the increase in the cost of goods sold by properly reporting your opening and closing inventories. 2009 federal tax forms Do not claim this loss again as a casualty or theft loss. 2009 federal tax forms If you take the loss through the increase in the cost of goods sold, include any insurance or other reimbursement you receive for the loss in gross income. 2009 federal tax forms   The other way is to deduct the loss separately. 2009 federal tax forms If you deduct it separately, eliminate the affected inventory items from the cost of goods sold by making a downward adjustment to opening inventory or purchases. 2009 federal tax forms Reduce the loss by the reimbursement you received. 2009 federal tax forms Do not include the reimbursement in gross income. 2009 federal tax forms If you do not receive the reimbursement by the end of the year, you may not claim a loss to the extent you have a reasonable prospect of recovery. 2009 federal tax forms Leased property. 2009 federal tax forms   If you are liable for casualty damage to property you lease, your loss is the amount you must pay to repair the property minus any insurance or other reimbursement you receive or expect to receive. 2009 federal tax forms Separate computations. 2009 federal tax forms   Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. 2009 federal tax forms Then combine the losses to determine the total loss from that casualty or theft. 2009 federal tax forms Exception for personal-use real property. 2009 federal tax forms   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. 2009 federal tax forms Figure the loss using the smaller of the following. 2009 federal tax forms The decrease in FMV of the entire property. 2009 federal tax forms The adjusted basis of the entire property. 2009 federal tax forms   See Real property under Figuring the Deduction, later. 2009 federal tax forms Decrease in Fair Market Value Fair market value (FMV) is the price for which you could sell your property to a willing buyer when neither of you has to sell or buy and both of you know all the relevant facts. 2009 federal tax forms The decrease in FMV used to figure the amount of a casualty or theft loss is the difference between the property's fair market value immediately before and immediately after the casualty or theft. 2009 federal tax forms FMV of stolen property. 2009 federal tax forms   The FMV of property immediately after a theft is considered to be zero because you no longer have the property. 2009 federal tax forms Example. 2009 federal tax forms Several years ago, you purchased silver dollars at face value for $150. 2009 federal tax forms This is your adjusted basis in the property. 2009 federal tax forms Your silver dollars were stolen this year. 2009 federal tax forms The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. 2009 federal tax forms Your theft loss is $150. 2009 federal tax forms Recovered stolen property. 2009 federal tax forms   Recovered stolen property is your property that was stolen and later returned to you. 2009 federal tax forms If you recovered property after you had already taken a theft loss deduction, you must refigure your loss using the smaller of the property's adjusted basis (explained later) or the decrease in FMV from the time just before it was stolen until the time it was recovered. 2009 federal tax forms Use this amount to refigure your total loss for the year in which the loss was deducted. 2009 federal tax forms   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. 2009 federal tax forms But report the difference only up to the amount of the loss that reduced your tax. 2009 federal tax forms For more information on the amount to report, see Recoveries in Publication 525. 2009 federal tax forms Figuring Decrease in FMV — Items To Consider To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. 2009 federal tax forms However, other measures also can be used to establish certain decreases. 2009 federal tax forms See Appraisal and Cost of cleaning up or making repairs , next. 2009 federal tax forms Appraisal. 2009 federal tax forms   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterwards should be made by a competent appraiser. 2009 federal tax forms The appraiser must recognize the effects of any general market decline that may occur along with the casualty. 2009 federal tax forms This information is needed to limit any deduction to the actual loss resulting from damage to the property. 2009 federal tax forms   Several factors are important in evaluating the accuracy of an appraisal, including the following. 2009 federal tax forms The appraiser's familiarity with your property before and after the casualty or theft. 2009 federal tax forms The appraiser's knowledge of sales of comparable property in the area. 2009 federal tax forms The appraiser's knowledge of conditions in the area of the casualty. 2009 federal tax forms The appraiser's method of appraisal. 2009 federal tax forms You may be able to use an appraisal that you used to get a federal loan (or a federal loan guarantee) as the result of a federally declared disaster to establish the amount of your disaster loss. 2009 federal tax forms For more information on disasters, see Disaster Area Losses, later. 2009 federal tax forms Cost of cleaning up or making repairs. 2009 federal tax forms   The cost of repairing damaged property is not part of a casualty loss. 2009 federal tax forms Neither is the cost of cleaning up after a casualty. 2009 federal tax forms But you can use the cost of cleaning up or of making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. 2009 federal tax forms The repairs are actually made. 2009 federal tax forms The repairs are necessary to bring the property back to its condition before the casualty. 2009 federal tax forms The amount spent for repairs is not excessive. 2009 federal tax forms The repairs take care of the damage only. 2009 federal tax forms The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. 2009 federal tax forms Landscaping. 2009 federal tax forms   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. 2009 federal tax forms You may be able to measure your loss by what you spend on the following. 2009 federal tax forms Removing destroyed or damaged trees and shrubs, minus any salvage you receive. 2009 federal tax forms Pruning and other measures taken to preserve damaged trees and shrubs. 2009 federal tax forms Replanting necessary to restore the property to its approximate value before the casualty. 2009 federal tax forms Car value. 2009 federal tax forms   Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. 2009 federal tax forms You can use the books' retail values and modify them by factors such as the mileage and condition of your car to figure its value. 2009 federal tax forms The prices are not official, but they may be useful in determining value and suggesting relative prices for comparison with current sales and offerings in your area. 2009 federal tax forms If your car is not listed in the books, determine its value from other sources. 2009 federal tax forms A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. 2009 federal tax forms Figuring Decrease in FMV — Items Not To Consider You generally should not consider the following items when attempting to establish the decrease in FMV of your property. 2009 federal tax forms Cost of protection. 2009 federal tax forms   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. 2009 federal tax forms The amount you spend on insurance or to board up your house against a storm is not part of your loss. 2009 federal tax forms If the property is business property, these expenses are deductible as business expenses. 2009 federal tax forms   If you make permanent improvements to your property to protect it against a casualty or theft, add the cost of these improvements to your basis in the property. 2009 federal tax forms An example would be the cost of a dike to prevent flooding. 2009 federal tax forms Exception. 2009 federal tax forms   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments (discussed later under Disaster Area Losses ). 2009 federal tax forms Related expenses. 2009 federal tax forms   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. 2009 federal tax forms However, they may be deductible as business expenses if the damaged or stolen property is business property. 2009 federal tax forms Replacement cost. 2009 federal tax forms   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. 2009 federal tax forms Example. 2009 federal tax forms You bought a new chair 4 years ago for $300. 2009 federal tax forms In April, a fire destroyed the chair. 2009 federal tax forms You estimate that it would cost $500 to replace it. 2009 federal tax forms If you had sold the chair before the fire, you estimate that you could have received only $100 for it because it was 4 years old. 2009 federal tax forms The chair was not insured. 2009 federal tax forms Your loss is $100, the FMV of the chair before the fire. 2009 federal tax forms It is not $500, the replacement cost. 2009 federal tax forms Sentimental value. 2009 federal tax forms   Do not consider sentimental value when determining your loss. 2009 federal tax forms If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV, as limited by your adjusted basis in the property. 2009 federal tax forms Decline in market value of property in or near casualty area. 2009 federal tax forms   A decrease in the value of your property because it is in or near an area that suffered a casualty, or that might again suffer a casualty, is not to be taken into consideration. 2009 federal tax forms You have a loss only for actual casualty damage to your property. 2009 federal tax forms However, if your home is in a federally declared disaster area, see Disaster Area Losses , later. 2009 federal tax forms Costs of photographs and appraisals. 2009 federal tax forms   Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. 2009 federal tax forms Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. 2009 federal tax forms   Appraisals are used to figure the decrease in FMV because of a casualty or theft. 2009 federal tax forms See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. 2009 federal tax forms   The costs of photographs and appraisals used as evidence of the value and condition of property damaged as a result of a casualty are not a part of the loss. 2009 federal tax forms They are expenses in determining your tax liability. 2009 federal tax forms You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). 2009 federal tax forms Adjusted Basis The measure of your investment in the property you own is its basis. 2009 federal tax forms For property you buy, your basis is usually its cost to you. 2009 federal tax forms For property you acquire in some other way, such as inheriting it, receiving it as a gift, or getting it in a nontaxable exchange, you must figure your basis in another way, as explained in Publication 551. 2009 federal tax forms If you inherited the property from someone who died in 2010 and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. 2009 federal tax forms Adjustments to basis. 2009 federal tax forms    While you own the property, various events may take place that change your basis. 2009 federal tax forms Some events, such as additions or permanent improvements to the property, increase basis. 2009 federal tax forms Others, such as earlier casualty losses and depreciation deductions, decrease basis. 2009 federal tax forms When you add the increases to the basis and subtract the decreases from the basis, the result is your adjusted basis. 2009 federal tax forms See Publication 551 for more information on figuring the basis of your property. 2009 federal tax forms Insurance and Other Reimbursements If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. 2009 federal tax forms You do not have a casualty or theft loss to the extent you are reimbursed. 2009 federal tax forms If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. 2009 federal tax forms You must reduce your loss even if you do not receive payment until a later tax year. 2009 federal tax forms See Reimbursement Received After Deducting Loss , later. 2009 federal tax forms Failure to file a claim for reimbursement. 2009 federal tax forms   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. 2009 federal tax forms Otherwise, you cannot deduct this loss as a casualty or theft. 2009 federal tax forms The portion of the loss usually not covered by insurance (for example, a deductible) is not subject to this rule. 2009 federal tax forms Example. 2009 federal tax forms You have a car insurance policy with a $1,000 deductible. 2009 federal tax forms Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the $100 and 10% rules, discussed later). 2009 federal tax forms This is true, even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. 2009 federal tax forms Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. 2009 federal tax forms Other types of reimbursements are discussed next. 2009 federal tax forms Also see the Instructions for Form 4684. 2009 federal tax forms Employer's emergency disaster fund. 2009 federal tax forms   If you receive money from your employer's emergency disaster fund and you must use that money to rehabilitate or replace property on which you are claiming a casualty loss deduction, you must take that money into consideration in computing the casualty loss deduction. 2009 federal tax forms Take into consideration only the amount you used to replace your destroyed or damaged property. 2009 federal tax forms Example. 2009 federal tax forms Your home was extensively damaged by a tornado. 2009 federal tax forms Your loss after reimbursement from your insurance company was $10,000. 2009 federal tax forms Your employer set up a disaster relief fund for its employees. 2009 federal tax forms Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. 2009 federal tax forms You received $4,000 from the fund and spent the entire amount on repairs to your home. 2009 federal tax forms In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. 2009 federal tax forms Your casualty loss before applying the deduction limits (discussed later) is $6,000. 2009 federal tax forms Cash gifts. 2009 federal tax forms   If you receive excludable cash gifts as a disaster victim and there are no limits on how you can use the money, you do not reduce your casualty loss by these excludable cash gifts. 2009 federal tax forms This applies even if you use the money to pay for repairs to property damaged in the disaster. 2009 federal tax forms Example. 2009 federal tax forms Your home was damaged by a hurricane. 2009 federal tax forms Relatives and neighbors made cash gifts to you that were excludable from your income. 2009 federal tax forms You used part of the cash gifts to pay for repairs to your home. 2009 federal tax forms There were no limits or restrictions on how you could use the cash gifts. 2009 federal tax forms It was an excludable gift, so the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. 2009 federal tax forms Insurance payments for living expenses. 2009 federal tax forms   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. 2009 federal tax forms You lose the use of your main home because of a casualty. 