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Free Tax Forms 2012

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Free Tax Forms 2012

Free tax forms 2012 25. Free tax forms 2012   Nonbusiness Casualty and Theft Losses Table of Contents What's New Introduction Useful Items - You may want to see: CasualtyFamily pet. Free tax forms 2012 Progressive deterioration. Free tax forms 2012 Damage from corrosive drywall. Free tax forms 2012 Theft Loss on Deposits Proof of Loss Figuring a LossDecrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Single Casualty on Multiple Properties Deduction Limits$100 Rule 10% Rule When To Report Gains and LossesDisaster Area Loss How To Report Gains and Losses What's New New Section C of Form 4684 for Ponzi-type investment schemes. Free tax forms 2012  Section C of Form 4684 is new for 2013. Free tax forms 2012 You must complete Section C if you are claiming a theft loss deduction due to a Ponzi-type investment scheme and are using Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58. Free tax forms 2012 Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Free tax forms 2012 You do not need to complete Appendix A. Free tax forms 2012 For details, see Losses from Ponzi-type investment schemes , in this chapter. Free tax forms 2012 Introduction This chapter explains the tax treatment of personal (not business or investment related) casualty losses, theft losses, and losses on deposits. Free tax forms 2012 The chapter also explains the following  topics. Free tax forms 2012 How to figure the amount of your loss. Free tax forms 2012 How to treat insurance and other reimbursements you receive. Free tax forms 2012 The deduction limits. Free tax forms 2012 When and how to report a casualty or theft. Free tax forms 2012 Forms to file. Free tax forms 2012    When you have a casualty or theft, you have to file Form 4684. Free tax forms 2012 You will also have to file one or more of the following forms. Free tax forms 2012 Schedule A (Form 1040), Itemized Deductions Schedule D (Form 1040), Capital Gains and Losses Condemnations. Free tax forms 2012   For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544, Sales and Other Disposition of Assets. Free tax forms 2012 Workbook for casualties and thefts. Free tax forms 2012    Publication 584 is available to help you make a list of your stolen or damaged personal-use property and figure your loss. Free tax forms 2012 It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Free tax forms 2012 Business or investment-related losses. Free tax forms 2012   For information on a casualty or theft loss of business or income-producing property, see Publication 547, Casualties, Disasters, and Thefts. Free tax forms 2012 Useful Items - You may want to see: Publication 544 Sales and Other Dispositions  of Assets 547 Casualties, Disasters, and   Thefts 584 Casualty, Disaster, and Theft   Loss Workbook (Personal-Use  Property) Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule D (Form 1040) Capital Gains and Losses 4684 Casualties and Thefts Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Free tax forms 2012 A sudden event is one that is swift, not gradual or progressive. Free tax forms 2012 An unexpected event is one that is ordinarily unanticipated and unintended. Free tax forms 2012 An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged. Free tax forms 2012 Deductible losses. Free tax forms 2012   Deductible casualty losses can result from a number of different causes, including the following. Free tax forms 2012 Car accidents (but see Nondeductible losses , next, for exceptions). Free tax forms 2012 Earthquakes. Free tax forms 2012 Fires (but see Nondeductible losses , next, for exceptions). Free tax forms 2012 Floods. Free tax forms 2012 Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses in Publication 547. Free tax forms 2012 Mine cave-ins. Free tax forms 2012 Shipwrecks. Free tax forms 2012 Sonic booms. Free tax forms 2012 Storms, including hurricanes and tornadoes. Free tax forms 2012 Terrorist attacks. Free tax forms 2012 Vandalism. Free tax forms 2012 Volcanic eruptions. Free tax forms 2012 Nondeductible losses. Free tax forms 2012   A casualty loss is not deductible if the damage or destruction is caused by the following. Free tax forms 2012 Accidentally breaking articles such as glassware or china under normal conditions. Free tax forms 2012 A family pet (explained below). Free tax forms 2012 A fire if you willfully set it or pay someone else to set it. Free tax forms 2012 A car accident if your willful negligence or willful act caused it. Free tax forms 2012 The same is true if the willful act or willful negligence of someone acting for you caused the accident. Free tax forms 2012 Progressive deterioration (explained later). Free tax forms 2012 Family pet. Free tax forms 2012   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. Free tax forms 2012 Example. Free tax forms 2012 Your antique oriental rug was damaged by your new puppy before it was housebroken. Free tax forms 2012 Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. Free tax forms 2012 Progressive deterioration. Free tax forms 2012    Loss of property due to progressive deterioration is not deductible as a casualty loss. Free tax forms 2012 This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Free tax forms 2012 The following are examples of damage due to progressive deterioration. Free tax forms 2012 The steady weakening of a building due to normal wind and weather conditions. Free tax forms 2012 The deterioration and damage to a water heater that bursts. Free tax forms 2012 However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. Free tax forms 2012 Most losses of property caused by droughts. Free tax forms 2012 To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. Free