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2010 1040 Tax Form

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2010 1040 Tax Form

2010 1040 tax form Publication 502 - Main Content Table of Contents What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. 2010 1040 tax form How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Spouse Dependent Decedent What Medical Expenses Are Includible?Abortion Acupuncture Alcoholism Ambulance Annual Physical Examination Artificial Limb Artificial Teeth Bandages Birth Control Pills Body Scan Braille Books and Magazines Breast Pumps and Supplies Breast Reconstruction Surgery Capital Expenses Car Chiropractor Christian Science Practitioner Contact Lenses Crutches Dental Treatment Diagnostic Devices Disabled Dependent Care Expenses Drug Addiction Drugs Eye Exam Eyeglasses Eye Surgery Fertility Enhancement Founder's Fee Guide Dog or Other Service Animal Health Institute Health Maintenance Organization (HMO) Hearing Aids Home Care Home Improvements Hospital Services Insurance Premiums Intellectually and Developmentally Disabled, Special Home for Laboratory Fees Lactation Expenses Lead-Based Paint Removal Learning Disability Legal Fees Lifetime Care—Advance Payments Lodging Long-Term Care Meals Medical Conferences Medical Information Plan Medicines Nursing Home Nursing Services Operations Optometrist Organ Donors Osteopath Oxygen Physical Examination Pregnancy Test Kit Prosthesis Psychiatric Care Psychoanalysis Psychologist Special Education Sterilization Stop-Smoking Programs Surgery Telephone Television Therapy Transplants Transportation Trips Tuition Vasectomy Vision Correction Surgery Weight-Loss Program Wheelchair Wig X-ray What Expenses Are Not Includible?Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Controlled Substances Cosmetic Surgery Dancing Lessons Diaper Service Electrolysis or Hair Removal Flexible Spending Account Funeral Expenses Future Medical Care Hair Transplant Health Club Dues Health Coverage Tax Credit Health Savings Accounts Household Help Illegal Operations and Treatments Insurance Premiums Maternity Clothes Medical Savings Account (MSA) Medicines and Drugs From Other Countries Nonprescription Drugs and Medicines Nutritional Supplements Personal Use Items Swimming Lessons Teeth Whitening Veterinary Fees Weight-Loss Program How Do You Treat Reimbursements?Insurance Reimbursement How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Sale of Medical Equipment or Property Damages for Personal Injuries Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons COBRA Premium Assistance Health Coverage Tax CreditWho Can Take This Credit? Qualifying Family Member Qualified Health Insurance Nonqualified Health Insurance Eligible Coverage Month How To Take the Credit How To Get Tax HelpLow Income Taxpayer Clinics What Are Medical Expenses? Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. 2010 1040 tax form These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. 2010 1040 tax form They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. 2010 1040 tax form Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. 2010 1040 tax form They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. 2010 1040 tax form Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. 2010 1040 tax form Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. 2010 1040 tax form What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. 2010 1040 tax form (But see Decedent under Whose Medical Expenses Can You Include, for an exception. 2010 1040 tax form ) If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. 2010 1040 tax form If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. 2010 1040 tax form If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. 2010 1040 tax form If you did not claim a medical or dental expense that would have been deductible in an earlier year, you can file Form 1040X, Amended U. 2010 1040 tax form S. 2010 1040 tax form Individual Income Tax Return, for the year in which you overlooked the expense. 2010 1040 tax form Do not claim the expense on this year's return. 2010 1040 tax form Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. 2010 1040 tax form You cannot include medical expenses that were paid by insurance companies or other sources. 2010 1040 tax form This is true whether the payments were made directly to you, to the patient, or to the provider of the medical services. 2010 1040 tax form Separate returns. 2010 1040 tax form   If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. 2010 1040 tax form Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise. 2010 1040 tax form Community property states. 2010 1040 tax form   If you and your spouse live in a community property state and file separate returns or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. 2010 1040 tax form Generally, each of you should include half the expenses. 2010 1040 tax form If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. 2010 1040 tax form If you live in a community property state and are not filing a joint return, see Publication 555, Community Property. 2010 1040 tax form How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI. 2010 1040 tax form But if either you or your spouse was born before January 2, 1949, you can deduct the amount of your medical and dental expenses that is more than 7. 2010 1040 tax form 5% of your AGI. 2010 1040 tax form Example. 2010 1040 tax form You are unmarried and were born after January 2, 1949, and your AGI is $40,000, 10% of which is $4,000. 2010 1040 tax form You paid medical expenses of $2,500. 2010 1040 tax form You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. 2010 1040 tax form Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. 2010 1040 tax form There are different rules for decedents and for individuals who are the subject of multiple support agreements. 2010 1040 tax form See Support claimed under a multiple support agreement , later under Qualifying Relative. 2010 1040 tax form Spouse You can include medical expenses you paid for your spouse. 2010 1040 tax form To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses. 2010 1040 tax form Example 1. 2010 1040 tax form Mary received medical treatment before she married Bill. 2010 1040 tax form Bill paid for the treatment after they married. 2010 1040 tax form Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. 2010 1040 tax form If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. 2010 1040 tax form Mary would include the amounts she paid during the year in her separate return. 2010 1040 tax form If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. 2010 1040 tax form Example 2. 2010 1040 tax form This year, John paid medical expenses for his wife Louise, who died last year. 2010 1040 tax form John married Belle this year and they file a joint return. 2010 1040 tax form Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. 2010 1040 tax form Dependent You can include medical expenses you paid for your dependent. 2010 1040 tax form For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. 2010 1040 tax form A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. 2010 1040 tax form The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. 2010 1040 tax form S. 2010 1040 tax form citizen or national or a resident of the United States, Canada, or Mexico. 2010 1040 tax form If your qualifying child was adopted, see Exception for adopted child , later. 2010 1040 tax form You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 2010 1040 tax form Exception for adopted child. 2010 1040 tax form   If you are a U. 2010 1040 tax form S. 2010 1040 tax form citizen or national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. 2010 1040 tax form S. 2010 1040 tax form citizen or national, or a resident of the United States, Canada, or Mexico. 2010 1040 tax form Qualifying Child A qualifying child is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, other than to claim a refund. 2010 1040 tax form Adopted child. 2010 1040 tax form   A legally adopted child is treated as your own child. 2010 1040 tax form This child includes a child lawfully placed with you for legal adoption. 2010 1040 tax form   You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid. 2010 1040 tax form   If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. 2010 1040 tax form   But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses. 2010 1040 tax form    You may be able to take a credit for other expenses related to an adoption. 2010 1040 tax form See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. 2010 1040 tax form Child of divorced or separated parents. 2010 1040 tax form   For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. 2010 1040 tax form Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child's dependency exemption, if: The child is in the custody of one or both parents for more than half the year, The child receives over half of his or her support during the year from his or her parents, and The child's parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Live apart at all times during the last 6 months of the year. 2010 1040 tax form This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). 2010 1040 tax form Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, or foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of any of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child, earlier) of any taxpayer for 2013, and For whom you provided over half of the support in 2013. 2010 1040 tax form But see Child of divorced or separated parents , earlier, Support claimed under a multiple support agreement, next, and Kidnapped child under Qualifying Relative in Publication 501. 2010 1040 tax form Support claimed under a multiple support agreement. 2010 1040 tax form   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. 2010 1040 tax form A multiple support agreement is used when two or more people provide more than half of a person's support, but no one alone provides more than half. 2010 1040 tax form   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. 2010 1040 tax form However, you can include the entire unreimbursed amount you paid for medical expenses. 2010 1040 tax form Example. 2010 1040 tax form You and your three brothers each provide one-fourth of your mother's total support. 2010 1040 tax form Under a multiple support agreement, you treat your mother as your dependent. 2010 1040 tax form You paid all of her medical expenses. 2010 1040 tax form Your brothers repaid you for three-fourths of these expenses. 2010 1040 tax form In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. 2010 1040 tax form Your brothers cannot include any part of the expenses. 2010 1040 tax form However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses. 2010 1040 tax form Decedent Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. 2010 1040 tax form This includes expenses for the decedent's spouse and dependents as well as for the decedent. 2010 1040 tax form The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. 2010 1040 tax form The expenses must be paid within the 1-year period beginning with the day after the date of death. 2010 1040 tax form If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return. 2010 1040 tax form Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. 2010 1040 tax form What if the decedent's return had been filed and the medical expenses were not included?   Form 1040X can be filed for the year or years the expenses are treated as paid, unless the period for filing an amended return for that year has passed. 2010 1040 tax form Generally, an amended return must be filed within 3 years of the date the original return was filed, or within 2 years from the time the tax was paid, whichever date is later. 2010 1040 tax form Example. 2010 1040 tax form John properly filed his 2012 income tax return. 2010 1040 tax form He died in 2013 with unpaid medical expenses of $1,500 from 2012 and $1,800 in 2013. 2010 1040 tax form If the expenses are paid within the 1-year period, his survivor or personal representative can file an amended return for 2012 claiming a deduction based on the $1,500 medical expenses. 2010 1040 tax form The $1,800 of medical expenses from 2013 can be included on the decedent's final return for 2013. 2010 1040 tax form What if you pay medical expenses of a deceased spouse or dependent?   If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Form 1040 in the year paid, whether they are paid before or after the decedent's death. 2010 1040 tax form The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses. 2010 1040 tax form What Medical Expenses Are Includible? Following is a list of items that you can include in figuring your medical expense deduction. 2010 1040 tax form The items are listed in alphabetical order. 2010 1040 tax form This list does not include all possible medical expenses. 2010 1040 tax form To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. 2010 1040 tax form Abortion You can include in medical expenses the amount you pay for a legal abortion. 2010 1040 tax form Acupuncture You can include in medical expenses the amount you pay for acupuncture. 2010 1040 tax form Alcoholism You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for alcohol addiction. 2010 1040 tax form This includes meals and lodging provided by the center during treatment. 2010 1040 tax form You can also include in medical expenses amounts you pay for transportation to and from Alcoholics Anonymous meetings in your community if the attendance is pursuant to medical advice that membership in Alcoholics Anonymous is necessary for the treatment of a disease involving the excessive use of alcoholic liquors. 2010 1040 tax form Ambulance You can include in medical expenses amounts you pay for ambulance service. 2010 1040 tax form Annual Physical Examination See Physical Examination , later. 2010 1040 tax form Artificial Limb You can include in medical expenses the amount you pay for an artificial limb. 2010 1040 tax form Artificial Teeth You can include in medical expenses the amount you pay for artificial teeth. 2010 1040 tax form Bandages You can include in medical expenses the cost of medical supplies such as bandages. 2010 1040 tax form Birth Control Pills You can include in medical expenses the amount you pay for birth control pills prescribed by a doctor. 2010 1040 tax form Body Scan You can include in medical expenses the cost of an electronic body scan. 2010 1040 tax form Braille Books and Magazines You can include in medical expenses the part of the cost of Braille books and magazines for use by a visually impaired person that is more than the cost of regular printed editions. 2010 1040 tax form Breast Pumps and Supplies You can include in medical expenses the cost of breast pumps and supplies that assist lactation. 2010 1040 tax form Breast Reconstruction Surgery You can include in medical expenses the amounts you pay for breast reconstruction surgery, as well as breast prosthesis, following a mastectomy for cancer. 2010 1040 tax form See Cosmetic Surgery , later. 