2009 federal tax forms Government authorities do not allow you access to your main home because of a casualty or threat of one. 2009 federal tax forms Inclusion in income. 2009 federal tax forms   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. 2009 federal tax forms Report this amount on Form 1040, line 21. 2009 federal tax forms However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. 2009 federal tax forms See Qualified disaster relief payments , later, under Disaster Area Losses. 2009 federal tax forms   A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. 2009 federal tax forms Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. 2009 federal tax forms Generally, these expenses include the amounts you pay for the following. 2009 federal tax forms Renting suitable housing. 2009 federal tax forms Transportation. 2009 federal tax forms Food. 2009 federal tax forms Utilities. 2009 federal tax forms Miscellaneous services. 2009 federal tax forms Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one. 2009 federal tax forms Example. 2009 federal tax forms As a result of a fire, you vacated your apartment for a month and moved to a motel. 2009 federal tax forms You normally pay $525 a month for rent. 2009 federal tax forms None was charged for the month the apartment was vacated. 2009 federal tax forms Your motel rent for this month was $1,200. 2009 federal tax forms You normally pay $200 a month for food. 2009 federal tax forms Your food expenses for the month you lived in the motel were $400. 2009 federal tax forms You received $1,100 from your insurance company to cover your living expenses. 2009 federal tax forms You determine the payment you must include in income as follows. 2009 federal tax forms 1. 2009 federal tax forms Insurance payment for living expenses $1,100 2. 2009 federal tax forms Actual expenses during the month you are unable to use your home because of the fire $1,600   3. 2009 federal tax forms Normal living expenses 725   4. 2009 federal tax forms Temporary increase in living expenses: Subtract line 3  from line 2 875 5. 2009 federal tax forms Amount of payment includible in income: Subtract line 4 from line 1 $ 225 Tax year of inclusion. 2009 federal tax forms   You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment. 2009 federal tax forms Example. 2009 federal tax forms Your main home was destroyed by a tornado in August 2011. 2009 federal tax forms You regained use of your home in November 2012. 2009 federal tax forms The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. 2009 federal tax forms You include this amount in income on your 2012 Form 1040. 2009 federal tax forms If, in 2013, you receive further payments to cover the living expenses you had in 2011 and 2012, you must include those payments in income on your 2013 Form 1040. 2009 federal tax forms Disaster relief. 2009 federal tax forms   Food, medical supplies, and other forms of assistance you receive do not reduce your casualty loss, unless they are replacements for lost or destroyed property. 2009 federal tax forms Table 2. 2009 federal tax forms Deduction Limit Rules for Personal-Use and Employee Property       $100 Rule 10% Rule 2% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. 2009 federal tax forms Apply this rule to personal-use property after you have figured the amount of your loss. 2009 federal tax forms You must reduce your total casualty or theft loss by 10% of your adjusted gross income. 2009 federal tax forms Apply this rule to personal-use property after you reduce each loss by $100 (the $100 rule). 2009 federal tax forms You must reduce your total casualty or theft loss by 2% of your adjusted gross income. 2009 federal tax forms Apply this rule to property you used in performing services as an employee after you have figured the amount of your loss and added it to your job expenses and most other miscellaneous itemized deductions. 2009 federal tax forms Single Event Apply this rule only once, even if many pieces of property are affected. 2009 federal tax forms Apply this rule only once, even if many pieces of property are affected. 2009 federal tax forms Apply this rule only once, even if many pieces of property are affected. 2009 federal tax forms More Than One Event Apply to the loss from each event. 2009 federal tax forms Apply to the total of all your losses from all events. 2009 federal tax forms Apply to the total of all your losses from all events. 2009 federal tax forms More Than One Person— With Loss From the   Same Event  (other than a married couple  filing jointly) Apply separately to each person. 2009 federal tax forms Apply separately to each person. 2009 federal tax forms Apply separately to each person. 2009 federal tax forms Married Couple—  With Loss From the  Same Event Filing Joint Return Apply as if you were one person. 2009 federal tax forms Apply as if you were one person. 2009 federal tax forms Apply as if you were one person. 2009 federal tax forms Filing Separate Return Apply separately to each spouse. 2009 federal tax forms Apply separately to each spouse. 2009 federal tax forms Apply separately to each spouse. 2009 federal tax forms More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. 2009 federal tax forms Apply separately to each owner of jointly owned property. 2009 federal tax forms Apply separately to each owner of jointly owned property. 2009 federal tax forms    Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster, are not taxable income to you. 2009 federal tax forms For more information, see Qualified disaster relief payments under Disaster Area Losses, later. 2009 federal tax forms   Disaster unemployment assistance payments are unemployment benefits that are taxable. 2009 federal tax forms   Generally, disaster relief grants received under the Robert T. 2009 federal tax forms Stafford Disaster Relief and Emergency Assistance Act are not included in your income. 2009 federal tax forms See Federal disaster relief grants , later, under Disaster Area Losses. 2009 federal tax forms Loan proceeds. 2009 federal tax forms   Do not reduce your casualty loss by loan proceeds you use to rehabilitate or replace property on which you are claiming a casualty loss deduction. 2009 federal tax forms If you have a federal loan that is canceled (forgiven), see Federal loan canceled , later, under Disaster Area Losses. 2009 federal tax forms Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using the amount of your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. 2009 federal tax forms This section explains the adjustment you may have to make. 2009 federal tax forms Actual reimbursement less than expected. 2009 federal tax forms   If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement. 2009 federal tax forms Example. 2009 federal tax forms Your personal car had a FMV of $2,000 when it was destroyed in a collision with another car in 2012. 2009 federal tax forms The accident was due to the negligence of the other driver. 2009 federal tax forms At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. 2009 federal tax forms You did not have a deductible loss in 2012. 2009 federal tax forms In January 2013, the court awards you a judgment of $2,000. 2009 federal tax forms However, in July it becomes apparent that you will be unable to collect any amount from the other driver. 2009 federal tax forms Since this is your only casualty or theft loss, you can deduct the loss in 2013 that is figured by applying the Deduction Limits (discussed later). 2009 federal tax forms Actual reimbursement more than expected. 2009 federal tax forms   If you later receive more reimbursement than you expected, after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. 2009 federal tax forms However, if any part of the original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. 2009 federal tax forms You do not refigure your tax for the year you claimed the deduction. 2009 federal tax forms See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. 2009 federal tax forms Example. 2009 federal tax forms In 2012, a hurricane destroyed your motorboat. 2009 federal tax forms Your loss was $3,000, and you estimated that your insurance would cover $2,500 of it. 2009 federal tax forms You did not itemize deductions on your 2012 return, so you could not deduct the loss. 2009 federal tax forms When the insurance company reimburses you for the loss, you do not report any of the reimbursement as income. 2009 federal tax forms This is true even if it is for the full $3,000 because you did not deduct the loss on your 2012 return. 2009 federal tax forms The loss did not reduce your tax. 2009 federal tax forms    If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. 2009 federal tax forms If you have already taken a deduction for a loss and you receive the reimbursement in a later year, you may have to include the gain in your income for the later year. 2009 federal tax forms Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. 2009 federal tax forms You may be able to postpone reporting any remaining gain as explained under Postponement of Gain, later. 2009 federal tax forms Actual reimbursement same as expected. 2009 federal tax forms   If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss. 2009 federal tax forms Example. 2009 federal tax forms In December 2013, you had a collision while driving your personal car. 2009 federal tax forms Repairs to the car cost $950. 2009 federal tax forms You had $100 deductible collision insurance. 2009 federal tax forms Your insurance company agreed to reimburse you for the rest of the damage. 2009 federal tax forms Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. 2009 federal tax forms Due to the $100 rule, you cannot deduct the $100 you paid as the deductible. 2009 federal tax forms When you receive the $850 from the insurance company in 2014, do not report it as income. 2009 federal tax forms Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. 2009 federal tax forms The deduction for casualty and theft losses of employee property and personal-use property is limited. 2009 federal tax forms A loss on employee property is subject to the 2% rule, discussed next. 2009 federal tax forms With certain exceptions, a loss on property you own for your personal use is subject to the $100 and 10% rules, discussed later. 2009 federal tax forms The 2%, $100, and 10% rules are also summarized in Table 2 . 2009 federal tax forms Losses on business property (other than employee property) and income-producing property are not subject to these rules. 2009 federal tax forms However, if your casualty or theft loss involved a home you used for business or rented out, your deductible loss may be limited. 2009 federal tax forms See the Instructions for Form 4684, Section B. 2009 federal tax forms If the casualty or theft loss involved property used in a passive activity, see Form 8582, Passive Activity Loss Limitations, and its instructions. 2009 federal tax forms 2% Rule The casualty and theft loss deduction for employee property, when added to your job expenses and most other miscellaneous itemized deductions on Schedule A (Form 1040) or Form 1040NR, Schedule A, must be reduced by 2% of your adjusted gross income. 2009 federal tax forms Employee property is property used in performing services as an employee. 2009 federal tax forms $100 Rule After you have figured your casualty or theft loss on personal-use property, as discussed earlier, you must reduce that loss by $100. 2009 federal tax forms This reduction applies to each total casualty or theft loss. 2009 federal tax forms It does not matter how many pieces of property are involved in an event. 2009 federal tax forms Only a single $100 reduction applies. 2009 federal tax forms Example. 2009 federal tax forms You have $750 deductible collision insurance on your car. 2009 federal tax forms The car is damaged in a collision. 2009 federal tax forms The insurance company pays you for the damage minus the $750 deductible. 2009 federal tax forms The amount of the casualty loss is based solely on the deductible. 2009 federal tax forms The casualty loss is $650 ($750 − $100) because the first $100 of a casualty loss on personal-use property is not deductible. 2009 federal tax forms Single event. 2009 federal tax forms   Generally, events closely related in origin cause a single casualty. 2009 federal tax forms It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. 2009 federal tax forms A single casualty may also damage two or more pieces of property, such as a hailstorm that damages both your home and your car parked in your driveway. 2009 federal tax forms Example 1. 2009 federal tax forms A thunderstorm destroyed your pleasure boat. 2009 federal tax forms You also lost some boating equipment in the storm. 2009 federal tax forms Your loss was $5,000 on the boat and $1,200 on the equipment. 2009 federal tax forms Your insurance company reimbursed you $4,500 for the damage to your boat. 2009 federal tax forms You had no insurance coverage on the equipment. 2009 federal tax forms Your casualty loss is from a single event and the $100 rule applies once. 2009 federal tax forms Figure your loss before applying the 10% rule (discussed later) as follows. 2009 federal tax forms     Boat Equipment 1. 2009 federal tax forms Loss $5,000 $1,200 2. 2009 federal tax forms Subtract insurance 4,500 -0- 3. 2009 federal tax forms Loss after reimbursement $ 500 $1,200 4. 2009 federal tax forms Total loss $1,700 5. 2009 federal tax forms Subtract $100 100 6. 2009 federal tax forms Loss before 10% rule $1,600 Example 2. 2009 federal tax forms Thieves broke into your home in January and stole a ring and a fur coat. 2009 federal tax forms You had a loss of $200 on the ring and $700 on the coat. 2009 federal tax forms This is a single theft. 2009 federal tax forms The $100 rule applies to the total $900 loss. 2009 federal tax forms Example 3. 2009 federal tax forms In September, hurricane winds blew the roof off your home. 2009 federal tax forms Flood waters caused by the hurricane further damaged your home and destroyed your furniture and personal car. 2009 federal tax forms This is considered a single casualty. 2009 federal tax forms The $100 rule is applied to your total loss from the flood waters and the wind. 2009 federal tax forms More than one loss. 2009 federal tax forms   If you have more than one casualty or theft loss during your tax year, you must reduce each loss by $100. 2009 federal tax forms Example. 2009 federal tax forms Your family car was damaged in an accident in January. 2009 federal tax forms Your loss after the insurance reimbursement was $75. 2009 federal tax forms In February, your car was damaged in another accident. 2009 federal tax forms This time your loss after the insurance reimbursement was $90. 2009 federal tax forms Apply the $100 rule to each separate casualty loss. 2009 federal tax forms Since neither accident resulted in a loss of over $100, you are not entitled to any deduction for these accidents. 2009 federal tax forms More than one person. 2009 federal tax forms   If two or more individuals (other than a husband and wife filing a joint return) have losses from the same casualty or theft, the $100 rule applies separately to each individual. 2009 federal tax forms Example. 2009 federal tax forms A fire damaged your house and also damaged the personal property of your house guest. 2009 federal tax forms You must reduce your loss by $100. 