tax forms 2012 Termite or moth damage. Free tax forms 2012 The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. Free tax forms 2012 However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. Free tax forms 2012 Damage from corrosive drywall. Free tax forms 2012   Under a special procedure, you may be able to claim a casualty loss deduction for amounts you paid to repair damage to your home and household appliances that resulted from corrosive drywall. Free tax forms 2012 For details, see Publication 547. Free tax forms 2012 Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. Free tax forms 2012 The taking of property must be illegal under the laws of the state where it occurred and it must have been done with criminal intent. Free tax forms 2012 You do not need to show a conviction for theft. Free tax forms 2012 Theft includes the taking of money or property by the following means. Free tax forms 2012 Blackmail. Free tax forms 2012 Burglary. Free tax forms 2012 Embezzlement. Free tax forms 2012 Extortion. Free tax forms 2012 Kidnapping for ransom. Free tax forms 2012 Larceny. Free tax forms 2012 Robbery. Free tax forms 2012 The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Free tax forms 2012 Decline in market value of stock. Free tax forms 2012   You cannot deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. Free tax forms 2012 However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. Free tax forms 2012 You report a capital loss on Schedule D (Form 1040). Free tax forms 2012 For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Free tax forms 2012 Mislaid or lost property. Free tax forms 2012   The simple disappearance of money or property is not a theft. Free tax forms 2012 However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Free tax forms 2012 Sudden, unexpected, and unusual events are defined earlier. Free tax forms 2012 Example. Free tax forms 2012 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Free tax forms 2012 The diamond falls from the ring and is never found. Free tax forms 2012 The loss of the diamond is a casualty. Free tax forms 2012 Losses from Ponzi-type investment schemes. Free tax forms 2012   If you had a loss from a Ponzi-type investment scheme, see: Revenue Ruling 2009-9, 2009-14 I. Free tax forms 2012 R. Free tax forms 2012 B. Free tax forms 2012 735 (available at www. Free tax forms 2012 irs. Free tax forms 2012 gov/irb/2009-14_IRB/ar07. Free tax forms 2012 html). Free tax forms 2012 Revenue Procedure 2009-20, 2009-14 I. Free tax forms 2012 R. Free tax forms 2012 B. Free tax forms 2012 749 (available at www. Free tax forms 2012 irs. Free tax forms 2012 gov/irb/2009-14_IRB/ar11. Free tax forms 2012 html). Free tax forms 2012 Revenue Procedure 2011-58, 2011-50 I. Free tax forms 2012 R. Free tax forms 2012 B. Free tax forms 2012 849 (available at www. Free tax forms 2012 irs. Free tax forms 2012 gov/irb/2011-50_IRB/ar11. Free tax forms 2012 html). Free tax forms 2012 If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. Free tax forms 2012 Skip lines 19 to 27. Free tax forms 2012 Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Free tax forms 2012 You do not need to complete Appendix A. Free tax forms 2012 For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. Free tax forms 2012   If you choose not to use the procedures in Revenue Procedure 2009-20, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. Free tax forms 2012 Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. Free tax forms 2012 If you incurred this type of loss, you can choose one of the following ways to deduct the loss. Free tax forms 2012 As a casualty loss. Free tax forms 2012 As an ordinary loss. Free tax forms 2012 As a nonbusiness bad debt. Free tax forms 2012 Casualty loss or ordinary loss. Free tax forms 2012   You can choose to deduct a loss on deposits as a casualty loss or as an ordinary loss for any year in which you can reasonably estimate how much of your deposits you have lost in an insolvent or bankrupt financial institution. Free tax forms 2012 The choice is generally made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. Free tax forms 2012 If you treat the loss as a casualty or ordinary loss, you cannot treat the same amount of the loss as a nonbusiness bad debt when it actually becomes worthless. Free tax forms 2012 However, you can take a nonbusiness bad debt deduction for any amount of loss that is more than the estimated amount you deducted as a casualty or ordinary loss. Free tax forms 2012 Once you make this choice, you cannot change it without permission from the Internal Revenue Service. Free tax forms 2012   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Free tax forms 2012 The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. Free tax forms 2012 Your loss is subject to the 2%-of-adjusted-gross-income limit. Free tax forms 2012 You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. Free tax forms 2012 Nonbusiness bad debt. Free tax forms 2012   If you do not choose to deduct the loss as a casualty loss or as an ordinary loss, you must wait until the year the actual loss is determined and deduct the loss as a nonbusiness bad debt in that year. Free tax forms 2012 How to report. Free tax forms 2012   The kind of deduction you choose for your loss on deposits determines how you report your loss. Free tax forms 2012 If you choose: Casualty loss — report it on Form 4684 first and then on Schedule A (Form 1040). Free tax forms 2012 Ordinary loss — report it on Schedule A (Form 1040) as a miscellaneous itemized deduction. Free tax forms 2012 Nonbusiness bad debt — report it on Form 8949 first and then on Schedule D (Form 1040). Free tax forms 2012 More information. Free tax forms 2012   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684 or Deposit in Insolvent or