2010 1040 tax form Capital Expenses You can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements, if their main purpose is medical care for you, your spouse, or your dependent. 2010 1040 tax form The cost of permanent improvements that increase the value of your property may be partly included as a medical expense. 2010 1040 tax form The cost of the improvement is reduced by the increase in the value of your property. 2010 1040 tax form The difference is a medical expense. 2010 1040 tax form If the value of your property is not increased by the improvement, the entire cost is included as a medical expense. 2010 1040 tax form Certain improvements made to accommodate a home to your disabled condition, or that of your spouse or your dependents who live with you, do not usually increase the value of the home and the cost can be included in full as medical expenses. 2010 1040 tax form These improvements include, but are not limited to, the following items. 2010 1040 tax form Constructing entrance or exit ramps for your home. 2010 1040 tax form Widening doorways at entrances or exits to your home. 2010 1040 tax form Widening or otherwise modifying hallways and interior doorways. 2010 1040 tax form Installing railings, support bars, or other modifications to bathrooms. 2010 1040 tax form Lowering or modifying kitchen cabinets and equipment. 2010 1040 tax form Moving or modifying electrical outlets and fixtures. 2010 1040 tax form Installing porch lifts and other forms of lifts (but elevators generally add value to the house). 2010 1040 tax form Modifying fire alarms, smoke detectors, and other warning systems. 2010 1040 tax form Modifying stairways. 2010 1040 tax form Adding handrails or grab bars anywhere (whether or not in bathrooms). 2010 1040 tax form Modifying hardware on doors. 2010 1040 tax form Modifying areas in front of entrance and exit doorways. 2010 1040 tax form Grading the ground to provide access to the residence. 2010 1040 tax form Only reasonable costs to accommodate a home to a disabled condition are considered medical care. 2010 1040 tax form Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses. 2010 1040 tax form Capital expense worksheet. 2010 1040 tax form   Use Worksheet A to figure the amount of your capital expense to include in your medical expenses. 2010 1040 tax form Worksheet A. 2010 1040 tax form Capital Expense Worksheet Instructions: Use this worksheet to figure the amount, if any, of your medical expenses due to a home improvement. 2010 1040 tax form 1. 2010 1040 tax form Enter the amount you paid for the home improvement 1. 2010 1040 tax form   2. 2010 1040 tax form Enter the value of your home immediately after the improvement 2. 2010 1040 tax form       3. 2010 1040 tax form Enter the value of your home immediately before the improvement 3. 2010 1040 tax form       4. 2010 1040 tax form Subtract line 3 from line 2. 2010 1040 tax form This is the increase in the value of your home due to the improvement 4. 2010 1040 tax form     • If line 4 is more than or equal to line 1, you have no medical expenses due to the home improvement; stop here. 2010 1040 tax form       • If line 4 is less than line 1, go to line 5. 2010 1040 tax form     5. 2010 1040 tax form Subtract line 4 from line 1. 2010 1040 tax form These are your medical expenses due to the home improvement 5. 2010 1040 tax form   Operation and upkeep. 2010 1040 tax form   Amounts you pay for operation and upkeep of a capital asset qualify as medical expenses, as long as the main reason for them is medical care. 2010 1040 tax form This rule applies even if none or only part of the original cost of the capital asset qualified as a medical care expense. 2010 1040 tax form Improvements to property rented by a person with a disability. 2010 1040 tax form   Amounts paid to buy and install special plumbing fixtures for a person with a disability, mainly for medical reasons, in a rented house are medical expenses. 2010 1040 tax form Example. 2010 1040 tax form John has arthritis and a heart condition. 2010 1040 tax form He cannot climb stairs or get into a bathtub. 2010 1040 tax form On his doctor's advice, he installs a bathroom with a shower stall on the first floor of his two-story rented house. 2010 1040 tax form The landlord did not pay any of the cost of buying and installing the special plumbing and did not lower the rent. 2010 1040 tax form John can include in medical expenses the entire amount he paid. 2010 1040 tax form Car You can include in medical expenses the cost of special hand controls and other special equipment installed in a car for the use of a person with a disability. 2010 1040 tax form Special design. 2010 1040 tax form   You can include in medical expenses the difference between the cost of a regular car and a car specially designed to hold a wheelchair. 2010 1040 tax form Cost of operation. 2010 1040 tax form   The includible costs of using a car for medical reasons are explained under Transportation , later. 2010 1040 tax form Chiropractor You can include in medical expenses fees you pay to a chiropractor for medical care. 2010 1040 tax form Christian Science Practitioner You can include in medical expenses fees you pay to Christian Science practitioners for medical care. 2010 1040 tax form Contact Lenses You can include in medical expenses amounts you pay for contact lenses needed for medical reasons. 2010 1040 tax form You can also include the cost of equipment and materials required for using contact lenses, such as saline solution and enzyme cleaner. 2010 1040 tax form See Eyeglasses and Eye Surgery , later. 2010 1040 tax form Crutches You can include in medical expenses the amount you pay to buy or rent crutches. 2010 1040 tax form Dental Treatment You can include in medical expenses the amounts you pay for the prevention and alleviation of dental disease. 2010 1040 tax form Preventive treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, the application of sealants, and fluoride treatments to prevent tooth decay. 2010 1040 tax form Treatment to alleviate dental disease include services of a dentist for procedures such as X-rays, fillings, braces, extractions, dentures, and other dental ailments. 2010 1040 tax form But see Teeth Whitening under What Expenses Are Not Includible, later. 2010 1040 tax form Diagnostic Devices You can include in medical expenses the cost of devices used in diagnosing and treating illness and disease. 2010 1040 tax form Example. 2010 1040 tax form You have diabetes and use a blood sugar test kit to monitor your blood sugar level. 2010 1040 tax form You can include the cost of the blood sugar test kit in your medical expenses. 2010 1040 tax form Disabled Dependent Care Expenses Some disabled dependent care expenses may qualify as either: Medical expenses, or Work-related expenses for purposes of taking a credit for dependent care. 2010 1040 tax form (See Publication 503, Child and Dependent Care Expenses. 2010 1040 tax form ) You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction. 2010 1040 tax form Drug Addiction You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for drug addiction. 2010 1040 tax form This includes meals and lodging at the center during treatment. 2010 1040 tax form Drugs See Medicines , later. 2010 1040 tax form Eye Exam You can include in medical expenses the amount you pay for eye examinations. 2010 1040 tax form Eyeglasses You can include in medical expenses amounts you pay for eyeglasses and contact lenses needed for medical reasons. 2010 1040 tax form See Contact Lenses , earlier, for more information. 2010 1040 tax form Eye Surgery You can include in medical expenses the amount you pay for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy. 2010 1040 tax form Fertility Enhancement You can include in medical expenses the cost of the following procedures to overcome an inability to have children. 2010 1040 tax form Procedures such as in vitro fertilization (including temporary storage of eggs or sperm). 2010 1040 tax form Surgery, including an operation to reverse prior surgery that prevented the person operated on from having children. 2010 1040 tax form Founder's Fee See Lifetime Care—Advance Payments , later. 2010 1040 tax form Guide Dog or Other Service Animal You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities. 2010 1040 tax form In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the health and vitality of the service animal so that it may perform its duties. 2010 1040 tax form Health Institute You can include in medical expenses fees you pay for treatment at a health institute only if the treatment is prescribed by a physician and the physician issues a statement that the treatment is necessary to alleviate a physical or mental defect or illness of the individual receiving the treatment. 2010 1040 tax form Health Maintenance Organization (HMO) You can include in medical expenses amounts you pay to entitle you, your spouse, or a dependent to receive medical care from an HMO. 2010 1040 tax form These amounts are treated as medical insurance premiums. 2010 1040 tax form See Insurance Premiums , later. 2010 1040 tax form Hearing Aids You can include in medical expenses the cost of a hearing aid and batteries, repairs, and maintenance needed to operate it. 2010 1040 tax form Home Care See Nursing Services , later. 2010 1040 tax form Home Improvements See Capital Expenses , earlier. 2010 1040 tax form Hospital Services You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. 2010 1040 tax form This includes amounts paid for meals and lodging. 2010 1040 tax form Also see Lodging , later. 2010 1040 tax form Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. 2010 1040 tax form Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). 2010 1040 tax form See Qualified Long-Term Care Insurance Contracts under Long-Term Care, later. 2010 1040 tax form If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. 2010 1040 tax form The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. 2010 1040 tax form Health coverage tax credit. 2010 1040 tax form   If, during 2013, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient, you must complete Form 8885 before completing Schedule A. 2010 1040 tax form When figuring the amount of insurance premiums you can deduct on Schedule A, do not include: Any amounts you included on Form 8885, Any qualified health insurance premiums you paid to “U. 2010 1040 tax form S. 2010 1040 tax form Treasury–HCTC,” or Any health coverage tax credit advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. 2010 1040 tax form Employer-Sponsored Health Insurance Plan Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included on your Form W-2, Wage and Tax Statement. 2010 1040 tax form Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included on your Form W-2. 2010 1040 tax form Example. 2010 1040 tax form You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. 2010 1040 tax form Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. 2010 1040 tax form Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money. 2010 1040 tax form Long-term care services. 2010 1040 tax form   Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. 2010 1040 tax form This amount will be reported as wages on your Form W-2. 2010 1040 tax form Retired public safety officers. 2010 1040 tax form   If you are a retired public safety officer, do not include as medical expenses any health or long-term care insurance premiums that you elected to have paid with tax-free distributions from a retirement plan. 2010 1040 tax form This applies only to distributions that would otherwise be included in income. 2010 1040 tax form Health reimbursement arrangement (HRA). 2010 1040 tax form   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. 2010 1040 tax form This is because an HRA is funded solely by the employer. 2010 1040 tax form Medicare A If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. 2010 1040 tax form The payroll tax paid for Medicare A is not a medical expense. 2010 1040 tax form If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. 2010 1040 tax form In this situation you can include the premiums you paid for Medicare A as a medical expense. 2010 1040 tax form Medicare B Medicare B is a supplemental medical insurance. 2010 1040 tax form Premiums you pay for Medicare B are a medical expense. 2010 1040 tax form Check the information you received from the Social Security Administration to find out your premium. 2010 1040 tax form Medicare D Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. 2010 1040 tax form You can include as a medical expense premiums you pay for Medicare D. 2010 1040 tax form Prepaid Insurance Premiums Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). 2010 1040 tax form Unused Sick Leave Used To Pay Premiums You must include in gross income cash payments you receive at the time of retirement for unused sick leave. 2010 1040 tax form You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer's health plan after you retire. 2010 1040 tax form You can include this cost of continuing participation in the health plan as a medical expense. 2010 1040 tax form If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. 2010 1040 tax form You cannot include this cost of continuing participation in that health plan as a medical expense. 2010 1040 tax form Insurance Premiums You Cannot Include You cannot include premiums you pay for: Life insurance policies, Policies providing payment for loss of earnings, Policies for loss of life, limb, sight, etc. 2010 1040 tax form , Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury, The part of your car insurance that provides medical insurance coverage for all persons injured in or by your car because the part of the premium providing insurance for you, your spouse, and your dependents is not stated separately from the part of the premium providing insurance for medical care for others, or Health or long-term care insurance if you elected to pay these premiums with tax-free distributions from a retirement plan made directly to the insurance provider and these distributions would otherwise have been included in income. 2010 1040 tax form Taxes imposed by any governmental unit, such as Medicare taxes, are not insurance premiums. 2010 1040 tax form Coverage for nondependents. 2010 1040 tax form   Generally, you cannot deduct any additional premium you pay as the result of including on your policy someone who is not your spouse or dependent, even if that person is your child under age 27. 2010 1040 tax form However, you can deduct the additional premium if that person is: Your child whom you do not claim as a dependent because of the rules for children of divorced or separated parents, Any person you could have claimed as a dependent on your return except that person received $3,900 or more of gross income or filed a joint return, or Any person you could have claimed as a dependent except that you, or your spouse if filing jointly, can be claimed as a dependent on someone else's 2013 return. 2010 1040 tax form  Also, if you had family coverage when you added this individual to your policy and your premiums did not increase, you can enter on Schedule A (Form 1040) the full amount of your medical and dental insurance premiums. 