2009 federal tax forms Your house guest must reduce his or her loss by $100. 2009 federal tax forms Married taxpayers. 2009 federal tax forms   If you and your spouse file a joint return, you are treated as one individual in applying the $100 rule. 2009 federal tax forms It does not matter whether you own the property jointly or separately. 2009 federal tax forms   If you and your spouse have a casualty or theft loss and you file separate returns, each of you must reduce your loss by $100. 2009 federal tax forms This is true even if you own the property jointly. 2009 federal tax forms If one spouse owns the property, only that spouse can figure a loss deduction on a separate return. 2009 federal tax forms   If the casualty or theft loss is on property you own as tenants by the entirety, each of you can figure your deduction on only one-half of the loss on separate returns. 2009 federal tax forms Neither of you can figure your deduction on the entire loss on a separate return. 2009 federal tax forms Each of you must reduce the loss by $100. 2009 federal tax forms More than one owner. 2009 federal tax forms   If two or more individuals (other than a husband and wife filing a joint return) have a loss on property jointly owned, the $100 rule applies separately to each. 2009 federal tax forms For example, if two sisters live together in a home they own jointly and they have a casualty loss on the home, the $100 rule applies separately to each sister. 2009 federal tax forms 10% Rule You must reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. 2009 federal tax forms Apply this rule after you reduce each loss by $100. 2009 federal tax forms For more information, see the Form 4684 instructions. 2009 federal tax forms If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. 2009 federal tax forms Example. 2009 federal tax forms In June, you discovered that your house had been burglarized. 2009 federal tax forms Your loss after insurance reimbursement was $2,000. 2009 federal tax forms Your adjusted gross income for the year you discovered the theft is $29,500. 2009 federal tax forms Figure your theft loss as follows. 2009 federal tax forms 1. 2009 federal tax forms Loss after insurance $2,000 2. 2009 federal tax forms Subtract $100 100 3. 2009 federal tax forms Loss after $100 rule $1,900 4. 2009 federal tax forms Subtract 10% of $29,500 AGI $2,950 5. 2009 federal tax forms Theft loss deduction $-0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($2,950). 2009 federal tax forms More than one loss. 2009 federal tax forms   If you have more than one casualty or theft loss during your tax year, reduce each loss by any reimbursement and by $100. 2009 federal tax forms Then you must reduce the total of all your losses by 10% of your adjusted gross income. 2009 federal tax forms Example. 2009 federal tax forms In March, you had a car accident that totally destroyed your car. 2009 federal tax forms You did not have collision insurance on your car, so you did not receive any insurance reimbursement. 2009 federal tax forms Your loss on the car was $1,800. 2009 federal tax forms In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items you had stored there. 2009 federal tax forms Your loss on the basement items after reimbursement was $2,100. 2009 federal tax forms Your adjusted gross income for the year that the accident and fire occurred is $25,000. 2009 federal tax forms You figure your casualty loss deduction as follows. 2009 federal tax forms     Car Basement 1. 2009 federal tax forms Loss $1,800 $2,100 2. 2009 federal tax forms Subtract $100 per incident 100 100 3. 2009 federal tax forms Loss after $100 rule $1,700 $2,000 4. 2009 federal tax forms Total loss $3,700 5. 2009 federal tax forms Subtract 10% of $25,000 AGI 2,500 6. 2009 federal tax forms Casualty loss deduction $1,200 Married taxpayers. 2009 federal tax forms   If you and your spouse file a joint return, you are treated as one individual in applying the 10% rule. 2009 federal tax forms It does not matter if you own the property jointly or separately. 2009 federal tax forms   If you file separate returns, the 10% rule applies to each return on which a loss is claimed. 2009 federal tax forms More than one owner. 2009 federal tax forms   If two or more individuals (other than husband and wife filing a joint return) have a loss on property that is owned jointly, the 10% rule applies separately to each. 2009 federal tax forms Gains and losses. 2009 federal tax forms   If you have casualty or theft gains as well as losses to personal-use property, you must compare your total gains to your total losses. 2009 federal tax forms Do this after you have reduced each loss by any reimbursements and by $100 but before you have reduced the losses by 10% of your adjusted gross income. 2009 federal tax forms Casualty or theft gains do not include gains you choose to postpone. 2009 federal tax forms See Postponement of Gain, later. 2009 federal tax forms Losses more than gains. 2009 federal tax forms   If your losses are more than your recognized gains, subtract your gains from your losses and reduce the result by 10% of your adjusted gross income. 2009 federal tax forms The rest, if any, is your deductible loss from personal-use property. 2009 federal tax forms Example. 2009 federal tax forms Your theft loss after reducing it by reimbursements and by $100 is $2,700. 2009 federal tax forms Your casualty gain is $700. 2009 federal tax forms Your loss is more than your gain, so you must reduce your $2,000 net loss ($2,700 − $700) by 10% of your adjusted gross income. 2009 federal tax forms Gains more than losses. 2009 federal tax forms   If your recognized gains are more than your losses, subtract your losses from your gains. 2009 federal tax forms The difference is treated as a capital gain and must be reported on Schedule D (Form 1040). 2009 federal tax forms The 10% rule does not apply to your gains. 2009 federal tax forms Example. 2009 federal tax forms Your theft loss is $600 after reducing it by reimbursements and by $100. 2009 federal tax forms Your casualty gain is $1,600. 2009 federal tax forms Because your gain is more than your loss, you must report the $1,000 net gain ($1,600 − $600) on Schedule D (Form 1040). 2009 federal tax forms More information. 2009 federal tax forms   For information on how to figure recognized gains, see Figuring a Gain , later. 2009 federal tax forms Figuring the Deduction Generally, you must figure your loss separately for each item stolen, damaged, or destroyed. 2009 federal tax forms However, a special rule applies to real property you own for personal use. 2009 federal tax forms Real property. 2009 federal tax forms   In figuring a loss to real estate you own for personal use, all improvements (such as buildings and ornamental trees and the land containing the improvements) are considered together. 2009 federal tax forms Example 1. 2009 federal tax forms In June, a fire destroyed your lakeside cottage, which cost $144,800 (including $14,500 for the land) several years ago. 2009 federal tax forms (Your land was not damaged. 2009 federal tax forms ) This was your only casualty or theft loss for the year. 2009 federal tax forms The FMV of the property immediately before the fire was $180,000 ($145,000 for the cottage and $35,000 for the land). 2009 federal tax forms The FMV immediately after the fire was $35,000 (value of the land). 2009 federal tax forms You collected $130,000 from the insurance company. 2009 federal tax forms Your adjusted gross income for the year the fire occurred is $80,000. 2009 federal tax forms Your deduction for the casualty loss is $6,700, figured in the following manner. 2009 federal tax forms 1. 2009 federal tax forms Adjusted basis of the entire property (cost in this example) $144,800 2. 2009 federal tax forms FMV of entire property  before fire $180,000 3. 2009 federal tax forms FMV of entire property after fire 35,000 4. 2009 federal tax forms Decrease in FMV of entire property (line 2 − line 3) $145,000 5. 2009 federal tax forms Loss (smaller of line 1 or line 4) $144,800 6. 2009 federal tax forms Subtract insurance 130,000 7. 2009 federal tax forms Loss after reimbursement $14,800 8. 2009 federal tax forms Subtract $100 100 9. 2009 federal tax forms Loss after $100 rule $14,700 10. 2009 federal tax forms Subtract 10% of $80,000 AGI 8,000 11. 2009 federal tax forms Casualty loss deduction $ 6,700 Example 2. 2009 federal tax forms You bought your home a few years ago. 2009 federal tax forms You paid $150,000 ($10,000 for the land and $140,000 for the house). 2009 federal tax forms You also spent an additional $2,000 for landscaping. 2009 federal tax forms This year a fire destroyed your home. 2009 federal tax forms The fire also damaged the shrubbery and trees in your yard. 2009 federal tax forms The fire was your only casualty or theft loss this year. 2009 federal tax forms Competent appraisers valued the property as a whole at $175,000 before the fire, but only $50,000 after the fire. 2009 federal tax forms Shortly after the fire, the insurance company paid you $95,000 for the loss. 2009 federal tax forms Your adjusted gross income for this year is $70,000. 2009 federal tax forms You figure your casualty loss deduction as follows. 2009 federal tax forms 1. 2009 federal tax forms Adjusted basis of the entire property (cost of land, building, and landscaping) $152,000 2. 2009 federal tax forms FMV of entire property  before fire $175,000 3. 2009 federal tax forms FMV of entire property after fire 50,000 4. 2009 federal tax forms Decrease in FMV of entire property (line 2 − line 3) $125,000 5. 2009 federal tax forms Loss (smaller of line 1 or line 4) $125,000 6. 2009 federal tax forms Subtract insurance 95,000 7. 2009 federal tax forms Loss after reimbursement $30,000 8. 2009 federal tax forms Subtract $100 100 9. 2009 federal tax forms Loss after $100 rule $29,900 10. 2009 federal tax forms Subtract 10% of $70,000 AGI 7,000 11. 2009 federal tax forms Casualty loss deduction $ 22,900 Personal property. 2009 federal tax forms   Personal property is any property that is not real property. 2009 federal tax forms If your personal property is stolen or is damaged or destroyed by a casualty, you must figure your loss separately for each item of property. 2009 federal tax forms Then combine these separate losses to figure the total loss. 2009 federal tax forms Reduce the total loss by $100 and 10% of your adjusted gross income to figure the loss deduction. 2009 federal tax forms Example 1. 2009 federal tax forms In August, a storm destroyed your pleasure boat, which cost $18,500. 2009 federal tax forms This was your only casualty or theft loss for the year. 2009 federal tax forms Its FMV immediately before the storm was $17,000. 2009 federal tax forms You had no insurance, but were able to salvage the motor of the boat and sell it for $200. 2009 federal tax forms Your adjusted gross income for the year the casualty occurred is $70,000. 2009 federal tax forms Although the motor was sold separately, it is part of the boat and not a separate item of property. 2009 federal tax forms You figure your casualty loss deduction as follows. 2009 federal tax forms 1. 2009 federal tax forms Adjusted basis (cost in this example) $18,500 2. 2009 federal tax forms FMV before storm $17,000 3. 2009 federal tax forms FMV after storm 200 4. 2009 federal tax forms Decrease in FMV  (line 2 − line 3) $16,800 5. 2009 federal tax forms Loss (smaller of line 1 or line 4) $16,800 6. 2009 federal tax forms Subtract insurance -0- 7. 2009 federal tax forms Loss after reimbursement $16,800 8. 2009 federal tax forms Subtract $100 100 9. 2009 federal tax forms Loss after $100 rule $16,700 10. 2009 federal tax forms Subtract 10% of $70,000 AGI 7,000 11. 2009 federal tax forms Casualty loss deduction $ 9,700 Example 2. 2009 federal tax forms In June, you were involved in an auto accident that totally destroyed your personal car and your antique pocket watch. 2009 federal tax forms You had bought the car for $30,000. 2009 federal tax forms The FMV of the car just before the accident was $17,500. 2009 federal tax forms Its FMV just after the accident was $180 (scrap value). 2009 federal tax forms Your insurance company reimbursed you $16,000. 2009 federal tax forms Your watch was not insured. 2009 federal tax forms You had purchased it for $250. 2009 federal tax forms Its FMV just before the accident was $500. 2009 federal tax forms Your adjusted gross income for the year the accident occurred is $97,000. 2009 federal tax forms Your casualty loss deduction is zero, figured as follows. 2009 federal tax forms     Car Watch 1. 2009 federal tax forms Adjusted basis (cost) $30,000 $250 2. 2009 federal tax forms FMV before accident $17,500 $500 3. 2009 federal tax forms FMV after accident 180 -0- 4. 2009 federal tax forms Decrease in FMV (line 2 − line 3) $17,320 $500 5. 2009 federal tax forms Loss (smaller of line 1 or line 4) $17,320 $250 6. 2009 federal tax forms Subtract insurance 16,000 -0- 7. 2009 federal tax forms Loss after reimbursement $1,320 $250 8. 2009 federal tax forms Total loss $1,570 9. 2009 federal tax forms Subtract $100 100 10. 2009 federal tax forms Loss after $100 rule $1,470 11. 2009 federal tax forms Subtract 10% of $97,000 AGI 9,700 12. 2009 federal tax forms Casualty loss deduction $ -0- Both real and personal properties. 2009 federal tax forms   When a casualty involves both real and personal properties, you must figure the loss separately for each type of property. 2009 federal tax forms However, you apply a single $100 reduction to the total loss. 2009 federal tax forms Then, you apply the 10% rule to figure the casualty loss deduction. 2009 federal tax forms Example. 2009 federal tax forms In July, a hurricane damaged your home, which cost you $164,000 including land. 2009 federal tax forms The FMV of the property (both building and land) immediately before the storm was $170,000 and its FMV immediately after the storm was $100,000. 2009 federal tax forms Your household furnishings were also damaged. 2009 federal tax forms You separately figured the loss on each damaged household item and arrived at a total loss of $600. 2009 federal tax forms You collected $50,000 from the insurance company for the damage to your home, but your household furnishings were not insured. 2009 federal tax forms Your adjusted gross income for the year the hurricane occurred is $65,000. 2009 federal tax forms You figure your casualty loss deduction from the hurricane in the following manner. 2009 federal tax forms 1. 2009 federal tax forms Adjusted basis of real property (cost in this example) $164,000 2. 2009 federal tax forms FMV of real property before hurricane $170,000 3. 2009 federal tax forms FMV of real property after hurricane 100,000 4. 2009 federal tax forms Decrease in FMV of real property (line 2 − line 3) $70,000 5. 2009 federal tax forms Loss on real property (smaller of line 1 or line 4) $70,000 6. 2009 federal tax forms Subtract insurance 50,000 7. 2009 federal tax forms Loss on real property after reimbursement $20,000 8. 2009 federal tax forms Loss on furnishings $600 9. 2009 federal tax forms Subtract insurance -0- 10. 2009 federal tax forms Loss on furnishings after reimbursement $600 11. 2009 federal tax forms Total loss (line 7 plus line 10) $20,600 12. 