Bankrupt Financial Institution in Publication 550. Free tax forms 2012 Proof of Loss To deduct a casualty or theft loss, you must be able to prove that you had a casualty or theft. Free tax forms 2012 You also must be able to support the amount you take as a deduction. Free tax forms 2012 Casualty loss proof. Free tax forms 2012   For a casualty loss, your records should show all the following. Free tax forms 2012 The type of casualty (car accident, fire, storm, etc. Free tax forms 2012 ) and when it occurred. Free tax forms 2012 That the loss was a direct result of the casualty. Free tax forms 2012 That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage. Free tax forms 2012 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Free tax forms 2012 Theft loss proof. Free tax forms 2012   For a theft loss, your records should show all the following. Free tax forms 2012 When you discovered that your property was missing. Free tax forms 2012 That your property was stolen. Free tax forms 2012 That you were the owner of the property. Free tax forms 2012 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Free tax forms 2012 It is important that you have records that will prove your deduction. Free tax forms 2012 If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. Free tax forms 2012 Figuring a Loss Figure the amount of your loss using the following steps. Free tax forms 2012 Determine your adjusted basis in the property before the casualty or theft. Free tax forms 2012 Determine the decrease in fair market value of the property as a result of the casualty or theft. Free tax forms 2012 From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. Free tax forms 2012 For personal-use property and property used in performing services as an employee, apply the deduction limits, discussed later, to determine the amount of your deductible loss. Free tax forms 2012 Gain from reimbursement. Free tax forms 2012   If your reimbursement is more than your adjusted basis in the property, you have a gain. Free tax forms 2012 This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. Free tax forms 2012 If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. Free tax forms 2012 See Publication 547 for more information on how to treat a gain from a reimbursement for a casualty or theft. Free tax forms 2012 Leased property. Free tax forms 2012   If you are liable for casualty damage to property you lease, your loss is the amount you must pay to repair the property minus any insurance or other reimbursement you receive or expect to receive. Free tax forms 2012 Decrease in Fair Market Value Fair market value (FMV) is the price for which you could sell your property to a willing buyer when neither of you has to sell or buy and both of you know all the relevant facts. Free tax forms 2012 The decrease in FMV used to figure the amount of a casualty or theft loss is the difference between the property's fair market value immediately before and immediately after the casualty or theft. Free tax forms 2012 FMV of stolen property. Free tax forms 2012   The FMV of property immediately after a theft is considered to be zero, since you no longer have the property. Free tax forms 2012 Example. Free tax forms 2012 Several years ago, you purchased silver dollars at face value for $150. Free tax forms 2012 This is your adjusted basis in the property. Free tax forms 2012 Your silver dollars were stolen this year. Free tax forms 2012 The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. Free tax forms 2012 Your theft loss is $150. Free tax forms 2012 Recovered stolen property. Free tax forms 2012   Recovered stolen property is your property that was stolen and later returned to you. Free tax forms 2012 If you recovered property after you had already taken a theft loss deduction, you must refigure your loss using the smaller of the property's adjusted basis (explained later) or the decrease in FMV from the time just before it was stolen until the time it was recovered. Free tax forms 2012 Use this amount to refigure your total loss for the year in which the loss was deducted. Free tax forms 2012   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. Free tax forms 2012 But report the difference only up to the amount of the loss that reduced your tax. Free tax forms 2012 For more information on the amount to report, see Recoveries in chapter 12. Free tax forms 2012 Figuring Decrease in FMV— Items To Consider To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Free tax forms 2012 However, other measures can also be used to establish certain decreases. Free tax forms 2012 Appraisal. Free tax forms 2012   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterward should be made by a competent appraiser. Free tax forms 2012 The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Free tax forms 2012 This information is needed to limit any deduction to the actual loss resulting from damage to the property. Free tax forms 2012   Several factors are important in evaluating the accuracy of an appraisal, including the following. Free tax forms 2012 The appraiser's familiarity with your property before and after the casualty or theft. Free tax forms 2012 The appraiser's knowledge of sales of comparable property in the area. Free tax forms 2012 The appraiser's knowledge of conditions in the area of the casualty. Free tax forms 2012 The appraiser's method of appraisal. Free tax forms 2012    You may be able to use an appraisal that you used to get a federal loan (or a federal loan guarantee) as the result of a federally declared disaster to establish the amount of your disaster loss. Free tax forms 2012 For more information on disasters, see Disaster Area Losses, in Pub. Free tax forms 2012 547. Free tax forms 2012 Cost of cleaning up or making repairs. Free tax forms 2012   The cost of repairing