2010 1040 tax form Intellectually and Developmentally Disabled, Special Home for You can include in medical expenses the cost of keeping a person who is intellectually and developmentally disabled in a special home, not the home of a relative, on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living. 2010 1040 tax form Laboratory Fees You can include in medical expenses the amounts you pay for laboratory fees that are part of medical care. 2010 1040 tax form Lactation Expenses See Breast Pumps and Supplies , earlier. 2010 1040 tax form Lead-Based Paint Removal You can include in medical expenses the cost of removing lead-based paints from surfaces in your home to prevent a child who has or had lead poisoning from eating the paint. 2010 1040 tax form These surfaces must be in poor repair (peeling or cracking) or within the child's reach. 2010 1040 tax form The cost of repainting the scraped area is not a medical expense. 2010 1040 tax form If, instead of removing the paint, you cover the area with wallboard or paneling, treat these items as capital expenses. 2010 1040 tax form See Capital Expenses , earlier. 2010 1040 tax form Do not include the cost of painting the wallboard as a medical expense. 2010 1040 tax form Learning Disability See Special Education , later. 2010 1040 tax form Legal Fees You can include in medical expenses legal fees you paid that are necessary to authorize treatment for mental illness. 2010 1040 tax form However, you cannot include in medical expenses fees for the management of a guardianship estate, fees for conducting the affairs of the person being treated, or other fees that are not necessary for medical care. 2010 1040 tax form Lifetime Care—Advance Payments You can include in medical expenses a part of a life-care fee or “founder's fee” you pay either monthly or as a lump sum under an agreement with a retirement home. 2010 1040 tax form The part of the payment you include is the amount properly allocable to medical care. 2010 1040 tax form The agreement must require that you pay a specific fee as a condition for the home's promise to provide lifetime care that includes medical care. 2010 1040 tax form You can use a statement from the retirement home to prove the amount properly allocable to medical care. 2010 1040 tax form The statement must be based either on the home's prior experience or on information from a comparable home. 2010 1040 tax form Dependents with disabilities. 2010 1040 tax form   You can include in medical expenses advance payments to a private institution for lifetime care, treatment, and training of your physically or mentally impaired child upon your death or when you become unable to provide care. 2010 1040 tax form The payments must be a condition for the institution's future acceptance of your child and must not be refundable. 2010 1040 tax form Payments for future medical care. 2010 1040 tax form   Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. 2010 1040 tax form This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care of the type described earlier. 2010 1040 tax form Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. 2010 1040 tax form See Nursing Home , later. 2010 1040 tax form You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. 2010 1040 tax form You can include the cost of such lodging while away from home if all of the following requirements are met. 2010 1040 tax form The lodging is primarily for and essential to medical care. 2010 1040 tax form The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. 2010 1040 tax form The lodging is not lavish or extravagant under the circumstances. 2010 1040 tax form There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. 2010 1040 tax form The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. 2010 1040 tax form You can include lodging for a person traveling with the person receiving the medical care. 2010 1040 tax form For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. 2010 1040 tax form Meals are not included. 2010 1040 tax form Do not include the cost of lodging while away from home for medical treatment if that treatment is not received from a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital or if that lodging is not primarily for or essential to the medical care received. 2010 1040 tax form Long-Term Care You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts. 2010 1040 tax form Qualified Long-Term Care Services Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are: Required by a chronically ill individual, and Provided pursuant to a plan of care prescribed by a licensed health care practitioner. 2010 1040 tax form Chronically ill individual. 2010 1040 tax form   An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions. 2010 1040 tax form He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. 2010 1040 tax form Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. 2010 1040 tax form He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. 2010 1040 tax form Maintenance and personal care services. 2010 1040 tax form    Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment). 2010 1040 tax form Qualified Long-Term Care Insurance Contracts A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. 2010 1040 tax form The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses. 2010 1040 tax form The amount of qualified long-term care premiums you can include is limited. 2010 1040 tax form You can include the following as medical expenses on Schedule A (Form 1040). 2010 1040 tax form Qualified long-term care premiums up to the following amounts. 2010 1040 tax form Age 40 or under – $360. 2010 1040 tax form Age 41 to 50 – $680. 2010 1040 tax form Age 51 to 60 – $1,360. 2010 1040 tax form Age 61 to 70 – $3,640. 2010 1040 tax form Age 71 or over – $4,550. 2010 1040 tax form Unreimbursed expenses for qualified long-term care services. 2010 1040 tax form Note. 2010 1040 tax form The limit on premiums is for each person. 2010 1040 tax form Also, if you are an eligible retired public safety officer, you cannot include premiums for long-term care insurance if you elected to pay these premiums with tax-free distributions from a qualified retirement plan made directly to the insurance provider and these distributions would otherwise have been included in your income. 2010 1040 tax form Meals You can include in medical expenses the cost of meals at a hospital or similar institution if a principal reason for being there is to get medical care. 2010 1040 tax form You cannot include in medical expenses the cost of meals that are not part of inpatient care. 2010 1040 tax form Also see Weight-Loss Program and Nutritional Supplements , later. 2010 1040 tax form Medical Conferences You can include in medical expenses amounts paid for admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent. 2010 1040 tax form The costs of the medical conference must be primarily for and necessary to the medical care of you, your spouse, or your dependent. 2010 1040 tax form The majority of the time spent at the conference must be spent attending sessions on medical information. 2010 1040 tax form The cost of meals and lodging while attending the conference is not deductible as a medical expense. 2010 1040 tax form Medical Information Plan You can include in medical expenses amounts paid to a plan that keeps medical information in a computer data bank and retrieves and furnishes the information upon request to an attending physician. 2010 1040 tax form Medicines You can include in medical expenses amounts you pay for prescribed medicines and drugs. 2010 1040 tax form A prescribed drug is one that requires a prescription by a doctor for its use by an individual. 2010 1040 tax form You can also include amounts you pay for insulin. 2010 1040 tax form Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. 2010 1040 tax form Imported medicines and drugs. 2010 1040 tax form   If you imported medicines or drugs from other countries, see Medicines and Drugs From Other Countries , under What Expenses Are Not Includible, later. 2010 1040 tax form Nursing Home You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. 2010 1040 tax form This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. 2010 1040 tax form Do not include the cost of meals and lodging if the reason for being in the home is personal. 2010 1040 tax form You can, however, include in medical expenses the part of the cost that is for medical or nursing care. 2010 1040 tax form Nursing Services You can include in medical expenses wages and other amounts you pay for nursing services. 2010 1040 tax form The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. 2010 1040 tax form This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. 2010 1040 tax form These services can be provided in your home or another care facility. 2010 1040 tax form Generally, only the amount spent for nursing services is a medical expense. 2010 1040 tax form If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services. 2010 1040 tax form For example, because of your medical condition you pay a visiting nurse $300 per week for medical and household services. 2010 1040 tax form She spends 10% of her time doing household services such as washing dishes and laundry. 2010 1040 tax form You can include only $270 per week as medical expenses. 2010 1040 tax form The $30 (10% × $300) allocated to household services cannot be included. 2010 1040 tax form However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. 2010 1040 tax form See Maintenance and personal care services under Long-Term Care, earlier. 2010 1040 tax form Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. 2010 1040 tax form See Publication 503. 2010 1040 tax form You can also include in medical expenses part of the amount you pay for that attendant's meals. 2010 1040 tax form Divide the food expense among the household members to find the cost of the attendant's food. 2010 1040 tax form Then divide that cost in the same manner as in the preceding paragraph. 2010 1040 tax form If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. 2010 1040 tax form This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant. 2010 1040 tax form Employment taxes. 2010 1040 tax form   You can include as a medical expense social security tax, FUTA, Medicare tax, and state employment taxes you pay for an attendant who provides medical care. 2010 1040 tax form If the attendant also provides personal and household services, you can include as a medical expense only the amount of employment taxes paid for medical services as explained earlier. 2010 1040 tax form For information on employment tax responsibilities of household employers, see Publication 926, Household Employer's Tax Guide. 2010 1040 tax form Operations You can include in medical expenses amounts you pay for legal operations that are not for unnecessary cosmetic surgery. 2010 1040 tax form See Cosmetic Surgery under What Expenses Are Not Includible, later. 2010 1040 tax form Optometrist See Eyeglasses , earlier. 2010 1040 tax form Organ Donors See Transplants , later. 2010 1040 tax form Osteopath You can include in medical expenses amounts you pay to an osteopath for medical care. 2010 1040 tax form Oxygen You can include in medical expenses amounts you pay for oxygen and oxygen equipment to relieve breathing problems caused by a medical condition. 2010 1040 tax form Physical Examination You can include in medical expenses the amount you pay for an annual physical examination and diagnostic tests by a physician. 2010 1040 tax form You do not have to be ill at the time of the examination. 2010 1040 tax form Pregnancy Test Kit You can include in medical expenses the amount you pay to purchase a pregnancy test kit to determine if you are pregnant. 2010 1040 tax form Prosthesis See Artificial Limb and Breast Reconstruction Surgery , earlier. 2010 1040 tax form Psychiatric Care You can include in medical expenses amounts you pay for psychiatric care. 2010 1040 tax form This includes the cost of supporting a mentally ill dependent at a specially equipped medical center where the dependent receives medical care. 2010 1040 tax form See Psychoanalysis, next, and Transportation , later. 2010 1040 tax form Psychoanalysis You can include in medical expenses payments for psychoanalysis. 2010 1040 tax form However, you cannot include payments for psychoanalysis that is part of required training to be a psychoanalyst. 2010 1040 tax form Psychologist You can include in medical expenses amounts you pay to a psychologist for medical care. 2010 1040 tax form Special Education You can include in medical expenses fees you pay on a doctor's recommendation for a child's tutoring by a teacher who is specially trained and qualified to work with children who have learning disabilities caused by mental or physical impairments, including nervous system disorders. 2010 1040 tax form You can include in medical expenses the cost (tuition, meals, and lodging) of attending a school that furnishes special education to help a child to overcome learning disabilities. 2010 1040 tax form A doctor must recommend that the child attend the school. 2010 1040 tax form Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided. 2010 1040 tax form Special education includes: Teaching Braille to a visually impaired person, Teaching lip reading to a hearing disabled person, or Giving remedial language training to correct a condition caused by a birth defect. 2010 1040 tax form Sterilization You can include in medical expenses the cost of a legal sterilization (a legally performed operation to make a person unable to have children). 2010 1040 tax form Also see Vasectomy , later. 2010 1040 tax form Stop-Smoking Programs You can include in medical expenses amounts you pay for a program to stop smoking. 2010 1040 tax form However, you cannot include in medical expenses amounts you pay for drugs that do not require a prescription, such as nicotine gum or patches, that are designed to help stop smoking. 2010 1040 tax form Surgery See Operations , earlier. 2010 1040 tax form Telephone You can include in medical expenses the cost of special telephone equipment that lets a person who is deaf, hard of hearing or has a speech disability communicate over a regular telephone. 2010 1040 tax form This includes teletypewriter (TTY) and telecommunications device for the deaf (TDD) equipment. 2010 1040 tax form You can also include the cost of repairing the equipment. 2010 1040 tax form Television You can include in medical expenses the cost of equipment that displays the audio part of television programs as subtitles for persons with a hearing disability. 2010 1040 tax form This may be the cost of an adapter that attaches to a regular set. 2010 1040 tax form It also may be the part of the cost of a specially equipped television that exceeds the cost of the same model regular television set. 2010 1040 tax form Therapy You can include in medical expenses amounts you pay for therapy received as medical treatment. 