2009 federal tax forms Subtract $100 100 13. 2009 federal tax forms Loss after $100 rule $20,500 14. 2009 federal tax forms Subtract 10% of $65,000 AGI 6,500 15. 2009 federal tax forms Casualty loss deduction $14,000 Property used partly for business and partly for personal purposes. 2009 federal tax forms   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use portion and for the business or income-producing portion. 2009 federal tax forms You must figure each loss separately because the losses attributed to these two uses are figured in two different ways. 2009 federal tax forms When figuring each loss, allocate the total cost or basis, the FMV before and after the casualty or theft loss, and the insurance or other reimbursement between the business and personal use of the property. 2009 federal tax forms The $100 rule and the 10% rule apply only to the casualty or theft loss on the personal-use portion of the property. 2009 federal tax forms Example. 2009 federal tax forms You own a building that you constructed on leased land. 2009 federal tax forms You use half of the building for your business and you live in the other half. 2009 federal tax forms The cost of the building was $400,000. 2009 federal tax forms You made no further improvements or additions to it. 2009 federal tax forms A flood in March damaged the entire building. 2009 federal tax forms The FMV of the building was $380,000 immediately before the flood and $320,000 afterwards. 2009 federal tax forms Your insurance company reimbursed you $40,000 for the flood damage. 2009 federal tax forms Depreciation on the business part of the building before the flood totaled $24,000. 2009 federal tax forms Your adjusted gross income for the year the flood occurred is $125,000. 2009 federal tax forms You have a deductible business casualty loss of $10,000. 2009 federal tax forms You do not have a deductible personal casualty loss because of the 10% rule. 2009 federal tax forms You figure your loss as follows. 2009 federal tax forms     Business   Personal     Part   Part 1. 2009 federal tax forms Cost (total $400,000) $200,000   $200,000 2. 2009 federal tax forms Subtract depreciation 24,000   -0- 3. 2009 federal tax forms Adjusted basis $176,000   $200,000 4. 2009 federal tax forms FMV before flood (total $380,000) $190,000   $190,000 5. 2009 federal tax forms FMV after flood (total $320,000) 160,000   160,000 6. 2009 federal tax forms Decrease in FMV  (line 4 − line 5) $30,000   $30,000 7. 2009 federal tax forms Loss (smaller of line 3 or line 6) $30,000   $30,000 8. 2009 federal tax forms Subtract insurance 20,000   20,000 9. 2009 federal tax forms Loss after reimbursement $10,000   $10,000 10. 2009 federal tax forms Subtract $100 on personal-use property -0-   100 11. 2009 federal tax forms Loss after $100 rule $10,000   $9,900 12. 2009 federal tax forms Subtract 10% of $125,000 AGI on personal-use property -0-   12,500 13. 2009 federal tax forms Deductible business loss $10,000     14. 2009 federal tax forms Deductible personal loss $-0- Figuring a Gain If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. 2009 federal tax forms Your gain is figured as follows. 2009 federal tax forms The amount you receive (discussed next), minus Your adjusted basis in the property at the time of the casualty or theft. 2009 federal tax forms See Adjusted Basis , earlier, for information on adjusted basis. 2009 federal tax forms Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. 2009 federal tax forms Amount you receive. 2009 federal tax forms   The amount you receive includes any money plus the value of any property you receive minus any expenses you have in obtaining reimbursement. 2009 federal tax forms It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. 2009 federal tax forms Example. 2009 federal tax forms A hurricane destroyed your personal residence and the insurance company awarded you $145,000. 2009 federal tax forms You received $140,000 in cash. 2009 federal tax forms The remaining $5,000 was paid directly to the holder of a mortgage on the property. 2009 federal tax forms The amount you received includes the $5,000 reimbursement paid on the mortgage. 2009 federal tax forms Main home destroyed. 2009 federal tax forms   If you have a gain because your main home was destroyed, you generally can exclude the gain from your income as if you had sold or exchanged your home. 2009 federal tax forms You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). 2009 federal tax forms To exclude a gain, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date it was destroyed. 2009 federal tax forms For information on this exclusion, see Publication 523. 2009 federal tax forms If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. 2009 federal tax forms See Postponement of Gain , later. 2009 federal tax forms Reporting a gain. 2009 federal tax forms   You generally must report your gain as income in the year you receive the reimbursement. 2009 federal tax forms However, you do not have to report your gain if you meet certain requirements and choose to postpone reporting the gain according to the rules explained under Postponement of Gain, next. 2009 federal tax forms   For information on how to report a gain, see How To Report Gains and Losses , later. 2009 federal tax forms    If you have a casualty or theft gain on personal-use property that you choose to postpone reporting (as explained next) and you also have another casualty or theft loss on personal-use property, do not consider the gain you are postponing when figuring your casualty or theft loss deduction. 2009 federal tax forms See 10% Rule under Deduction Limits, earlier. 2009 federal tax forms Postponement of Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed or stolen property. 2009 federal tax forms Your basis in the new property is generally the same as your adjusted basis in the property it replaces. 2009 federal tax forms You must ordinarily report the gain on your stolen or destroyed property if you receive money or unlike property as reimbursement. 2009 federal tax forms However, you can choose to postpone reporting the gain if you purchase property that is similar or related in service or use to the stolen or destroyed property within a specified replacement period, discussed later. 2009 federal tax forms You also can choose to postpone reporting the gain if you purchase a controlling interest (at least 80%) in a corporation owning property that is similar or related in service or use to the property. 2009 federal tax forms See Controlling interest in a corporation , later. 2009 federal tax forms If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. 2009 federal tax forms To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. 2009 federal tax forms If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. 2009 federal tax forms Example. 2009 federal tax forms In 1970, you bought an oceanfront cottage for your personal use at a cost of $18,000. 2009 federal tax forms You made no further improvements or additions to it. 2009 federal tax forms When a storm destroyed the cottage this January, the cottage was worth $250,000. 2009 federal tax forms You received $146,000 from the insurance company in March. 2009 federal tax forms You had a gain of $128,000 ($146,000 − $18,000). 2009 federal tax forms You spent $144,000 to rebuild the cottage. 2009 federal tax forms Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. 2009 federal tax forms Buying replacement property from a related person. 2009 federal tax forms   You cannot postpone reporting a gain from a casualty or theft if you buy the replacement property from a related person (discussed later). 2009 federal tax forms This rule applies to the following taxpayers. 2009 federal tax forms C corporations. 2009 federal tax forms Partnerships in which more than 50% of the capital or profits interests is owned by C corporations. 2009 federal tax forms All others (including individuals, partnerships — other than those in (2) — and S corporations) if the total realized gain for the tax year on all destroyed or stolen properties on which there are realized gains is more than $100,000. 2009 federal tax forms For casualties and thefts described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. 2009 federal tax forms If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. 2009 federal tax forms If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. 2009 federal tax forms Exception. 2009 federal tax forms   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the destroyed or stolen property. 2009 federal tax forms Related persons. 2009 federal tax forms   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. 2009 federal tax forms For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. 2009 federal tax forms Death of a taxpayer. 2009 federal tax forms   If a taxpayer dies after having a gain but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. 2009 federal tax forms The executor of the estate or the person succeeding to the funds from the casualty or theft cannot postpone reporting the gain by buying replacement property. 2009 federal tax forms Replacement Property You must buy replacement property for the specific purpose of replacing your destroyed or stolen property. 2009 federal tax forms Property you acquire as a gift or inheritance does not qualify. 2009 federal tax forms You do not have to use the same funds you receive as
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The 2009 Federal Tax Forms

2009 federal tax forms Publication 939 - Main Content Table of Contents General Information Taxation of Periodic PaymentsInvestment in the Contract Expected Return Computation Under the General Rule How To Use Actuarial TablesUnisex Annuity Tables Special Elections Worksheets for Determining Taxable Annuity Actuarial Tables Requesting a Ruling on Taxation of Annuity How To Get Tax HelpLow Income Taxpayer Clinics General Information Some of the terms used in this publication are defined in the following paragraphs. 2009 federal tax forms A pension is generally a series of payments made to you after you retire from work. 2009 federal tax forms Pension payments are made regularly and are for past services with an employer. 2009 federal tax forms An annuity is a series of payments under a contract. 2009 federal tax forms You can buy the contract alone or you can buy it with the help of your employer. 2009 federal tax forms Annuity payments are made regularly for more than one full year. 2009 federal tax forms Note. 2009 federal tax forms Distributions from pensions and annuities follow the same rules as outlined in this publication unless otherwise noted. 2009 federal tax forms Types of pensions and annuities. 2009 federal tax forms   Particular types of pensions and annuities include: Fixed period annuities. 2009 federal tax forms You receive definite amounts at regular intervals for a definite length of time. 2009 federal tax forms Annuities for a single life. 2009 federal tax forms You receive definite amounts at regular intervals for life. 2009 federal tax forms The payments end at death. 2009 federal tax forms Joint and survivor annuities. 2009 federal tax forms The first annuitant receives a definite amount at regular intervals for life. 2009 federal tax forms After he or she dies, a second annuitant receives a definite amount at regular intervals for life. 2009 federal tax forms The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. 2009 federal tax forms Variable annuities. 2009 federal tax forms You receive payments that may vary in amount for a definite length of time or for life. 2009 federal tax forms The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds or cost-of-living indexes. 2009 federal tax forms Disability pensions. 2009 federal tax forms You are under minimum retirement age and receive payments because you retired on disability. 2009 federal tax forms If, at the time of your retirement, you were permanently and totally disabled, you may be eligible for the credit for the elderly or the disabled discussed in Publication 524. 2009 federal tax forms If your annuity starting date is after November 18, 1996, the General Rule cannot be used for the following qualified plans. 2009 federal tax forms A qualified employee plan is an employer's stock bonus, pension, or profit-sharing plan that is for the exclusive benefit of employees or their beneficiaries. 2009 federal tax forms This plan must meet Internal Revenue Code requirements. 2009 federal tax forms It qualifies for special tax benefits, including tax deferral for employer contributions and rollover distributions. 2009 federal tax forms However, you must use the General Rule if you were 75 or over and the annuity payments are guaranteed for more than 5 years. 2009 federal tax forms A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. 2009 federal tax forms A tax-sheltered annuity is a special annuity plan or contract purchased for an employee of a public school or tax-exempt organization. 2009 federal tax forms   The General Rule is used to figure the tax treatment of various types of pensions and annuities, including nonqualified employee plans. 2009 federal tax forms A nonqualified employee plan is an employer's plan that does not meet Internal Revenue Code requirements. 2009 federal tax forms It does not qualify for most of the tax benefits of a qualified plan. 2009 federal tax forms Annuity worksheets. 2009 federal tax forms   The worksheets found near the end of the text of this publication may be useful to you in figuring the taxable part of your annuity. 2009 federal tax forms Request for a ruling. 2009 federal tax forms   If you are unable to determine the income tax treatment of your pension or annuity, you may ask the Internal Revenue Service to figure the taxable part of your annuity payments. 2009 federal tax forms This is treated as a request for a ruling. 2009 federal tax forms See Requesting a Ruling on Taxation of Annuity near the end of this publication. 2009 federal tax forms Withholding tax and estimated tax. 2009 federal tax forms   Your pension or annuity is subject to federal income tax withholding unless you choose not to have tax withheld. 2009 federal tax forms If you choose not to have tax withheld from your pension or annuity, or if you do not have enough income tax withheld, you may have to make estimated tax payments. 2009 federal tax forms Taxation of Periodic Payments This section explains how the periodic payments you receive under a pension or annuity plan are taxed under the General Rule. 2009 federal tax forms Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). 2009 federal tax forms These payments are also known as amounts received as an annuity. 2009 federal tax forms If you receive an amount from your plan that is a nonperiodic payment (amount not received as an annuity), see Taxation of Nonperiodic Payments in Publication 575. 2009 federal tax forms In general, you can recover your net cost of the pension or annuity tax free over the period you are to receive the payments. 2009 federal tax forms The amount of each payment that is more than the part that represents your net cost is taxable. 2009 federal tax forms Under the General Rule, the part of each annuity payment that represents your net cost is in the same proportion that your investment in the contract is to your expected return. 2009 federal tax forms These terms are explained in the following discussions. 2009 federal tax forms Investment in the Contract In figuring how much of your pension or annuity is taxable under the General Rule, you must figure your investment in the contract. 2009 federal tax forms First, find your net cost of the contract as of the annuity starting date (defined later). 2009 federal tax forms To find this amount, you must first figure the total premiums, contributions, or other amounts paid. 2009 federal tax forms This includes the amounts your employer contributed if you were required to include these amounts in income. 2009 federal tax forms It also includes amounts you actually contributed (except amounts for health and accident benefits and deductible voluntary employee contributions). 2009 federal tax forms From this total cost you subtract: Any refunded premiums, rebates, dividends, or unrepaid loans (any of which were not included in your income) that you received by the later of the annuity starting date or the date on which you received your first payment. 2009 federal tax forms Any additional premiums paid for double indemnity or disability benefits. 2009 federal tax forms Any other tax-free amounts you received under the contract or plan before the later of the dates in (1). 2009 federal tax forms The annuity starting date   is the later of the first day of the first period for which you receive payment under the contract or the date on which the obligation under the contract becomes fixed. 2009 federal tax forms Example. 2009 federal tax forms On January 1 you completed all your payments required under an annuity contract providing for monthly payments starting on August 1, for the period beginning July 1. 2009 federal tax forms The annuity starting date is July 1. 2009 federal tax forms This is the date you use in figuring your investment in the contract and your expected return (discussed later). 2009 federal tax forms Adjustments If any of the following items apply, adjust (add or subtract) your total cost to find your net cost. 2009 federal tax forms Foreign employment. 2009 federal tax forms   If you worked abroad, your cost may include contributions by your employer to the retirement plan, but only if those contributions would be excludible from your gross income had they been paid directly to you as compensation. 2009 federal tax forms The contributions that apply are: Contributions before 1963 by your employer, Contributions after 1962 by your employer if the contributions would be excludible from your gross income (without regard to the foreign earned income exclusion) had they been paid directly to you, or Contributions after 1996 by your employer on your behalf if you performed the services of a foreign missionary (a duly ordained, commissioned, or licensed minister of a church or a lay person) if the contributions would be excludible from your gross income had they been paid directly to you. 2009 federal tax forms Foreign employment contributions while a nonresident alien. 2009 federal tax forms   In determining your cost, special rules apply if you are a U. 2009 federal tax forms S. 2009 federal tax forms citizen or resident alien who received distributions from a plan to which contributions were made while you were a nonresident alien. 2009 federal tax forms Your contributions and your employer's contributions are not included in your cost if the contributions: Were made based on compensation which was for services performed outside the United States which you were a nonresident alien, and Were not subject to income tax under the laws of the United States or any foreign country, but only if the contribution would have been subject to income tax if they had been paid as cash compensation when the services were performed. 2009 federal tax forms Death benefit exclusion. 2009 federal tax forms   If you are the beneficiary of a deceased employee (or former employee), who died before August 21, 1996, you may qualify for a death benefit exclusion of up to $5,000. 2009 federal tax forms The beneficiary of a deceased employee who died after August 20, 1996, will not qualify for the death benefit exclusion. 2009 federal tax forms How to adjust your total cost. 2009 federal tax forms   If you are eligible, treat the amount of any allowable death benefit exclusion as additional cost paid by the employee. 2009 federal tax forms Add it to the cost or unrecovered cost of the annuity at the annuity starting date. 2009 federal tax forms See Example 3 under Computation Under General Rule for an illustration of the adjustment to the cost of the contract. 2009 federal tax forms Net cost. 2009 federal tax forms   Your total cost plus certain adjustments and minus other amounts already recovered before the annuity starting date is your net cost. 2009 federal tax forms This is the unrecovered investment in the contract as of the annuity starting date. 2009 federal tax forms If your annuity starting date is after 1986, this is the maximum amount that you may recover tax free under the contract. 2009 federal tax forms Refund feature. 2009 federal tax forms   Adjustment for the value of the refund feature is only applicable when you report your pension or annuity under the General Rule. 2009 federal tax forms Your annuity contract has a refund feature if: The expected return ( discussed later) of an annuity depends entirely or partly on the life of one or more individuals, The contract provides that payments will be made to a beneficiary or the estate of an annuitant on or after the death of the annuitant if a stated amount or a stated number of payments has not been paid to the annuitant or annuitants before death, and The payments are a refund of the amount you paid for the annuity contract. 2009 federal tax forms   If your annuity has a refund feature, you must reduce your net cost of the contract by the value of the refund feature (figured using Table III or VII at the end of this publication, also see How To Use Actuarial Tables , later) to find the investment in the contract. 2009 federal tax forms Zero value of refund feature. 2009 federal tax forms   For a joint and survivor annuity, the value of the refund feature is zero if: Both annuitants are age 74 or younger, The payments are guaranteed for less than 2½ years, and The survivor's annuity is at least 50% of the first annuitant's annuity. 2009 federal tax forms   For a single-life annuity without survivor benefit, the value of the refund feature is zero if: The payments are guaranteed for less than 2½ years, and The annuitant is: Age 57 or younger (if using the new (unisex) annuity tables), Age 42 or younger (if male and using the old annuity tables), or Age 47 or younger (if female and using the old annuity tables). 2009 federal tax forms   If you do not meet these requirements, you will have to figure the value of the refund feature, as explained in the following discussion. 2009 federal tax forms Examples. 2009 federal tax forms The first example shows how to figure the value of the refund feature when there is only one beneficiary. 2009 federal tax forms Example 2 shows how to figure the value of the refund feature when the contract provides, in addition to a whole life annuity, one or more temporary life annuities for the lives of children. 2009 federal tax forms In both examples, the taxpayer elects to use Tables V through VIII. 2009 federal tax forms If you need the value of the refund feature for a joint and survivor annuity, write to the Internal Revenue Service as explained under Requesting a Ruling on Taxation of Annuity near the end of this publication. 2009 federal tax forms Example 1. 2009 federal tax forms At age 65, Barbara bought for $21,053 an annuity with a refund feature. 2009 federal tax forms She will get $100 a month for life. 2009 federal tax forms Barbara's contract provides that if she does not live long enough to recover the full $21,053, similar payments will be made to her surviving beneficiary until a total of $21,053 has been paid under the contract. 2009 federal tax forms In this case, the contract cost and the total guaranteed return are the same ($21,053). 2009 federal tax forms Barbara's investment in the contract is figured as follows: Net cost $21,053 Amount to be received annually $1,200   Number of years for which payment is guaranteed ($21,053 divided by $1,200) 17. 2009 federal tax forms 54   Rounded to nearest whole number of years 18   Percentage from Actuarial Table VII for age 65 with 18 years of guaranteed payments 15%   Value of the refund feature (rounded to the nearest dollar)—15% of $21,053 3,158 Investment in the contract, adjusted for value of refund feature $17,895       If the total guaranteed return were less than the $21,053 net cost of the contract, Barbara would apply the appropriate percentage from the tables to the lesser amount. 2009 federal tax forms For example, if the contract guaranteed the $100 monthly payments for 17 years to Barbara's estate or beneficiary if she were to die before receiving all the payments for that period, the total guaranteed return would be $20,400 ($100 × 12 × 17 years). 2009 federal tax forms In this case, the value of the refund feature would be $2,856 (14% of $20,400) and Barbara's investment in the contract would be $18,197 ($21,053 minus $2,856) instead of $17,895. 2009 federal tax forms Example 2. 2009 federal tax forms John died while still employed. 2009 federal tax forms His widow, Eleanor, age 48, receives $171 a month for the rest of her life. 2009 federal tax forms John's son, Elmer, age 9, receives $50 a month until he reaches age 18. 2009 federal tax forms John's contributions to the retirement fund totaled $7,559. 2009 federal tax forms 45, with interest on those contributions of $1,602. 2009 federal tax forms 53. 2009 federal tax forms The guarantee or total refund feature of the contract is $9,161. 2009 federal tax forms 98 ($7,559. 2009 federal tax forms 45 plus $1,602. 2009 federal tax forms 53). 2009 federal tax forms The adjustment in the investment in the contract is figured as follows: A) Expected return:*       1) Widow's expected return:         Annual annuity ($171 × 12) $2,052       Multiplied by factor from Table V         (nearest age 48) 34. 2009 federal tax forms 9 $71,614. 2009 federal tax forms 80   2) Child's expected return:         Annual annuity ($50 × 12) $600       Multiplied by factor from         Table VIII (nearest age 9         for term of 9 years) 9. 2009 federal tax forms 0 5,400. 2009 federal tax forms 00   3) Total expected return   $77,014. 2009 federal tax forms 80 B) Adjustment for refund feature:       1) Contributions (net cost) $7,559. 2009 federal tax forms 45   2) Guaranteed amount (contributions of $7,559. 2009 federal tax forms 45 plus interest of $1,602. 2009 federal tax forms 53) $9,161. 2009 federal tax forms 98   3) Minus: Expected return under child's (temporary life) annuity (A(2)) 5,400. 2009 federal tax forms 00   4) Net guaranteed amount $3,761. 2009 federal tax forms 98   5) Multiple from Table VII (nearest age 48 for 2 years duration (recovery of $3,761. 2009 federal tax forms 98 at $171 a month to nearest whole year)) 0%   6) Adjustment required for value of refund feature rounded to the nearest whole dollar  (0% × $3,761. 2009 federal tax forms 98, the smaller of B(3) or B(6)) 0 *Expected return is the total amount you and other eligible annuitants can expect to receive under the contract. 2009 federal tax forms See the discussion of expected return, later in this publication. 2009 federal tax forms Free IRS help. 2009 federal tax forms   If you need to request assistance to figure the value of the refund feature, see Requesting a Ruling on Taxation of Annuity near the end of this publication. 2009 federal tax forms Expected Return Your expected return is the total amount you and other eligible annuitants can expect to receive under the contract. 2009 federal tax forms The following discussions explain how to figure the expected return with each type of annuity. 2009 federal tax forms A person's age, for purposes of figuring the expected return, is the age at the birthday nearest to the annuity starting date. 2009 federal tax forms Fixed period annuity. 2009 federal tax forms   If you will get annuity payments for a fixed number of years, without regard to your life expectancy, you must figure your expected return based on that fixed number of years. 2009 federal tax forms It is the total amount you will get beginning at the annuity starting date. 2009 federal tax forms You will receive specific periodic payments for a definite period of time, such as a fixed number of months (but not less than 13). 2009 federal tax forms To figure your expected return, multiply the fixed number of months for which payments are to be made by the amount of the payment specified for each period. 2009 federal tax forms Single life annuity. 2009 federal tax forms   If you are to get annuity payments for the rest of your life, find your expected return as follows. 2009 federal tax forms You must multiply the amount of the annual payment by a multiple based on your life expectancy as of the annuity starting date. 2009 federal tax forms These multiples are set out in actuarial Tables I and V near the end of this publication (see How To Use Actuarial Tables , later). 2009 federal tax forms   You may need to adjust these multiples if the payments are made quarterly, semiannually, or annually. 2009 federal tax forms See Adjustments to Tables I, II, V, VI, and VIA following Table I. 2009 federal tax forms Example. 2009 federal tax forms Henry bought an annuity contract that will give him an annuity of $500 a month for his life. 2009 federal tax forms If at the annuity starting date Henry's nearest birthday is 66, the expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table V, age 66 × 19. 2009 federal tax forms 2 Expected return $115,200 If the payments were to be made to Henry quarterly and the first payment was made one full month after the annuity starting date, Henry would adjust the 19. 2009 federal tax forms 2 multiple by +. 2009 federal tax forms 1. 2009 federal tax forms His expected return would then be $115,800 ($6,000 × 19. 2009 federal tax forms 3). 2009 federal tax forms Annuity for shorter of life or specified period. 2009 federal tax forms   With this type of annuity, you are to get annuity payments either for the rest of your life or until the end of a specified period, whichever period is shorter. 2009 federal tax forms To figure your expected return, multiply the amount of your annual payment by a multiple in Table IV or VIII for temporary life annuities. 2009 federal tax forms Find the proper multiple based on your sex (if using Table IV), your age at the annuity starting date, and the nearest whole number of years in the specified period. 2009 federal tax forms Example. 2009 federal tax forms Harriet purchased an annuity this year that will pay her $200 each month for five years or until she dies, whichever period is shorter. 2009 federal tax forms She was age 65 at her birthday nearest the annuity starting date. 2009 federal tax forms She figures the expected return as follows: Annual payment ($200 × 12 months) $2,400 Multiple shown in Table VIII, age 65, 5-year term × 4. 2009 federal tax forms 9 Expected return $11,760 She uses Table VIII (not Table IV) because all her contributions were made after June 30, 1986. 