2010 1040 tax form Transplants You can include in medical expenses amounts paid for medical care you receive because you are a donor or a possible donor of a kidney or other organ. 2010 1040 tax form This includes transportation. 2010 1040 tax form You can include any expenses you pay for the medical care of a donor in connection with the donating of an organ. 2010 1040 tax form This includes transportation. 2010 1040 tax form Transportation You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. 2010 1040 tax form You can include:    Bus, taxi, train, or plane fares or ambulance service, Transportation expenses of a parent who must go with a child who needs medical care, Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment. 2010 1040 tax form Car expenses. 2010 1040 tax form   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use a car for medical reasons. 2010 1040 tax form You cannot include depreciation, insurance, general repair, or maintenance expenses. 2010 1040 tax form   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents a mile. 2010 1040 tax form    You can also include parking fees and tolls. 2010 1040 tax form You can add these fees and tolls to your medical expenses whether you use actual expenses or the standard mileage rate. 2010 1040 tax form Example. 2010 1040 tax form In 2013, Bill Jones drove 2,800 miles for medical reasons. 2010 1040 tax form He spent $500 for gas, $30 for oil, and $100 for tolls and parking. 2010 1040 tax form He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. 2010 1040 tax form He figures the actual expenses first. 2010 1040 tax form He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. 2010 1040 tax form He then figures the standard mileage amount. 2010 1040 tax form He multiplies 2,800 miles by 24 cents a mile for a total of $672. 2010 1040 tax form He then adds the $100 tolls and parking for a total of $772. 2010 1040 tax form Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. 2010 1040 tax form Transportation expenses you cannot include. 2010 1040 tax form    You cannot include in medical expenses the cost of transportation in the following situations. 2010 1040 tax form Going to and from work, even if your condition requires an unusual means of transportation. 2010 1040 tax form Travel for purely personal reasons to another city for an operation or other medical care. 2010 1040 tax form Travel that is merely for the general improvement of one's health. 2010 1040 tax form The costs of operating a specially equipped car for other than medical reasons. 2010 1040 tax form Trips You can include in medical expenses amounts you pay for transportation to another city if the trip is primarily for, and essential to, receiving medical services. 2010 1040 tax form You may be able to include up to $50 for each night for each person. 2010 1040 tax form You can include lodging for a person traveling with the person receiving the medical care. 2010 1040 tax form For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. 2010 1040 tax form Meals are not included. 2010 1040 tax form See Lodging , earlier. 2010 1040 tax form You cannot include in medical expenses a trip or vacation taken merely for a change in environment, improvement of morale, or general improvement of health, even if the trip is made on the advice of a doctor. 2010 1040 tax form However, see Medical Conferences , earlier. 2010 1040 tax form Tuition Under special circumstances, you can include charges for tuition in medical expenses. 2010 1040 tax form See Special Education , earlier. 2010 1040 tax form You can include charges for a health plan included in a lump-sum tuition fee if the charges are separately stated or can easily be obtained from the school. 2010 1040 tax form Vasectomy You can include in medical expenses the amount you pay for a vasectomy. 2010 1040 tax form Vision Correction Surgery See Eye Surgery , earlier. 2010 1040 tax form Weight-Loss Program You can include in medical expenses amounts you pay to lose weight if it is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). 2010 1040 tax form This includes fees you pay for membership in a weight reduction group as well as fees for attendance at periodic meetings. 2010 1040 tax form You cannot include membership dues in a gym, health club, or spa as medical expenses, but you can include separate fees charged there for weight loss activities. 2010 1040 tax form You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. 2010 1040 tax form You can include the cost of special food in medical expenses only if: The food does not satisfy normal nutritional needs, The food alleviates or treats an illness, and The need for the food is substantiated by a physician. 2010 1040 tax form The amount you can include in medical expenses is limited to the amount by which the cost of the special food exceeds the cost of a normal diet. 2010 1040 tax form See also Weight-Loss Program under What Expenses Are Not Includible, later. 2010 1040 tax form Wheelchair You can include in medical expenses amounts you pay for a wheelchair used mainly for the relief of sickness or disability, and not just to provide transportation to and from work. 2010 1040 tax form The cost of operating and maintaining the wheelchair is also a medical expense. 2010 1040 tax form Wig You can include in medical expenses the cost of a wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease. 2010 1040 tax form X-ray You can include in medical expenses amounts you pay for X-rays for medical reasons. 2010 1040 tax form What Expenses Are Not Includible? Following is a list of some items that you cannot include in figuring your medical expense deduction. 2010 1040 tax form The items are listed in alphabetical order. 2010 1040 tax form Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby You cannot include in medical expenses amounts you pay for the care of children, even if the expenses enable you, your spouse, or your dependent to get medical or dental treatment. 2010 1040 tax form Also, any expense allowed as a childcare credit cannot be treated as an expense paid for medical care. 2010 1040 tax form Controlled Substances You cannot include in medical expenses amounts you pay for controlled substances (such as marijuana, laetrile, etc. 2010 1040 tax form ), even if such substances are legalized by state law. 2010 1040 tax form Such substances are not legal under federal law and cannot be included in medical expenses. 2010 1040 tax form Cosmetic Surgery Generally, you cannot include in medical expenses the amount you pay for unnecessary cosmetic surgery. 2010 1040 tax form This includes any procedure that is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. 2010 1040 tax form You generally cannot include in medical expenses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuction. 2010 1040 tax form You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. 2010 1040 tax form Example. 2010 1040 tax form An individual undergoes surgery that removes a breast as part of treatment for cancer. 2010 1040 tax form She pays a surgeon to reconstruct the breast. 2010 1040 tax form The surgery to reconstruct the breast corrects a deformity directly related to the disease. 2010 1040 tax form The cost of the surgery is includible in her medical expenses. 2010 1040 tax form Dancing Lessons You cannot include in medical expenses the cost of dancing lessons, swimming lessons, etc. 2010 1040 tax form , even if they are recommended by a doctor, if they are only for the improvement of general health. 2010 1040 tax form Diaper Service You cannot include in medical expenses the amount you pay for diapers or diaper services, unless they are needed to relieve the effects of a particular disease. 2010 1040 tax form Electrolysis or Hair Removal See Cosmetic Surgery , earlier. 2010 1040 tax form Flexible Spending Account You cannot include in medical expenses amounts for which you are fully reimbursed by your flexible spending account if you contribute a part of your income on a pre-tax basis to pay for the qualified benefit. 2010 1040 tax form Funeral Expenses You cannot include in medical expenses amounts you pay for funerals. 2010 1040 tax form Future Medical Care Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. 2010 1040 tax form This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care or long-term care of the type described at Lifetime Care—Advance Payments or Long-Term Care, earlier under What Medical Expenses Are Includible. 2010 1040 tax form Hair Transplant See Cosmetic Surgery , earlier. 2010 1040 tax form Health Club Dues You cannot include in medical expenses health club dues or amounts paid to improve one's general health or to relieve physical or mental discomfort not related to a particular medical condition. 2010 1040 tax form You cannot include in medical expenses the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. 2010 1040 tax form Health Coverage Tax Credit You cannot include in medical expenses amounts you pay for health insurance that you use in figuring your health coverage tax credit. 2010 1040 tax form For more information, see Health Coverage Tax Credit , later. 2010 1040 tax form Health Savings Accounts You cannot include in medical expenses any payment or distribution for medical expenses out of a health savings account. 2010 1040 tax form Contributions to health savings accounts are deducted separately. 2010 1040 tax form See Publication 969. 2010 1040 tax form Household Help You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. 2010 1040 tax form This is a personal expense that is not deductible. 2010 1040 tax form However, you may be able to include certain expenses paid to a person providing nursing-type services. 2010 1040 tax form For more information, see Nursing Services , earlier under What Medical Expenses Are Includible. 2010 1040 tax form Also, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. 2010 1040 tax form For more information, see Long-Term Care , earlier under What Medical Expenses Are Includible. 2010 1040 tax form Illegal Operations and Treatments You cannot include in medical expenses amounts you pay for illegal operations, treatments, or controlled substances whether rendered or prescribed by licensed or unlicensed practitioners. 2010 1040 tax form Insurance Premiums See Insurance Premiums under What Medical Expenses Are Includible, earlier. 2010 1040 tax form Maternity Clothes You cannot include in medical expenses amounts you pay for maternity clothes. 2010 1040 tax form Medical Savings Account (MSA) You cannot include in medical expenses amounts you contribute to an Archer MSA. 2010 1040 tax form You cannot include expenses you pay for with a tax-free distribution from your Archer MSA. 2010 1040 tax form You also cannot use other funds equal to the amount of the distribution and include the expenses. 2010 1040 tax form For more information on Archer MSAs, see Publication 969. 2010 1040 tax form Medicines and Drugs From Other Countries In general, you cannot include in your medical expenses the cost of a prescribed drug brought in (or ordered shipped) from another country. 2010 1040 tax form You can only include the cost of a drug that was imported legally. 2010 1040 tax form For example, you can include the cost of a prescribed drug the Food and Drug Administration announces can be legally imported by individuals. 2010 1040 tax form You can include the cost of a prescribed drug you purchase and consume in another country if the drug is legal in both the other country and the United States. 2010 1040 tax form Nonprescription Drugs and Medicines Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. 2010 1040 tax form Example. 2010 1040 tax form Your doctor recommends that you take aspirin. 2010 1040 tax form Because aspirin is a drug that does not require a physician's prescription, you cannot include its cost in your medical expenses. 2010 1040 tax form Nutritional Supplements You cannot include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. 2010 1040 tax form unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. 2010 1040 tax form Otherwise, these items are taken to maintain your ordinary good health, and are not for medical care. 2010 1040 tax form Personal Use Items You cannot include in medical expenses the cost of an item ordinarily used for personal, living, or family purposes unless it is used primarily to prevent or alleviate a physical or mental defect or illness. 2010 1040 tax form For example, the cost of a toothbrush and toothpaste is a nondeductible personal expense. 2010 1040 tax form In order to accommodate an individual with a physical defect, you may have to purchase an item ordinarily used as a personal, living, or family item in a special form. 2010 1040 tax form You can include the excess of the cost of the item in a special form over the cost of the item in normal form as a medical expense. 2010 1040 tax form (See Braille Books and Magazines under What Medical Expenses Are Includible, earlier. 2010 1040 tax form ) Swimming Lessons See Dancing Lessons , earlier. 2010 1040 tax form Teeth Whitening You cannot include in medical expenses amounts paid to whiten teeth. 2010 1040 tax form See Cosmetic Surgery , earlier. 2010 1040 tax form Veterinary Fees You generally cannot include veterinary fees in your medical expenses, but see Guide Dog or Other Service Animal under What Medical Expenses Are Includible, earlier. 2010 1040 tax form Weight-Loss Program You cannot include in medical expenses the cost of a weight-loss program if the purpose of the weight loss is the improvement of appearance, general health, or sense of well-being. 2010 1040 tax form You cannot include amounts you pay to lose weight unless the weight loss is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). 2010 1040 tax form If the weight-loss treatment is not for a specific disease diagnosed by a physician, you cannot include either the fees you pay for membership in a weight reduction group or fees for attendance at periodic meetings. 2010 1040 tax form Also, you cannot include membership dues in a gym, health club, or spa. 2010 1040 tax form You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. 2010 1040 tax form See Weight-Loss Program under What Medical Expenses Are Includible, earlier. 2010 1040 tax form How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the tax year for which you received no insurance or other reimbursement. 2010 1040 tax form Insurance Reimbursement You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. 2010 1040 tax form This includes payments from Medicare. 2010 1040 tax form Even if a policy provides reimbursement only for certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse. 2010 1040 tax form Example. 2010 1040 tax form You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. 2010 1040 tax form The insurance you receive for the hospital and doctors' bills is more than their charges. 2010 1040 tax form In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses. 2010 1040 tax form Health reimbursement arrange
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IRS Commissioner Addresses Nation's Taxpayers on 2014 Filing Season; YouTube Video Released