2009 federal tax forms See Special Elections, later. 2009 federal tax forms Joint and survivor annuities. 2009 federal tax forms   If you have an annuity that pays you a periodic income for life and after your death provides an identical lifetime periodic income to your spouse (or some other person), you figure the expected return based on your combined life expectancies. 2009 federal tax forms To figure the expected return, multiply the annual payment by a multiple in Table II or VI based on your joint life expectancies. 2009 federal tax forms If your payments are made quarterly, semiannually, or annually, you may need to adjust these multiples. 2009 federal tax forms See Adjustments to Tables I, II, V, VI, and VIA following Table I near the end of this publication. 2009 federal tax forms Example. 2009 federal tax forms John bought a joint and survivor annuity providing payments of $500 a month for his life, and, after his death, $500 a month for the remainder of his wife's life. 2009 federal tax forms At John's annuity starting date, his age at his nearest birthday is 70 and his wife's at her nearest birthday is 67. 2009 federal tax forms The expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table VI, ages 67 and 70 × 22. 2009 federal tax forms 0 Expected return $132,000 Different payments to survivor. 2009 federal tax forms   If your contract provides that payments to a survivor annuitant will be different from the amount you receive, you must use a computation which accounts for both the joint lives of the annuitants and the life of the survivor. 2009 federal tax forms Example 1. 2009 federal tax forms Gerald bought a contract providing for payments to him of $500 a month for life and, after his death, payments to his wife, Mary, of $350 a month for life. 2009 federal tax forms If, at the annuity starting date, Gerald's nearest birthday is 70 and Mary's is 67, the expected return under the contract is figured as follows: Combined multiple for Gerald and Mary, ages 70 and 67 (from Table VI)   22. 2009 federal tax forms 0 Multiple for Gerald, age 70 (from Table V)   16. 2009 federal tax forms 0 Difference: Multiple applicable to Mary   6. 2009 federal tax forms 0 Gerald's annual payment ($500 × 12) $6,000   Gerald's multiple 16. 2009 federal tax forms 0   Gerald's expected return   $96,000 Mary's annual payment ($350 × 12) $4,200   Mary's multiple 6. 2009 federal tax forms 0   Mary's expected return   25,200 Total expected return under the contract   $121,200 Example 2. 2009 federal tax forms Your husband died while still employed. 2009 federal tax forms Under the terms of his employer's retirement plan, you are entitled to get an immediate annuity of $400 a month for the rest of your life or until you remarry. 2009 federal tax forms Your daughters, Marie and Jean, are each entitled to immediate temporary life annuities of $150 a month until they reach age 18. 2009 federal tax forms You were 50 years old at the annuity starting date. 2009 federal tax forms Marie was 16 and Jean was 14. 2009 federal tax forms Using the multiples shown in Tables V and VIII at the end of this publication, the total expected return on the annuity starting date is $169,680, figured as follows: Widow, age 50 (multiple from Table V—33. 2009 federal tax forms 1 × $4,800 annual payment) $158,880 Marie, age 16 for 2 years duration (multiple from Table VIII—2. 2009 federal tax forms 0 × $1,800 annual payment) 3,600 Jean, age 14 for 4 years duration (multiple from Table VIII—4. 2009 federal tax forms 0 × $1,800 annual payment) 7,200 Total expected return $169,680 No computation of expected return is made based on your husband's age at the date of death because he died before the annuity starting date. 2009 federal tax forms Computation Under the General Rule Note. 2009 federal tax forms Variable annuities use a different computation for determining the exclusion amounts. 2009 federal tax forms See Variable annuities later. 2009 federal tax forms Under the General Rule, you figure the taxable part of your annuity by using the following steps: Step 1. 2009 federal tax forms   Figure the amount of your investment in the contract, including any adjustments for the refund feature and the death benefit exclusion, if applicable. 2009 federal tax forms See Death benefit exclusion , earlier. 2009 federal tax forms Step 2. 2009 federal tax forms   Figure your expected return. 2009 federal tax forms Step 3. 2009 federal tax forms   Divide Step 1 by Step 2 and round to three decimal places. 2009 federal tax forms This will give you the exclusion percentage. 2009 federal tax forms Step 4. 2009 federal tax forms   Multiply the exclusion percentage by the first regular periodic payment. 2009 federal tax forms The result is the tax-free part of each pension or annuity payment. 2009 federal tax forms   The tax-free part remains the same even if the total payment increases due to variation in the annuity amount such as cost of living increases, or you outlive the life expectancy factor used. 2009 federal tax forms However, if your annuity starting date is after 1986, the total amount of annuity income that is tax free over the years cannot exceed your net cost. 2009 federal tax forms   Each annuitant applies the same exclusion percentage to his or her initial payment called for in the contract. 2009 federal tax forms Step 5. 2009 federal tax forms   Multiply the tax-free part of each payment (step 4) by the number of payments received during the year. 2009 federal tax forms This will give you the tax-free part of the total payment for the year. 2009 federal tax forms    In the first year of your annuity, your first payment or part of your first payment may be for a fraction of the payment period. 2009 federal tax forms This fractional amount is multiplied by your exclusion percentage to get the tax-free part. 2009 federal tax forms Step 6. 2009 federal tax forms   Subtract the tax-free part from the total payment you received. 2009 federal tax forms The rest is the taxable part of your pension or annuity. 2009 federal tax forms Example 1. 2009 federal tax forms You purchased an annuity with an investment in the contract of $10,800. 2009 federal tax forms Under its terms, the annuity will pay you $100 a month for life. 2009 federal tax forms The multiple for your age (age 65) is 20. 2009 federal tax forms 0 as shown in Table V. 2009 federal tax forms Your expected return is $24,000 (20 × 12 × $100). 2009 federal tax forms Your cost of $10,800, divided by your expected return of $24,000, equals 45. 2009 federal tax forms 0%. 2009 federal tax forms This is the percentage you will not have to include in income. 2009 federal tax forms Each year, until your net cost is recovered, $540 (45% of $1,200) will be tax free and you will include $660 ($1,200 − $540) in your income. 2009 federal tax forms If you had received only six payments of $100 ($600) during the year, your exclusion would have been $270 (45% of $100 × 6 payments). 2009 federal tax forms Example 2. 2009 federal tax forms Gerald bought a joint and survivor annuity. 2009 federal tax forms Gerald's investment in the contract is $62,712 and the expected return is $121,200. 2009 federal tax forms The exclusion percentage is 51. 2009 federal tax forms 7% ($62,712 ÷ $121,200). 2009 federal tax forms Gerald will receive $500 a month ($6,000 a year). 2009 federal tax forms Each year, until his net cost is recovered, $3,102 (51. 2009 federal tax forms 7% of his total payments received of $6,000) will be tax free and $2,898 ($6,000 − $3,102) will be included in his income. 2009 federal tax forms If Gerald dies, his wife will receive $350 a month ($4,200 a year). 2009 federal tax forms If Gerald had not recovered all of his net cost before his death, his wife will use the same exclusion percentage (51. 2009 federal tax forms 7%). 2009 federal tax forms Each year, until the entire net cost is recovered, his wife will receive $2,171. 2009 federal tax forms 40 (51. 2009 federal tax forms 7% of her payments received of $4,200) tax free. 2009 federal tax forms She will include $2,028. 2009 federal tax forms 60 ($4,200 − $2,171. 2009 federal tax forms 40) in her income tax return. 2009 federal tax forms Example 3. 2009 federal tax forms Using the same facts as Example 2 under Different payments to survivor, you are to receive an annual annuity of $4,800 until you die or remarry. 2009 federal tax forms Your two daughters each receive annual annuities of $1,800 until they reach age 18. 2009 federal tax forms Your husband contributed $25,576 to the plan. 2009 federal tax forms You are eligible for the $5,000 death benefit exclusion because your husband died before August 21, 1996. 2009 federal tax forms Adjusted Investment in the Contract Contributions $25,576 Plus: Death benefit exclusion 5,000 Adjusted investment in the contract $30,576 The total expected return, as previously figured (in Example 2 under Different payments to survivor), is $169,680. 2009 federal tax forms The exclusion percentage of 18. 2009 federal tax forms 0% ($30,576 ÷ $169,680) applies to the annuity payments you and each of your daughters receive. 2009 federal tax forms Each full year $864 (18. 2009 federal tax forms 0% × $4,800) will be tax free to you, and you must include $3,936 in your income tax return. 2009 federal tax forms Each year, until age 18, $324 (18. 2009 federal tax forms 0% × $1,800) of each of your daughters' payments will be tax free and each must include the balance, $1,476, as income on her own income tax return. 2009 federal tax forms Part-year payments. 2009 federal tax forms   If you receive payments for only part of a year, apply the exclusion percentage to the first regular periodic payment, and multiply the result by the number of payments received during the year. 2009 federal tax forms   If you receive amounts during the year that represent 12 payments, one for each month in that year, and an amount that represents payments for months in a prior year, apply the exclusion percentage to the first regular periodic payment, and multiply the result by the number of payments the amounts received represent. 2009 federal tax forms For instance, if you received amounts during the year that represent the 12 payments for that year plus an amount that represents three payments for a prior year, multiply that amount by the 15 (12 + 3) payments received that the year. 2009 federal tax forms   If you received a fractional payment, follow Step 5, discussed earlier. 2009 federal tax forms This gives you the tax-free part of your total payment. 2009 federal tax forms Example. 2009 federal tax forms On September 28, Mary bought an annuity contract for $22,050 that will give her $125 a month for life, beginning October 30. 2009 federal tax forms The applicable multiple from Table V is 23. 2009 federal tax forms 3 (age 61). 2009 federal tax forms Her expected return is $34,950 ($125 × 12 × 23. 2009 federal tax forms 3). 2009 federal tax forms Mary's investment in the contract of $22,050, divided by her expected return of $34,950, equals 63. 2009 federal tax forms 1%. 2009 federal tax forms Each payment received will consist of 63. 2009 federal tax forms 1% return of cost and 36. 2009 federal tax forms 9% taxable income, until her net cost of the contract is fully recovered. 2009 federal tax forms During the first year, Mary received three payments of $125, or $375, of which $236. 2009 federal tax forms 63 (63. 2009 federal tax forms 1% × $375) is a return of cost. 2009 federal tax forms The remaining $138. 2009 federal tax forms 37 is included in income. 2009 federal tax forms Increase in annuity payments. 2009 federal tax forms   The tax-free amount remains the same as the amount figured at the annuity starting date, even if the payment increases. 2009 federal tax forms All increases in the installment payments are fully taxable. 2009 federal tax forms   However, if your annuity payments are scheduled to increase at a definite date in the future you must figure the expected return for that annuity using the method described in section 1. 2009 federal tax forms 72-5(a)(5) of the regulations. 2009 federal tax forms Example. 2009 federal tax forms Joe's wife died while she was still employed and, as her beneficiary, he began receiving an annuity of $147 per month. 2009 federal tax forms In figuring the taxable part, Joe elects to use Tables V through VIII. 2009 federal tax forms The cost of the contract was $7,938, consisting of the sum of his wife's net contributions, adjusted for any refund feature. 2009 federal tax forms His expected return as of the annuity starting date is $35,280 (age 65, multiple of 20. 2009 federal tax forms 0 × $1,764 annual payment). 2009 federal tax forms The exclusion percentage is $7,938 ÷ $35,280, or 22. 2009 federal tax forms 5%. 2009 federal tax forms During the year he received 11 monthly payments of $147, or $1,617. 2009 federal tax forms Of this amount, 22. 2009 federal tax forms 5% × $147 × 11 ($363. 2009 federal tax forms 83) is tax free as a return of cost and the balance of $1,253. 2009 federal tax forms 17 is taxable. 2009 federal tax forms Later, because of a cost-of-living increase, his annuity payment was increased to $166 per month, or $1,992 a year (12 × $166). 2009 federal tax forms The tax-free part is still only 22. 2009 federal tax forms 5% of the annuity payments as of the annuity starting date (22. 2009 federal tax forms 5% × $147 × 12 = $396. 2009 federal tax forms 90 for a full year). 2009 federal tax forms The increase of $228 ($1,992 − $1,764 (12 × $147)) is fully taxable. 2009 federal tax forms Variable annuities. 2009 federal tax forms   For variable annuity payments, figure the amount of each payment that is tax free by dividing your investment in the contract (adjusted for any refund feature) by the total number of periodic payments you expect to get under the contract. 2009 federal tax forms   If the annuity is for a definite period, you determine the total number of payments by multiplying the number of payments to be made each year by the number of years you will receive payments. 2009 federal tax forms If the annuity is for life, you determine the total number of payments by using a multiple from the appropriate actuarial table. 2009 federal tax forms Example. 2009 federal tax forms Frank purchased a variable annuity at age 65. 2009 federal tax forms The total cost of the contract was $12,000. 2009 federal tax forms The annuity starting date is January 1 of the year of purchase. 2009 federal tax forms His annuity will be paid, starting July 1, in variable annual installments for his life. 2009 federal tax forms The tax-free amount of each payment, until he has recovered his cost of his contract, is: Investment in the contract $12,000 Number of expected annual payments (multiple for age 65 from Table V) 20 Tax-free amount of each payment ($12,000 ÷ 20) $600 If Frank's first payment is $920, he includes only $320 ($920 − $600) in his gross income. 2009 federal tax forms   If the tax-free amount for a year is more than the payments you receive in that year, you may choose, when you receive the next payment, to refigure the tax-free part. 2009 federal tax forms Divide the amount of the periodic tax-free part that is more than the payment you received by the remaining number of payments you expect. 