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Message to Taxpayers: English| Spanish| ASL

IR-2014-12, Feb. 10, 2014

WASHINGTON – The Internal Revenue Service today released a YouTube message from Commissioner John Koskinen to the nation's taxpayers providing tips and help for the 2014 filing season.

In the YouTube video, now available at IRS.gov and the IRS YouTube channel, Koskinen also discusses how the IRS and its employees will approach the 2014 tax season.

“I can assure you we are all dedicated to doing whatever we can to help you file your taxes this filing season,” Koskinen said in the video, which runs just under three minutes.

“We want to provide you with the assistance you need to get your taxes filed accurately and on time,” Koskinen added. “And we will work hard to issue refunds quickly while increasing our efforts to stop tax fraud and identity thieves.”

Koskinen also cautioned taxpayers that phone lines will be busy this year. “Given our very limited resources, our phone lines are going to be extremely busy this year – and there will frequently be extensive wait times,” Koskinen said. “We are working to limit these waiting times as much as possible, and I apologize that we can’t do more in that regard this year.”

As an alternative, he encouraged taxpayers to consider the following options:

  • Visit IRS.gov to find a wide range of information, including the Where’s My Refund? tool to check on tax refund status.
  • Download the newly redesigned IRS smartphone app IRS2Go to check on tax refund status and get the latest tax news and information, available in English and Spanish for Apple and Android devices.
  • Visit the IRS YouTube channel to get information from over a hundred short instructional IRS videos. IRS YouTube channels have been viewed more than 6 million times.

The IRS also offers subscription to daily tax tips during the filing season as well as other useful resources year-round through a variety of social media platforms such as Twitter, @IRSnews, @IRSenEspanol and @IRStaxpros, Facebook and Tumblr. For more IRS social media links, go to IRS Social Media.

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Page Last Reviewed or Updated: 10-Feb-2014

The 2010 1040 Tax Form

2010 1040 tax form Internal Revenue Bulletin:  2013-7  February 11, 2013  Rev. 2010 1040 tax form Proc. 2010 1040 tax form 2013-16 Table of Contents SECTION 1. 2010 1040 tax form PURPOSE SECTION 2. 2010 1040 tax form BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE SECTION 3. 2010 1040 tax form BACKGROUND—APPLICABLE PROVISIONS OF LAW SECTION 4. 2010 1040 tax form FEDERAL INCOME TAX TREATMENT SECTION 5. 2010 1040 tax form INFORMATION-REPORTING OBLIGATIONS SECTION 6. 2010 1040 tax form HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA SECTION 7. 2010 1040 tax form PENALTY RELIEF FOR 2012 SECTION 8. 2010 1040 tax form SCOPE AND EFFECTIVE DATE SECTION 9. 2010 1040 tax form DRAFTING INFORMATION SECTION 1. 2010 1040 tax form PURPOSE This revenue procedure provides guidance to mortgage loan holders, loan servicers, and borrowers who are participating in the Department of the Treasury’s (Treasury) and Department of Housing and Urban Development’s (HUD) Home Affordable Modification Program® (HAMP®). 2010 1040 tax form Under HAMP, a borrower may be eligible for principal reduction of the outstanding balance of a qualifying mortgage pursuant to the program’s Principal Reduction AlternativeSM (PRA). 2010 1040 tax form In appropriate cases, HAMP has been offering the PRA as part of a HAMP loan modification since the last quarter of 2010. 2010 1040 tax form Current plans call for HAMP to continue accepting new borrowers through the end of 2013. 2010 1040 tax form The Internal Revenue Service (Service) is providing this guidance to address the tax consequences for borrowers (HAMP-PRA borrowers) who are participating in the PRA and the reporting obligations for participating mortgage loan holders and servicers. 2010 1040 tax form SECTION 2. 2010 1040 tax form BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE . 2010 1040 tax form 01 To help distressed borrowers lower their monthly mortgage payments, Treasury and HUD established HAMP for mortgage loans that are not owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). 2010 1040 tax form A description of the program can be found at www. 2010 1040 tax form makinghomeaffordable. 2010 1040 tax form gov. 2010 1040 tax form . 2010 1040 tax form 02 Under HAMP, a participating loan servicer, acting on behalf of the mortgage loan holder, must consider a sequence of modification steps for each eligible borrower’s mortgage loan until the borrower’s monthly payment is reduced to a monthly payment amount determined under the HAMP guidelines. 2010 1040 tax form These steps include a reduction in the mortgage loan’s interest rate, an extension of the mortgage loan’s term, and a reduction in the mortgage loan’s principal balance. 2010 1040 tax form . 2010 1040 tax form 03 In some cases, the unpaid principal balance of the modified mortgage loan is divided into (1) an amount that bears stated interest and that is used to calculate the borrower’s new monthly mortgage payment (the “Non-forbearance Portion”), and (2) a forbearance amount, which does not bear stated interest and on which periodic payments of stated principal are not required. 2010 1040 tax form The stated principal of the forbearance amount is due upon the earliest of the borrower’s transfer of the property, payoff of the balance on the Non-forbearance Portion of the mortgage loan, or maturity of the mortgage loan. 2010 1040 tax form However, as noted in section 2. 2010 1040 tax form 06 of this revenue procedure, a HAMP-PRA borrower sometimes may not have to pay all or a portion of the forbearance amount. 2010 1040 tax form (The forbearance amount associated with a HAMP-PRA principal reduction is called the “PRA Forbearance Amount. 2010 1040 tax form ”) . 2010 1040 tax form 04 If a mortgage loan is being considered for a HAMP modification and the amount owed on the mortgage loan is greater than 115 percent of the value of the property, then the servicer must consider whether principal reduction under PRA should be used as part of the HAMP modification. 2010 1040 tax form . 2010 1040 tax form 05 The first step toward a HAMP modification is a trial period plan, in which the borrower’s monthly mortgage payment is set at a monthly payment amount determined under the HAMP guidelines. 2010 1040 tax form The trial period plan effective date is the due date for the first of the reduced payments that are to be made under the trial period plan. 2010 1040 tax form (It is the first day of either the first or the second month after the servicer transmits the trial period notice to the borrower. 2010 1040 tax form ) In general, the trial period is three months, and, during this period, the borrower must satisfy certain conditions before the changes to the terms of the mortgage loan become permanent (the “Trial Period Conditions”). 2010 1040 tax form Specifically, depending on the borrower’s trial period payment history, the borrower’s compliance with HAMP and servicer guidelines, and his or her satisfaction of all other Trial Period Conditions, the borrower will be offered a permanent modification of the terms of the mortgage loan, including monthly mortgage payments that are lower than those under the old mortgage loan. 2010 1040 tax form Until the effective date of a permanent modification, the terms of the existing mortgage loan continue to apply. 2010 1040 tax form . 2010 1040 tax form 06 After the mortgage loan is permanently modified under HAMP, if the modified mortgage loan is in good standing on the first, second, or third annual anniversary of the trial period plan effective date (the “Three-year Period”), the servicer must reduce the unpaid principal balance of the mortgage loan on the respective anniversary date by one-third of the initial PRA Forbearance Amount. 2010 1040 tax form (The servicer allocates the entire reduction to the remaining PRA Forbearance Amount. 2010 1040 tax form ) In general, if a HAMP-PRA borrower’s mortgage loan is in good standing and if the HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan prior to the reduction of the entire PRA Forbearance Amount, the servicer must reduce the remaining outstanding principal balance of the mortgage loan by the remaining PRA Forbearance Amount. 2010 1040 tax form . 2010 1040 tax form 07 In connection with every HAMP loan modification, the HAMP program administrator (acting on behalf of the federal government) provides incentives to the borrower, the servicer, and the investor (that is, the holder of the mortgage loan). 2010 1040 tax form If a HAMP loan modification includes a PRA principal reduction, the HAMP program administrator makes additional incentive payments to the investor. 2010 1040 tax form These additional incentives are called “PRA Investor Incentive Payments” and are generally spread over three years. 2010 1040 tax form The size of the PRA Investor Incentive Payments depends on the amount of principal reduced, the loan-to-value ratio at the time of the HAMP modification, and the loan’s payment history before the modification. 2010 1040 tax form The PRA Investor Incentive Payments range from 18 to 63 percent of the principal amounts reduced. 2010 1040 tax form For purposes of this revenue procedure, the excess of the initial PRA Forbearance Amount of a mortgage loan over the aggregate PRA Investor Incentive Payments scheduled to be paid with respect to that loan is called the “PRA Adjusted Forbearance Amount. 2010 1040 tax form ” . 2010 1040 tax form 08 A PRA Investor Incentive Payment is earned by the investor on each date on which the servicer reduces the unpaid principal balance of the mortgage loan by a portion of the PRA Forbearance Amount (generally, on the first three annual anniversaries of the trial period plan effective date). 2010 1040 tax form . 2010 1040 tax form 09 If a HAMP-PRA borrower’s early payment in full of the Non-forbearance Portion of the mortgage loan accelerates the reduction of the remaining PRA Forbearance Amount (described above in section 2. 2010 1040 tax form 06 of this revenue procedure), the remaining PRA Investor Incentive Payments from the HAMP program administrator are also accelerated. 2010 1040 tax form . 2010 1040 tax form 10 If, prior to completion of the Three-year Period, a mortgage loan ceases to be in good standing because of the HAMP-PRA borrower’s payment history, then the remaining PRA Forbearance Amount is not further reduced and is due when the HAMP-PRA borrower transfers the property, the HAMP-PRA borrower refinances, or otherwise pays off the Non-forbearance Portion of the mortgage loan, or the mortgage loan matures. 2010 1040 tax form SECTION 3. 2010 1040 tax form BACKGROUND—APPLICABLE PROVISIONS OF LAW . 2010 1040 tax form 01 Under § 61 of the Internal Revenue Code, except as otherwise provided in subtitle A, gross income means all income from whatever source derived, including income from discharge of indebtedness. 2010 1040 tax form See § 61(a)(12). 2010 1040 tax form . 2010 1040 tax form 02 Under § 1. 2010 1040 tax form 1001-3 of the Income Tax Regulations, if a debt instrument undergoes a significant modification, then the modification results in an exchange of the original debt instrument for the modified debt instrument. 2010 1040 tax form In general, an agreement to change a term of a debt instrument is a modification at the time the borrower and holder enter into the agreement, even if the change in term is not immediately effective. 2010 1040 tax form However, if the change is conditioned on reasonable closing conditions, a modification occurs on the closing date of the agreement. 2010 1040 tax form See § 1. 2010 1040 tax form 1001-3(c)(6). 2010 1040 tax form . 2010 1040 tax form 03 Under § 108(e)(10), in the case of a debt-for-debt exchange (including a deemed exchange under § 1. 2010 1040 tax form 1001-3), the borrower is treated as having satisfied the original debt instrument with an amount of money equal to the issue price of the new debt instrument. 2010 1040 tax form If the amount of debt satisfied in this manner exceeds that issue price, the borrower realizes discharge of indebtedness income on the exchange. 2010 1040 tax form See also § 1. 2010 1040 tax form 61-12(c). 2010 1040 tax form . 2010 1040 tax form 04 The issue price of a non-publicly traded debt instrument issued for non-publicly traded property generally reflects the amount of principal that the borrower is required to pay to the holder of the instrument. 2010 1040 tax form If a borrower has the ability to avoid paying certain amounts (including principal) without violating the terms of the instrument, the payment schedule for the instrument is generally determined based on an assumption that the borrower will avoid any requirement to make those payments. 2010 1040 tax form See, e. 2010 1040 tax form g. 2010 1040 tax form , §§ 1. 2010 1040 tax form 1272-1(c)(5) and 1. 2010 1040 tax form 1274-2(d). 2010 1040 tax form . 2010 1040 tax form 05 Under § 108(a), gross income does not include any amount that but for § 108(a) would be includible in gross income by reason of the discharge (in whole or in part) of a taxpayer’s indebtedness if (1) the indebtedness discharged is qualified principal residence indebtedness that is discharged before January 1, 2014, or (2) the discharge occurs when the taxpayer is insolvent. 2010 1040 tax form Section 108(a)(1)(E) and 108(a)(1)(B). 2010 1040 tax form (Although § 108 contains other exclusions as well, this revenue procedure focuses on these two exclusions because they are the most likely to apply to the greatest number of HAMP-PRA borrowers. 2010 1040 tax form ) . 2010 1040 tax form 06 Under §§ 108(h) and 163(h)(3)(B), qualified principal residence indebtedness is any indebtedness that is incurred by a borrower to buy, build, or substantially improve the borrower’s principal residence and is secured by that residence. 2010 1040 tax form . 2010 1040 tax form 07 Qualified principal residence indebtedness also includes a loan secured by the borrower’s principal residence that refinances qualified principal residence indebtedness, but only to the extent of the amount of the refinanced indebtedness. 2010 1040 tax form See §§ 108(h) and 163(h)(3)(B)(i). 2010 1040 tax form . 2010 1040 tax form 08 The maximum amount of discharged indebtedness that a borrower may exclude from gross income under the qualified principal residence indebtedness exclusion is $2,000,000 ($1,000,000 for a married individual filing a separate return). 2010 1040 tax form Under § 108(h)(4), if only part of the discharged indebtedness is qualified principal residence indebtedness, then the exclusion applies only to the amount of the discharged indebtedness that exceeds the amount of the loan (determined immediately before the discharge) that is not qualified principal residence indebtedness. 2010 1040 tax form . 2010 1040 tax form 09 Under § 108(a)(3), the insolvency exclusion applies to the lesser of the amount of the debt discharged or the amount by which the taxpayer is insolvent immediately before the discharge. 2010 1040 tax form . 2010 1040 tax form 10 Section 108(d)(3) provides that, for purposes of the insolvency exclusion, a taxpayer is insolvent to the extent that the taxpayer’s total liabilities exceed the fair market value of all of the taxpayer’s assets immediately before the discharge of indebtedness. 2010 1040 tax form Under § 108(a)(2)(C), the qualified principal residence indebtedness exclusion takes precedence over the insolvency exclusion when both exclusions apply to discharged indebtedness, unless the taxpayer elects to apply the insolvency exclusion. 2010 1040 tax form . 2010 1040 tax form 11 If an amount is excluded from gross income as a discharge of qualified principal residence indebtedness, the taxpayer must reduce the basis of the taxpayer’s principal residence. 2010 1040 tax form See § 108(h)(1). 2010 1040 tax form If a discharged amount is excluded from gross income because the taxpayer was insolvent when the discharge occurred, the taxpayer must reduce certain tax attributes (possibly including basis). 