2009 federal tax forms The result is added to the previously figured periodic tax-free part. 2009 federal tax forms The sum is the amount of each future payment that will be tax free. 2009 federal tax forms Example. 2009 federal tax forms Using the facts of the previous example about Frank, assume that after Frank's $920 payment, he received $500 in the following year, and $1,200 in the year after that. 2009 federal tax forms Frank does not pay tax on the $500 (second year) payment because $600 of each annual pension payment is tax free. 2009 federal tax forms Since the $500 payment is less than the $600 annual tax-free amount, he may choose to refigure his tax-free part when he receives his $1,200 (third year) payment, as follows: Amount tax free in second year $600. 2009 federal tax forms 00 Amount received in second year 500. 2009 federal tax forms 00 Difference $100. 2009 federal tax forms 00 Number of remaining payments after the first 2 payments (age 67, from Table V) 18. 2009 federal tax forms 4 Amount to be added to previously determined annual tax-free part ($100 ÷ 18. 2009 federal tax forms 4) $5. 2009 federal tax forms 43 Revised annual tax-free part for third and later years ($600 + $5. 2009 federal tax forms 43) $605. 2009 federal tax forms 43 Amount taxable in third year ($1,200 − $605. 2009 federal tax forms 43) $594. 2009 federal tax forms 57 If you choose to refigure your tax-free amount,   you must file a statement with your income tax return stating that you are refiguring the tax-free amount in accordance with the rules of section 1. 2009 federal tax forms 72–4(d)(3) of the Income Tax Regulations. 2009 federal tax forms The statement must also show the following information: The annuity starting date and your age on that date. 2009 federal tax forms The first day of the first period for which you received an annuity payment in the current year. 2009 federal tax forms Your investment in the contract as originally figured. 2009 federal tax forms The total of all amounts received tax free under the annuity from the annuity starting date through the first day of the first period for which you received an annuity payment in the current tax year. 2009 federal tax forms Exclusion Limits Your annuity starting date determines the total amount of annuity income that you can exclude from income over the years. 2009 federal tax forms Exclusion limited to net cost. 2009 federal tax forms   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a return of your cost cannot exceed your net cost (figured without any reduction for a refund feature). 2009 federal tax forms This is the unrecovered investment in the contract as of the annuity starting date. 2009 federal tax forms   If your annuity starting date is after July 1, 1986, any unrecovered net cost at your (or last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. 2009 federal tax forms This deduction is not subject to the 2%-of-adjusted-gross-income limit. 2009 federal tax forms Example 1. 2009 federal tax forms Your annuity starting date is after 1986. 2009 federal tax forms Your total cost is $12,500, and your net cost is $10,000, taking into account certain adjustments. 2009 federal tax forms There is no refund feature. 2009 federal tax forms Your monthly annuity payment is $833. 2009 federal tax forms 33. 2009 federal tax forms Your exclusion ratio is 12% and you exclude $100 a month. 2009 federal tax forms Your exclusion ends after 100 months, when you have excluded your net cost of $10,000. 2009 federal tax forms Thereafter, your annuity payments are fully taxable. 2009 federal tax forms Example 2. 2009 federal tax forms The facts are the same as in Example 1, except that there is a refund feature, and you die after 5 years with no surviving annuitant. 2009 federal tax forms The adjustment for the refund feature is $1,000, so the investment in the contract is $9,000. 2009 federal tax forms The exclusion ratio is 10. 2009 federal tax forms 8%, and your monthly exclusion is $90. 2009 federal tax forms After 5 years (60 months), you have recovered tax free only $5,400 ($90 x 60). 2009 federal tax forms An itemized deduction for the unrecovered net cost of $4,600 ($10,000 net cost minus $5,400) may be taken on your final income tax return. 2009 federal tax forms Your unrecovered investment is determined without regard to the refund feature adjustment, discussed earlier, under Adjustments. 2009 federal tax forms Exclusion not limited to net cost. 2009 federal tax forms   If your annuity starting date was before 1987, you could continue to take your monthly exclusion for as long as you receive your annuity. 2009 federal tax forms If you choose a joint and survivor annuity, your survivor continues to take the survivor's exclusion figured as of the annuity starting date. 2009 federal tax forms The total exclusion may be more than your investment in the contract. 2009 federal tax forms How To Use Actuarial Tables In figuring, under the General Rule, the taxable part of your annuity payments that you are to get for the rest of your life (rather than for a fixed number of years), you must use one or more of the actuarial tables in this publication. 2009 federal tax forms Unisex Annuity Tables Effective July 1, 1986, the Internal Revenue Service adopted new annuity Tables V through VIII, in which your sex is not considered when determining the applicable factor. 2009 federal tax forms These tables correspond to the old Tables I through IV. 2009 federal tax forms In general, Tables V through VIII must be used if you made contributions to the retirement plan after June 30, 1986. 2009 federal tax forms If you made no contributions to the plan after June 30, 1986, generally you must use only Tables I through IV. 2009 federal tax forms However, if you received an annuity payment after June 30, 1986, you may elect to use Tables V through VIII (see Annuity received after June 30, 1986, later). 2009 federal tax forms Special Elections Although you generally must use Tables V through VIII if you made contributions to the retirement plan after June 30, 1986, and Tables I through IV if you made no contributions after June 30, 1986, you can make the following special elections to select which tables to use. 2009 federal tax forms Contributions made both before July 1986 and after June 1986. 2009 federal tax forms   If you made contributions to the retirement plan both before July 1986 and after June 1986, you may elect to use Tables I through IV for the pre-July 1986 cost of the contract, and Tables V through VIII for the post-June 1986 cost. 2009 federal tax forms (See the examples below. 2009 federal tax forms )    Making the election. 2009 federal tax forms Attach this statement to your income tax return for the first year in which you receive an annuity:    “I elect to apply the provisions of paragraph (d) of section 1. 2009 federal tax forms 72–6 of the Income Tax Regulations. 2009 federal tax forms ”   The statement must also include your name, address, social security number, and the amount of the pre-July 1986 investment in the contract. 2009 federal tax forms   If your investment in the contract includes post-June 1986 contributions to the plan, and you do not make the election to use Tables I through IV and Tables V through VIII, then you can only use Tables V through VIII in figuring the taxable part of your annuity. 2009 federal tax forms You must also use Tables V through VIII if you are unable or do not wish to determine the portions of your contributions which were made before July 1, 1986, and after June 30, 1986. 2009 federal tax forms    Advantages of election. 2009 federal tax forms In general, a lesser amount of each annual annuity payment is taxable if you separately figure your exclusion ratio for pre-July 1986 and post-June 1986 contributions. 2009 federal tax forms    If you intend to make this election, save your records that substantiate your pre-July 1986 and post-June 1986 contributions. 2009 federal tax forms If the death benefit exclusion applies (see discussion, earlier), you do not have to apportion it between the pre-July 1986 and the post-June 1986 investment in the contract. 2009 federal tax forms   The following examples illustrate the separate computations required if you elect to use Tables I through IV for your pre-July 1986 investment in the contract and Tables V through VIII for your post-June 1986 investment in the contract. 2009 federal tax forms Example 1. 2009 federal tax forms Bill, who is single, contributed $42,000 to the retirement plan and will receive an annual annuity of $24,000 for life. 2009 federal tax forms Payment of the $42,000 contribution is guaranteed under a refund feature. 2009 federal tax forms Bill is 55 years old as of the annuity starting date. 2009 federal tax forms For figuring the taxable part of Bill's annuity, he chose to make separate computations for his pre-July 1986 investment in the contract of $41,300, and for his post-June 1986 investment in the contract of $700. 2009 federal tax forms       Pre- July 1986   Post- June 1986 A. 2009 federal tax forms Adjustment for refund feature         1) Net cost $41,300   $700   2) Annual annuity—$24,000  ($41,300/$42,000 × $24,000) $23,600       ($700/$42,000 × $24,000)     $400   3) Guarantee under contract $41,300   $700   4) No. 2009 federal tax forms of years payments  guaranteed (rounded), A(3) ÷ A(2) 2   2   5) Applicable percentage from  Tables III and VII 1%   0%   6) Adjustment for value of refund  feature, A(5) × smaller of A(1)  or A(3) $413   $0 B. 2009 federal tax forms Investment in the contract         1) Net cost $41,300   $700   2) Minus: Amount in A(6) 413   0   3) Investment in the contract $40,887   $700 C. 2009 federal tax forms Expected return         1) Annual annuity receivable $24,000   $24,000   2) Multiples from Tables I and V 21. 2009 federal tax forms 7   28. 2009 federal tax forms 6   3) Expected return, C(1) × C(2) $520,800   $686,400 D. 2009 federal tax forms Tax-free part of annuity         1) Exclusion ratio as decimal,  B(3) ÷ C(3) . 2009 federal tax forms 079   . 2009 federal tax forms 001   2) Tax-free part, C(1) × D(1) $1,896   $24 The tax-free part of Bill's total annuity is $1,920 ($1,896 plus $24). 2009 federal tax forms The taxable part of his annuity is $22,080 ($24,000 minus $1,920). 2009 federal tax forms If the annuity starting date is after 1986, the exclusion over the years cannot exceed the net cost (figured without any reduction for a refund feature). 2009 federal tax forms Example 2. 2009 federal tax forms Al is age 62 at his nearest birthday to the annuity starting date. 2009 federal tax forms Al's wife is age 60 at her nearest birthday to the annuity starting date. 2009 federal tax forms The joint and survivor annuity pays $1,000 per month to Al for life, and $500 per month to Al's surviving wife after his death. 2009 federal tax forms The pre-July 1986 investment in the contract is $53,100 and the post-June 1986 investment in the contract is $7,000. 2009 federal tax forms Al makes the election described in Example 1 . 2009 federal tax forms For purposes of this example, assume the refund feature adjustment is zero. 2009 federal tax forms If an adjustment is required, IRS will figure the amount. 2009 federal tax forms See Requesting a Ruling on Taxation of Annuity near the end of this publication. 2009 federal tax forms       Pre-  July 1986   Post-  June 1986 A. 2009 federal tax forms Adjustment for refund feature         1) Net cost $53,100   $7,000   2) Annual annuity—$12,000  ($53,100/$60,100 × $12,000) $10,602       ($7,000/$60,100 × $12,000)     $1,398   3) Guaranteed under the contract $53,100   $7,000   4) Number of years guaranteed,  rounded, A(3) ÷ A(2) 5   5   5) Applicable percentages 0%   0%   6) Refund feature adjustment, A(5) × smaller of A(1) or A(3) 0   0 B. 2009 federal tax forms Investment in the contract         1) Net cost $53,100   $7,000   2) Refund feature adjustment 0   0   3) Investment in the contract adjusted for refund feature $53,100   $7,000 C. 2009 federal tax forms Expected return         1) Multiple for both annuitants from Tables II and VI 25. 2009 federal tax forms 4   28. 2009 federal tax forms 8   2) Multiple for first annuitant from Tables I and V 16. 2009 federal tax forms 9   22. 2009 federal tax forms 5   3) Multiple applicable to surviving annuitant, subtract C(2) from C(1) 8. 2009 federal tax forms 5   6. 2009 federal tax forms 3   4) Annual annuity to surviving annuitant $6,000   $6,000   5) Portion of expected return for surviving annuitant, C(4) × C(3) $51,000   $37,800   6) Annual annuity to first annuitant $12,000   $12,000   7) Plus: Portion of expected return for first annuitant, C(6) × C(2) $202,800   $270,000   8) Expected return for both annuitants, C(5) + C(7) $253,800   $307,800 D. 2009 federal tax forms Tax-free part of annuity         1) Exclusion ratio as a decimal, B(3) ÷ C(8) . 2009 federal tax forms 209   . 2009 federal tax forms 023   2) Retiree's tax-free part of annuity, C(6) × D(1) $2,508   $276   3) Survivor's tax-free part of annuity, C(4) × D(1) $1,254   $138 The tax-free part of Al's total annuity is $2,784 ($2,508 + $276). 2009 federal tax forms The taxable part of his annuity is $9,216 ($12,000 − $2,784). 2009 federal tax forms The exclusion over the years cannot exceed the net cost of the contract (figured without any reduction for a refund feature) if the annuity starting date is after 1986. 2009 federal tax forms After Al's death, his widow will apply the same exclusion percentages (20. 2009 federal tax forms 9% and 2. 2009 federal tax forms 3%) to her annual annuity of $6,000 to figure the tax-free part of her annuity. 2009 federal tax forms Annuity received after June 30, 1986. 2009 federal tax forms   If you receive an annuity payment after June 30, 1986, (regardless of your annuity starting date), you may elect to treat the entire cost of the contract as post-June 1986 cost (even if you made no post-June 1986 contributions to the plan) and use Tables V through VIII. 2009 federal tax forms Once made, you cannot revoke the election, which will apply to all payments during the year and in any later year. 2009 federal tax forms    Make the election by attaching the following statement to your income tax return. 2009 federal tax forms    “I elect, under section 1. 2009 federal tax forms 72–9 of the Income Tax Regulations, to treat my entire cost of the contract as a post-June 1986 cost of the plan. 2009 federal tax forms ”   The statement must also include your name, address, and social security number. 2009 federal tax forms   You should also indicate you are making this election if you are unable or do not wish to determine the parts of your contributions which were made before July 1, 1986, and after June 30, 1986. 2009 federal tax forms Disqualifying form of payment or settlement. 2009 federal tax forms   If your annuity starting date is after June 30, 1986, and the contract provides for a disqualifying form of payment or settlement, such as an option to receive a lump sum in full discharge of the obligation under the contract, the entire investment in the contract is treated as post-June 1986 investment in the contract. 2009 federal tax forms See regulations section 1. 2009 federal tax forms 72–6(d)(3) for additional examples of disqualifying forms of payment or settlement. 