2010 1040 tax form See § 108(b). 2010 1040 tax form For further discussion of income from the discharge of indebtedness, the qualified principal residence indebtedness exclusion, the insolvency exclusion, and other exclusions from gross income that may apply, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). 2010 1040 tax form . 2010 1040 tax form 12 Taxpayers who exclude any discharged amounts from gross income report both the exclusion and the resulting reduction in basis or other tax attributes on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). 2010 1040 tax form See Form 982 instructions and Publication 4681. 2010 1040 tax form This form is to be filed with the tax return for the taxable year in which the amount is discharged but is excluded from gross income. 2010 1040 tax form . 2010 1040 tax form 13 Governmental payments made to or on behalf of individuals or other persons are included within the broad definition of gross income under § 61 unless an exception applies. 2010 1040 tax form See Notice 2003-18, 2003-1 C. 2010 1040 tax form B. 2010 1040 tax form 699, and Rev. 2010 1040 tax form Rul. 2010 1040 tax form 79-356, 1979-2 C. 2010 1040 tax form B. 2010 1040 tax form 28. 2010 1040 tax form However, if disbursements are made by a governmental unit to individuals in the interest of the general welfare (that is, are generally based on individual or family need) and the disbursements do not represent compensation for services, then the amounts disbursed are excluded from the income of the recipient (general welfare exclusion). 2010 1040 tax form See Rev. 2010 1040 tax form Rul. 2010 1040 tax form 2005-46, 2005-2 C. 2010 1040 tax form B. 2010 1040 tax form 120, and Rev. 2010 1040 tax form Rul. 2010 1040 tax form 75-246, 1975-1 C. 2010 1040 tax form B. 2010 1040 tax form 24. 2010 1040 tax form . 2010 1040 tax form 14 Under § 451 and § 1. 2010 1040 tax form 451-1(a), a taxpayer that uses the cash receipts and disbursements method of accounting includes income in gross income when the taxpayer actually or constructively receives the income. 2010 1040 tax form . 2010 1040 tax form 15 Section 6041 requires every person engaged in a trade or business (including the United States and its agencies) to (1) file an information return (Form 1099-MISC, Miscellaneous Income, is used for this purpose) for each calendar year in which the person makes, in the course of its trade or business, payments to another person of fixed or determinable income aggregating $600 or more, and (2) furnish a copy of the information return to that other person. 2010 1040 tax form See § 6041(a) and (d) and § 1. 2010 1040 tax form 6041-1(a)(1) and (b). 2010 1040 tax form . 2010 1040 tax form 16 Section 6050P requires applicable entities (including the United States and its agencies, financial entities, and any organization a significant trade or business of which is the lending of money) to (1) file an information return (Form 1099-C, Cancellation of Debt, is used for this purpose) for each calendar year in which it discharges indebtedness of another person of $600 or more, and (2) furnish a copy of the information return to that other person. 2010 1040 tax form See § 6050P(a)-(c) and §§ 1. 2010 1040 tax form 6050P-1(a) and 1. 2010 1040 tax form 6050P-2(a) and (d). 2010 1040 tax form . 2010 1040 tax form 17 Section 6721 imposes penalties with respect to information returns required to be filed with the Service. 2010 1040 tax form These penalties apply in the case of a failure to timely file an information return, a failure to include all required information on the return, or the inclusion of incorrect information on the return. 2010 1040 tax form Section 6724(d)(1) includes Forms 1099-MISC and 1099-C in the term “information return. 2010 1040 tax form ” . 2010 1040 tax form 18 Section 6722 imposes penalties with respect to payee statements required to be furnished to payees. 2010 1040 tax form These penalties apply in the case of a failure to timely furnish a payee statement, a failure to include all required information on the statement, or the inclusion of incorrect information on the payee statement. 2010 1040 tax form Section 6724(d)(2) includes in the term “payee statement” copies of Forms 1099-MISC and 1099-C that are required to be furnished to taxpayers. 2010 1040 tax form SECTION 4. 2010 1040 tax form FEDERAL INCOME TAX TREATMENT . 2010 1040 tax form 01 Because a HAMP modification with a PRA principal reduction is a significant modification, it results in a deemed debt-for-debt exchange in which the HAMP-PRA borrower satisfies the old mortgage loan by issuing a new one. 2010 1040 tax form See § 1. 2010 1040 tax form 1001-3. 2010 1040 tax form At the time of the modification, therefore, under § 108 and this revenue procedure, the HAMP-PRA borrower realizes discharge of indebtedness income equal to any excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new (post-modification) mortgage loan. 2010 1040 tax form See also § 61(a)(12) and § 1. 2010 1040 tax form 61-12(c). 2010 1040 tax form . 2010 1040 tax form 02 A HAMP-PRA borrower has the ability to avoid payment of the PRA Adjusted Forbearance Amount. 2010 1040 tax form Because the HAMP-PRA borrower has this ability, that amount should not be taken into account in determining the issue price of the new mortgage loan. 2010 1040 tax form Because the issue price of the new mortgage loan does not include the PRA Adjusted Forbearance Amount, the PRA Adjusted Forbearance Amount contributes to the excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new mortgage loan. 2010 1040 tax form . 2010 1040 tax form 03 On the other hand, the investor has not given up its right to receive the remainder of the PRA Forbearance Amount, because the HAMP program administrator is expected to make those payments on the HAMP-PRA borrower’s behalf by making the PRA Investor Incentive Payments. 2010 1040 tax form Because the remainder of the PRA Forbearance Amount is payable in this manner, that remainder is included in the issue price of the new mortgage loan. 2010 1040 tax form . 2010 1040 tax form 04 The Trial Period Conditions are reasonable closing conditions that must be satisfied before the changes to the terms of the mortgage loan become permanent. 2010 1040 tax form Therefore, for purposes of § 1. 2010 1040 tax form 1001-3, the date of the modification is the date of the permanent modification. 2010 1040 tax form . 2010 1040 tax form 05 Unless an exclusion applies, the HAMP-PRA borrower includes in gross income the discharge of indebtedness income described in section 4. 2010 1040 tax form 01 of this revenue procedure for the taxable year in which the permanent modification occurs. 2010 1040 tax form Under certain conditions, however, section 6 of this revenue procedure permits a borrower to report the discharge of indebtedness under HAMP-PRA over the Three-year Period. 2010 1040 tax form The qualified principal residence indebtedness exclusion under § 108(a)(1)(E) and the insolvency exclusion under § 108(a)(1)(B) are two exclusions that may apply to the discharge. 2010 1040 tax form . 2010 1040 tax form 06 The PRA Investor Incentive Payment is treated as a payment on the mortgage loan by the HAMP program administrator on behalf of the HAMP-PRA borrower. 2010 1040 tax form . 2010 1040 tax form 07 To the extent that the HAMP-PRA borrower uses the property as the HAMP-PRA borrower’s principal residence or the property is occupied by the HAMP-PRA borrower’s legal dependent, parent, or grandparent without rent being charged or collected, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the PRA Investor Incentive Payments that the HAMP program administrator makes to the investor in the mortgage loan. 2010 1040 tax form This is consistent with Rev. 2010 1040 tax form Rul. 2010 1040 tax form 2009-19, 2009-28 I. 2010 1040 tax form R. 2010 1040 tax form B. 2010 1040 tax form 111, which addressed the treatment of Pay-for-Performance Success Payments. 2010 1040 tax form . 2010 1040 tax form 08 To the extent that the HAMP-PRA borrower uses the property as a rental property or holds the property vacant and available for rent, the HAMP-PRA borrower includes PRA Investor Incentive Payments in gross income. 2010 1040 tax form If the HAMP-PRA borrower uses the cash receipts and disbursements method of accounting, then the HAMP-PRA borrower includes a PRA Investor Incentive Payment in gross income in the taxable year in which it is applied as a payment on the HAMP-PRA borrower’s mortgage loan. 2010 1040 tax form . 2010 1040 tax form 09 As described in section 2. 2010 1040 tax form 09 of this revenue procedure, if a HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan while the loan is in good standing and prior to completion of the Three-year Period, that payment accelerates both the reduction in the remaining PRA Forbearance Amount and the PRA Investor Incentive Payments from the HAMP program administrator. 2010 1040 tax form To the extent that the HAMP-PRA borrower is described in section 4. 2010 1040 tax form 07 of this revenue procedure, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the accelerated PRA Investor Incentive Payments. 2010 1040 tax form To the extent that the HAMP-PRA borrower is described in section 4. 2010 1040 tax form 08 of this revenue procedure, the HAMP-PRA borrower includes in income in the year of the acceleration the remaining amount of the PRA Investor Incentive Payment. 2010 1040 tax form SECTION 5. 2010 1040 tax form INFORMATION-REPORTING OBLIGATIONS . 2010 1040 tax form 01 Under § 6050P, the investor is required to file a Form 1099-C with respect to a borrower who realizes discharge of indebtedness of $600 or more. 2010 1040 tax form A copy of this form is required to be furnished to the borrower. 2010 1040 tax form . 2010 1040 tax form 02 As stated in sections 4. 2010 1040 tax form 01 and 4. 2010 1040 tax form 04 of this revenue procedure, the HAMP-PRA discharge of indebtedness is realized at the time of the permanent modification of the mortgage loan. 2010 1040 tax form . 2010 1040 tax form 03 An investor is an applicable entity that is required under § 1. 2010 1040 tax form 6050P-1 and this revenue procedure to issue a Form 1099-C for discharge of indebtedness. 2010 1040 tax form Under § 1. 2010 1040 tax form 6050P-1(b)(2)(F), the permanent modification of a mortgage loan is an identifiable event. 2010 1040 tax form Identifiable events determine when Forms 1099-C have to be issued. 2010 1040 tax form Thus, the Form 1099-C is issued for the calendar year in which the permanent mortgage loan modification occurs. 2010 1040 tax form This rule under § 1. 2010 1040 tax form 6050P-1(b)(2)(F) applies even if, under section 6 of this revenue procedure, the HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the times when the unpaid principal balance of the new mortgage loan is reduced. 2010 1040 tax form . 2010 1040 tax form 04 The investor (or the loan servicer acting on behalf of the investor) reports the full amount of the discharge on the Form 1099-C regardless of whether some or all of the amount is excludible from income under the qualified principal residence indebtedness exclusion, the insolvency exclusion, or any other exclusion that may apply. 2010 1040 tax form That discharged amount will generally be the PRA Adjusted Forbearance Amount (which does not include the amounts expected to be satisfied by PRA Investor Incentive Payments). 2010 1040 tax form . 2010 1040 tax form 05 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. 2010 1040 tax form 07 of this revenue procedure, the PRA Investor Incentive Payments are excluded from the gross income of the HAMP-PRA borrower, and thus they are not fixed or determinable income to the HAMP-PRA borrower. 2010 1040 tax form Under § 6041, these payments are not subject to information reporting. 2010 1040 tax form See Notice 2011-14, 2011-11 I. 2010 1040 tax form R. 2010 1040 tax form B. 2010 1040 tax form 544, 546. 2010 1040 tax form . 2010 1040 tax form 06 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. 2010 1040 tax form 08 of this revenue procedure, the PRA Investor Incentive Payments are includible in gross income as fixed or determinable income in the taxable year required by the HAMP-PRA borrower’s method of accounting. 2010 1040 tax form The payment is subject to the information reporting requirements of § 6041, as described in section 3. 2010 1040 tax form 15 of this revenue procedure. 2010 1040 tax form Accordingly, the HAMP program administrator is required to issue a Form 1099-MISC reporting the PRA Investor Incentive Payment. 2010 1040 tax form SECTION 6. 2010 1040 tax form HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA . 2010 1040 tax form 01 In general. 2010 1040 tax form The HAMP-PRA program began in the last quarter of 2010, and since that time there has been uncertainty about whether the amount of the discharge of indebtedness should be reported in the year of the permanent modification or over the Three-year Period (when the unpaid principal balance on the new mortgage loan is reduced). 2010 1040 tax form As a result, some HAMP-PRA borrowers have been reporting the discharge of indebtedness under HAMP-PRA over the Three-year Period. 2010 1040 tax form Given the temporary nature of the program and the issuance of this guidance after participation in the program has begun, in the interests of equitable and sound tax administration, HAMP-PRA borrowers may report discharges of indebtedness under HAMP-PRA under the rules in this section 6. 2010 1040 tax form A HAMP-PRA borrower may choose to report discharges of indebtedness under HAMP-PRA pursuant to the rules in this section 6 only if the borrower applies the same borrower option under section 6. 2010 1040 tax form 02 of this revenue procedure consistently to the taxable year of the permanent modification and to all subsequent taxable years. 2010 1040 tax form Thus, a HAMP-PRA borrower may not choose a borrower option under section 6. 2010 1040 tax form 02 of this revenue procedure if a statute of limitations has expired for any of the taxable years that are necessary for consistent application of that option. 2010 1040 tax form . 2010 1040 tax form 02 HAMP-PRA borrower options. 2010 1040 tax form A HAMP-PRA borrower may treat the HAMP-PRA discharge as being realized in either of the following ways— (1) One hundred percent of the PRA Adjusted Forbearance Amount at the time of the permanent modification; or (2) One third of the PRA Adjusted Forbearance Amount on each of the first three annual anniversaries of the trial period plan effective date (described in section 2. 2010 1040 tax form 06 of this revenue procedure), when, as required by the terms of the new mortgage loan, the servicer reduces the unpaid principal balance of the new mortgage loan. 2010 1040 tax form If some or all of the reduction in the unpaid principal balance is accelerated (as described in section 2. 2010 1040 tax form 06 of this revenue procedure) because the HAMP-PRA borrower prepays the Non-forbearance Portion of the mortgage loan, then the HAMP-PRA discharge represented by the amount of the reduction that was accelerated is treated as being realized at the time of the accelerated reduction. 2010 1040 tax form . 2010 1040 tax form 03 HAMP-PRA borrowers who choose to realize the HAMP-PRA discharge at the time of the permanent modification. 2010 1040 tax form (1) If a HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the time of the permanent modification, then for the taxable year in which the permanent modification occurs, the HAMP-PRA borrower reports on Form 982 the amount, if any, of the discharge that is excluded from gross income and includes in gross income any remaining discharge. 2010 1040 tax form (2) If a HAMP-PRA borrower’s mortgage loan was permanently modified under HAMP in 2010 or 2011, and if the borrower was reporting the discharge of indebtedness using the method described in section 6. 2010 1040 tax form 02(2) of this revenue procedure, then the borrower may change to reporting the discharge of indebtedness using the method described in section 6. 2010 1040 tax form 02(1) of this revenue procedure by filing a 2012 Form 982 with the borrower’s timely filed (with extensions) 2012 income tax return. 2010 1040 tax form This section 6. 2010 1040 tax form 03(2) applies only if the change to reporting the discharge using the method described in section 6. 2010 1040 tax form 02(1) of this revenue procedure does not change the borrower’s federal income tax liability (including any change in federal income tax liability due to a change in basis or tax attributes (under § 108(h)(1) or § 108(b))) for any taxable year prior to the borrower’s 2012 taxable year. 2010 1040 tax form To make this change, the borrower must— (i) Compute the amount of discharge of indebtedness that would be included in income under § 61(a)(12) or excluded from gross income under § 108, basing the computation of the discharge on the facts as of the year of the permanent modification; and (ii) Report on a 2012 Form 982 the reduction in basis or tax attributes (under § 108(h)(1) or § 108(b)) due to the permanent modification that the borrower would have reported on the Form 982 for the taxable year of the permanent modification, minus any reductions due to the permanent modification that the borrower actually reported on Forms 982 for taxable years prior to 2012. 2010 1040 tax form (3) Example. 2010 1040 tax form The following example illustrates the application of section 6. 2010 1040 tax form 03(2) of this revenue procedure. 2010 1040 tax form In 2010, B’s basis in B’s principal residence was $330,000. 2010 1040 tax form In 2010, B’s mortgage loan on the principal residence is permanently modified under HAMP-PRA. 2010 1040 tax form B realized $30,000 of cancellation of indebtedness from the permanent modification, all of which qualifies for the exclusion from income for qualified principal residence indebtedness under § 108(a)(1)(E). 2010 1040 tax form The trial period plan effective date also fell in 2010. 2010 1040 tax form B’s federal income tax return for 2010 was consistent with B’s reporting this discharge of indebtedness using the method described in section 6. 2010 1040 tax form 02(2) of this revenue procedure. 2010 1040 tax form That is, B’s 2010 return did not include income from discharge of indebtedness under HAMP-PRA, nor did the return contain a Form 982 reporting exclusion of any such discharge of indebtedness. 2010 1040 tax form The next year, B reported on line 10(b) of the 2011 Form 982 that B filed with B’s 2011 federal income tax return a $10,000 reduction in basis in the principal residence. 2010 1040 tax form For 2012, B chooses to change to reporting the discharge of indebtedness using the method described in section 6. 2010 1040 tax form 02(1) of this revenue procedure. 2010 1040 tax form Thus, B files a 2012 Form 982 with B’s timely filed (including extensions) 2012 federal income tax return, and on line 10(b) of that form, B reports a $20,000 basis reduction in the principal residence ($30,000 basis reduction that B would have excluded from income in 2010 using the method described in section 6. 2010 1040 tax form 02(1) of this revenue procedure, minus the $10,000 basis reduction that B reported on B’s 2011 Form 982). 2010 1040 tax form (4) If a HAMP-PRA borrower reports the entire HAMP-PRA discharge using the method described in section 6. 2010 1040 tax form 02(1) of this revenue procedure, and if that HAMP-PRA borrower’s mortgage loan ceases to be in good standing during the Three-year Period as described in section 2. 2010 1040 tax form 10 of this revenue procedure, then some or all of the anticipated reductions in the PRA Adjusted Forbearance Amount will not take place. 2010 1040 tax form Because the amount of these anticipated reductions was not included in determining the issue price of the new mortgage loan that, pursuant to § 1. 2010 1040 tax form 1001-3, the HAMP-PRA borrower is deemed to issue in satisfaction of the old mortgage loan, the issue price of the new mortgage loan was understated. 2010 1040 tax form Under these circumstances, the discharge of indebtedness income determined as of the date of the permanent modification will have been overstated. 2010 1040 tax form (5) The Service will not challenge a HAMP-PRA borrower who is described in section 6. 2010 1040 tax form 03(4) of this revenue procedure and who takes the following corrective measures: (i) If a HAMP-PRA borrower included any of the discharge of indebtedness in gross income, the HAMP-PRA borrower may file an amended return that does not include the amount of the discharge of indebtedness that was previously reported as gross income but that, because of the HAMP-PRA borrower’s failure to keep the new mortgage loan in good standing, was not ultimately discharged. 2010 1040 tax form The amended return should be for the taxable year in which the income was included (that is, the year of the permanent modification), provided the applicable statute of limitations remains open for that taxable year. 2010 1040 tax form (ii) If the HAMP-PRA borrower did not include any of the discharge of indebtedness in gross income (that is, if the HAMP-PRA borrower excluded all of it), the HAMP-PRA borrower may file a new Form 982 that the Service will treat as superseding the earlier Form 982. 2010 1040 tax form The new Form 982 will reflect the revised reduction in basis or in tax attributes (under § 108(h)(1) or § 108(b)). 2010 1040 tax form The new Form 982 should be the Form 982 for the year of the permanent modification and should be filed with the return for the taxable year in which the HAMP-PRA borrower’s mortgage loan ceased to be in good standing. 2010 1040 tax form . 2010 1040 tax form 04 HAMP-PRA borrowers who choose to treat the HAMP-PRA discharge as being realized on the dates on which the unpaid principal balance of the mortgage loan is reduced. 2010 1040 tax form (1) If a HAMP-PRA borrower chooses to realize the HAMP-PRA discharge at the times that the unpaid principal balance on the new mortgage loan is reduced, instead of at the time of the permanent modification, then the HAMP-PRA borrower’s federal income tax returns for the taxable year that contains the permanent modification and for the subsequent taxable years must not treat any of the discharge as being realized at the time of the permanent modification and must treat the entire HAMP-PRA discharge as being realized in the amounts—and at the times—of the reductions in the unpaid principal balance. 2010 1040 tax form Except as described in the last sentence of this paragraph, therefore, the income tax return for the year of the permanent modification must include no gross income from—nor report on Form 982 an exclusion of—any amount of the HAMP-PRA discharge. 2010 1040 tax form Instead, the HAMP-PRA discharge is included in gross income (or is reported on Form 982 as excluded from gross income) in the subsequent years in which the unpaid principal balance is reduced. 2010 1040 tax form If the first such reduction occurs in the year of the permanent modification, however, then the amount of any such reduction is reflected as an inclusion or exclusion on the federal income tax return for that year. 2010 1040 tax form (2) A HAMP-PRA borrower who has been using the method described in section 6. 2010 1040 tax form 02(1) of this revenue procedure may change to the method described in section 6. 2010 1040 tax form 02(2) but must comply with the consistency and open-year requirements described in section 6. 2010 1040 tax form 01 of this revenue procedure. 2010 1040 tax form SECTION 7. 2010 1040 tax form PENALTY RELIEF FOR 2012 . 2010 1040 tax form 01 The Service will not assert penalties under § 6721 or § 6722 against an investor for failing to timely file and furnish a 2012 Form 1099-C as required by section 5. 2010 1040 tax form 03 through 5. 2010 1040 tax form 04 and section 8. 2010 1040 tax form 02 of this revenue procedure with respect to discharge of indebtedness resulting from HAMP-PRA permanent modifications that take place during calendar year 2012 if the following requirements are satisfied: (1) Not later than February 28, 2013, a statement is sent to the HAMP-PRA borrower containing the following: (a) The HAMP-PRA borrower’s name, address, and taxpayer identification number; and (b) The date and amount of the discharge of indebtedness (as described in sections 4. 2010 1040 tax form 01 through 4. 2010 1040 tax form 04 of this revenue procedure) that is required to be reported for 2012. 2010 1040 tax form (2) Not later than March 28, 2013, a statement is sent to the Service. 2010 1040 tax form It must be in the form of a single statement that separately lists for each HAMP-PRA borrower the information specified in section 7. 2010 1040 tax form 01(1) of this revenue procedure. 2010 1040 tax form The statement should be sent to the Service at the following address: Internal Revenue Service Center Stop 6728AUSC Austin, TX 73301 . 2010 1040 tax form 02 The Service will not assert penalties under § 6721 or § 6722 with respect to any Forms 1099-MISC for 2012 that sections 5. 2010 1040 tax form 06 and 8. 2010 1040 tax form 02 of this revenue procedure require to be filed with the Service and furnished to taxpayers. 2010 1040 tax form . 2010 1040 tax form 03 Section 8. 2010 1040 tax form 03 and 8. 2010 1040 tax form 04 of this revenue procedure, below, describes penalty relief regarding Forms 1099-C and 1099-MISC for 2010 and 2011. 2010 1040 tax form SECTION 8. 2010 1040 tax form SCOPE AND EFFECTIVE DATE . 2010 1040 tax form 01 This revenue procedure applies to all borrowers, investors, and servicers who participate, or have participated, in the HAMP-PRA, regardless of when the permanent modification occurs. 2010 1040 tax form . 2010 1040 tax form 02 Section 5 of this revenue procedure is effective for Forms 1099-C and 1099-MISC due or filed after January 24, 2013. 2010 1040 tax form . 2010 1040 tax form 03 Because of the effective date in section 8. 2010 1040 tax form 02 of this revenue procedure, an investor is not subject to penalties under § 6721 or § 6722 on the grounds that the investor failed to timely file and furnish a 2010 or 2011 Form 1099-C as described in section 5. 2010 1040 tax form 03 through 5. 2010 1040 tax form 04 of this revenue procedure (or on the grounds that the investor filed or furnished a 2010 or 2011 Form 1099-C that is inconsistent with section 5. 2010 1040 tax form 03 through 5. 2010 1040 tax form 04 of this revenue procedure), provided that the investor demonstrates a good faith attempt to comply with the requirements of § 6050P and that the failure was not due to willful neglect. 2010 1040 tax form . 2010 1040 tax form 04 Because of the effective date in section 8. 2010 1040 tax form 02 of this revenue procedure, the Service will not assert penalties under § 6721 or § 6722 on the grounds of a failure to timely file and furnish a 2010 or 2011 Form 1099-MISC, as described in section 5. 2010 1040 tax form 06 of this revenue procedure. 2010 1040 tax form SECTION 9. 2010 1040 tax form DRAFTING INFORMATION The principal authors of this revenue procedure are Ronald J. 2010 1040 tax form Goldstein of the Office of Chief Counsel (Procedure and Administration); Shareen S. 2010 1040 tax form Pflanz and Sheldon A. 2010 1040 tax form Iskow of the Office of Chief Counsel (Income Tax and Accounting); and Andrea M. 2010 1040 tax form Hoffenson of the Office of Chief Counsel (Financial Institutions and Products). 2010 1040 tax form For further information regarding this revenue procedure, contact Procedure and Administration branch 1 at (202) 622-4910, Income Tax and Accounting branch 4 at (202) 622-4920, or Financial Institutions and Products branch 1 at (202) 622-3920 (not toll-free calls). 2010 1040 tax form Prev  Up  Next   Home   More Internal Revenue Bulletins