2009 federal tax forms You can find the Income Tax Regulations in many libraries and at Internal Revenue Service Offices. 2009 federal tax forms Worksheets for Determining Taxable Annuity Worksheets I and II. 2009 federal tax forms   Worksheets I and II follow for determining your taxable annuity under Regulations Section 1. 2009 federal tax forms 72–6(d)(6) Election. 2009 federal tax forms Worksheet I For Determining Taxable Annuity Under Regulations Section 1. 2009 federal tax forms 72-6(d)(6) Election For Single Annuitant With No Survivor Annuity               Pre-July 1986   Post-June 1986 A. 2009 federal tax forms   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 2009 federal tax forms )             2)   Annual annuity allocation:                   Portion of net cost in A(1) x annual annuity                   Net cost             3)   Guaranteed under the contract             4)   Number of years guaranteed, rounded to whole years:                   A(3) divided by A(2)             5)   Applicable percentages* from Tables III and VII                   *If your annuity meets the three conditions listed in Zero value of refund feature in Investment in the Contract, earlier, both percentages are 0. 2009 federal tax forms If not, the IRS will calculate the refund feature percentage. 2009 federal tax forms             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 2009 federal tax forms   Investment in the Contract             1)   Net cost:                   A(1)             2)   Refund feature adjustment:                   A(6)             3)   Investment in the contract adjusted for refund feature:                   B(1) minus B(2)                             C. 2009 federal tax forms   Expected Return             1)   Annual Annuity:                   12 times monthly annuity**             2)   Expected return multiples from Tables I and V             3)     Expected return:                   C(1) times C(2)                             D. 2009 federal tax forms   Tax-Free Part of Annuity             1)     Exclusion ratio, as a decimal rounded to 3 places:                   B(3) divided by C(3)             2)     Tax-free part of annuity:                   C(1) times D(1)             **If the annuity is not paid monthly, figure the amount to enter by using the total number of periodic payments for the year times the amount of the periodic payment. 2009 federal tax forms     Worksheet II For Determining Taxable Annuity Under Regulations Section 1. 2009 federal tax forms 72-6(d)(6) Election For Joint and Survivor Annuity               Pre-July 1986   Post-June 1986 A. 2009 federal tax forms   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 2009 federal tax forms )             2)   Annual annuity allocation:                   Portion of net cost in A(1) x annual annuity                   Net cost             3)   Guaranteed under the contract             4)     Number of years guaranteed, rounded to whole years:                   A(3) divided by A(2)             5)   Applicable percentages*                   *If your annuity meets the three conditions listed in Zero value of refund feature in Investment in the Contract, earlier, both percentages are 0. 2009 federal tax forms If not, the IRS will calculate the refund feature percentage. 2009 federal tax forms             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 2009 federal tax forms   Investment in the Contract             1)   Net cost:                   A(1)             2)   Refund feature adjustment:                   A(6)             3)   Investment in the contract adjusted for refund future:                   B(1) minus B(2)                             C. 2009 federal tax forms   Expected Return             1)   Multiples for both annuitants, Tables II and VI             2)   Multiple for retiree. 2009 federal tax forms Tables I and VI             3)   Multiple for survivor:                   C(1) minus C(2)             4)   Annual annuity to survivor:                   12 times potential monthly rate for survivor**             5)   Expected return for survivor:                   C(3) times C(4)             6)   Annual annuity to retiree:                   12 times monthly rate for retiree**             7)   Expected return for retiree:                   C(2) times C(6)             8)   Total expected return:                   C(5) plus C(7)                             D. 2009 federal tax forms   Tax-Free Part of Annuity             1)   Exclusion ratio, as a decimal rounded to 3 places:                   B(3) divided by C(8)             2)   Retiree's tax-free part of annuity:                   C(6) times D(1)             3)   Survivor's tax-free part of annuity, if surviving after death of retiree:                   C(4) times D(1)             **If the annuity is not paid monthly, figure the amount to enter by using the total number of periodic payments for the year times the amount of the periodic payment. 2009 federal tax forms   Actuarial Tables Please click here for the text description of the image. 2009 federal tax forms Actuarial Tables Please click here for the text description of the image. 2009 federal tax forms Actuarial Tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click 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description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Please click here for the text description of the image. 2009 federal tax forms Actuarial tables Requesting a Ruling on Taxation of Annuity If you are a retiree, or the survivor of an employee or retiree, you may ask the Internal Revenue Service to help you determine the taxation of your annuity. 2009 federal tax forms If you make this request, you are asking for a ruling. 2009 federal tax forms User fee. 2009 federal tax forms   Under the law in effect at the time this publication went to print, the IRS must charge a user fee for all ruling requests. 2009 federal tax forms You should call the IRS for the proper fee. 2009 federal tax forms A request solely for the value of the refund feature is not treated as a ruling request and requires no fee. 2009 federal tax forms Send your request to:     Internal Revenue Service  Attention: EP Letter Rulings P. 2009 federal tax forms O. 2009 federal tax forms Box 27063 McPherson Station Washington, DC 20038 The user fee is allowed as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit. 2009 federal tax forms When to make the request. 2009 federal tax forms   Please note that requests sent between February 1 and April 15 may experience some delay. 2009 federal tax forms We process requests in the order received, and we will reply to your request as soon as we can process it. 2009 federal tax forms If you do not receive your ruling by the required filing date, you may use Form 4868, Application for Automatic Extension of Time To File U. 2009 federal tax forms S. 2009 federal tax forms Individual Income Tax Return, to get an extension of time to file. 2009 federal tax forms Information you must furnish. 2009 federal tax forms   You must furnish the information listed below so the IRS can comply with your request. 2009 federal tax forms Failure to furnish the information will result in a delay in processing your request. 2009 federal tax forms Please send only copies of the following documents, as the IRS retains all material sent for its records: A letter explaining the question(s) you wish to have resolved or the information you need from the ruling. 2009 federal tax forms Copies of any documents showing distributions, annuity rates, and annuity options available to you. 2009 federal tax forms A copy of any Form 1099–R you received since your annuity began. 2009 federal tax forms A statement indicating whether you have filed your return for the year for which you are making the request. 2009 federal tax forms If you have requested an extension of time to file that return, please indicate the extension date. 2009 federal tax forms Your daytime phone number. 2009 federal tax forms Your current mailing address. 2009 federal tax forms A power of attorney if someone other than you, an attorney, a certified public accountant, or an enrolled agent is signing this request. 2009 federal tax forms Form 2848, Power of Attorney and Declaration of Representative, may be used for this purpose. 2009 federal tax forms A completed Tax Information Sheet (or facsimile) shown on the next page. 2009 federal tax forms Sign and date the Disclosure and Perjury Statement (or facsimile) at the end of the tax information sheet. 2009 federal tax forms This statement must be signed by the retiree or the survivor annuitant. 2009 federal tax forms It cannot be signed by a representative. 2009 federal tax forms Tax Information Sheet Please click here for the text description of the image. 2009 federal tax forms Tax Information Sheet Please click here for the text description of the image. 2009 federal tax forms Tax Information Sheet (continued) How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 2009 federal tax forms Free help with your tax return. 2009 federal tax forms   You can get free help preparing your return nationwide from IRS-certified volunteers. 2009 federal tax forms The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 2009 federal tax forms The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2009 federal tax forms Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 2009 federal tax forms In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 2009 federal tax forms To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 2009 federal tax forms gov, download the IRS2Go app, or call 1-800-906-9887. 2009 federal tax forms   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2009 federal tax forms To find the nearest AARP Tax-Aide site, visit AARP's website at www. 2009 federal tax forms aarp. 2009 federal tax forms org/money/taxaide or call 1-888-227-7669. 2009 federal tax forms For more information on these programs, go to IRS. 2009 federal tax forms gov and enter “VITA” in the search box. 2009 federal tax forms Internet. 2009 federal tax forms    IRS. 2009 federal tax forms gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 2009 federal tax forms Download the free IRS2Go app from the iTunes app store or from Google Play. 2009 federal tax forms Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 2009 federal tax forms Check the status of your 2013 refund with the Where's My Refund? application on IRS. 2009 federal tax forms gov or download the IRS2Go app and select the Refund Status option. 2009 federal tax forms The IRS issues more than 9 out of 10 refunds in less than 21 days. 2009 federal tax forms Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 2009 federal tax forms You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2009 federal tax forms The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2009 federal tax forms Use the Interactive Tax Assistant (ITA) to research your tax questions. 2009 federal tax forms No need to wait on the phone or stand in line. 2009 federal tax forms The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 2009 federal tax forms When you reach the response screen, you can print the entire interview and the final response for your records. 2009 federal tax forms New subject areas are added on a regular basis. 2009 federal tax forms  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 2009 federal tax forms gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 2009 federal tax forms You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 2009 federal tax forms The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 2009 federal tax forms When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 2009 federal tax forms Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 2009 federal tax forms You can also ask the IRS to mail a return or an account transcript to you. 2009 federal tax forms Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 2009 federal tax forms gov or by calling 1-800-908-9946. 2009 federal tax forms Tax return and tax account transcripts are generally available for the current year and the past three years. 2009 federal tax forms Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 2009 federal tax forms Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 2009 federal tax forms If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 2009 federal tax forms Check the status of your amended return using Where's My Amended Return? Go to IRS. 2009 federal tax forms gov and enter Where's My Amended Return? in the search box. 2009 federal tax forms You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2009 federal tax forms It can take up to 3 weeks from the date you mailed it to show up in our system. 2009 federal tax forms Make a payment using one of several safe and convenient electronic payment options available on IRS. 2009 federal tax forms gov. 2009 federal tax forms Select the Payment tab on the front page of IRS. 2009 federal tax forms gov for more information. 2009 federal tax forms Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 2009 federal tax forms Figure your income tax withholding with the IRS Withholding Calculator on IRS. 2009 federal tax forms gov. 2009 federal tax forms Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 2009 federal tax forms Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 2009 federal tax forms gov. 2009 federal tax forms Request an Electronic Filing PIN by going to IRS. 2009 federal tax forms gov and entering Electronic Filing PIN in the search box. 2009 federal tax forms Download forms, instructions and publications, including accessible versions for people with disabilities. 2009 federal tax forms Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 2009 federal tax forms gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 2009 federal tax forms An employee can answer questions about your tax account or help you set up a payment plan. 2009 federal tax forms Before you visit, check the Office Locator on IRS. 2009 federal tax forms gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 2009 federal tax forms If you have a special need, such as a disability, you can request an appointment. 2009 federal tax forms Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 2009 federal tax forms Apply for an Employer Identification Number (EIN). 2009 federal tax forms Go to IRS. 2009 federal tax forms gov and enter Apply for an EIN in the search box. 2009 federal tax forms Read the Internal Revenue Code, regulations, or other official guidance. 2009 federal tax forms Read Internal Revenue Bulletins. 2009 federal tax forms Sign up to receive local and national tax news and more by email. 2009 federal tax forms Just click on “subscriptions” above the search box on IRS. 2009 federal tax forms gov and choose from a variety of options. 2009 federal tax forms    Phone. 2009 federal tax forms You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 2009 federal tax forms Download the free IRS2Go app from the iTunes app store or from Google Play. 2009 federal tax forms Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 2009 federal tax forms gov, or download the IRS2Go app. 2009 federal tax forms Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 2009 federal tax forms The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2009 federal tax forms Mos