damaged property is not part of a casualty loss. Free tax forms 2012 Neither is the cost of cleaning up after a casualty. Free tax forms 2012 But you can use the cost of cleaning up or making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Free tax forms 2012 The repairs are actually made. Free tax forms 2012 The repairs are necessary to bring the property back to its condition before the casualty. Free tax forms 2012 The amount spent for repairs is not excessive. Free tax forms 2012 The repairs take care of the damage only. Free tax forms 2012 The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Free tax forms 2012 Landscaping. Free tax forms 2012   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. Free tax forms 2012 You may be able to measure your loss by what you spend on the following. Free tax forms 2012 Removing destroyed or damaged trees and shrubs minus any salvage you receive. Free tax forms 2012 Pruning and other measures taken to preserve damaged trees and shrubs. Free tax forms 2012 Replanting necessary to restore the property to its approximate value before the casualty. Free tax forms 2012 Car value. Free tax forms 2012    Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. Free tax forms 2012 You can use the book's retail values and modify them by such factors as mileage and the condition of your car to figure its value. Free tax forms 2012 The prices are not official, but they may be useful in determining value and suggesting relative prices for comparison with current sales and offerings in your area. Free tax forms 2012 If your car is not listed in the books, determine its value from other sources. Free tax forms 2012 A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. Free tax forms 2012 Figuring Decrease in FMV— Items Not To Consider You generally should not consider the following items when attempting to establish the decrease in FMV of your property. Free tax forms 2012 Cost of protection. Free tax forms 2012   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. Free tax forms 2012 The amount you spend on insurance or to board up your house against a storm is not part of your loss. Free tax forms 2012   If you make permanent improvements to your property to protect it against a casualty or theft, add the cost of these improvements to your basis in the property. Free tax forms 2012 An example would be the cost of a dike to prevent flooding. Free tax forms 2012 Exception. Free tax forms 2012   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments. Free tax forms 2012 See Disaster Area Losses in Publication 547. Free tax forms 2012 Incidental expenses. Free tax forms 2012   Any incidental expenses you have due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. Free tax forms 2012 Replacement cost. Free tax forms 2012   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. Free tax forms 2012 Sentimental value. Free tax forms 2012   Do not consider sentimental value when determining your loss. Free tax forms 2012 If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV, as limited by your adjusted basis in the property. Free tax forms 2012 Decline in market value of property in or near casualty area. Free tax forms 2012   A decrease in the value of your property because it is in or near an area that suffered a casualty, or that might again suffer a casualty, is not to be taken into consideration. Free tax forms 2012 You have a loss only for actual casualty damage to your property. Free tax forms 2012 However, if your home is in a federally declared disaster area, see Disaster Area Losses in Publication 547. Free tax forms 2012 Costs of photographs and appraisals. Free tax forms 2012    Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. Free tax forms 2012 Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. Free tax forms 2012    Appraisals are used to figure the decrease in FMV because of a casualty or theft. Free tax forms 2012 See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. Free tax forms 2012   The costs of photographs and appraisals used as evidence of the value and condition of property damaged as a result of a casualty are not a part of the loss. Free tax forms 2012 You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). Free tax forms 2012 For information about miscellaneous deductions, see chapter 28. Free tax forms 2012 Adjusted Basis Adjusted basis is your basis in the property (usually cost) increased or decreased by various events, such as improvements and casualty losses. Free tax forms 2012 For more information, see chapter 13. Free tax forms 2012 Insurance and Other Reimbursements If you receive an insurance payment or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Free tax forms 2012 You do not have a casualty or theft loss to the extent you are reimbursed. Free tax forms 2012 If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Free tax forms 2012 You must reduce your loss even if you do not receive payment until a later tax year. Free tax forms 2012 See Reimbursement Received After Deducting Loss , later. Free tax forms 2012 Failure to file a claim for reimbursement. Free tax forms 2012   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. Free tax forms 2012 Otherwise, you cannot deduct this loss as a casualty or theft loss. Free tax forms 2012 However, this rule does not apply to the portion of the loss not covered by insurance (for example, a deductible). Free tax forms 2012 Example. Free tax forms 2012 You have a car insurance policy with a $1,000 deductible. Free tax forms 2012 Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the deduction limits discussed later). Free tax forms 2012 This is true even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. Free tax forms 2012 Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. Free tax forms 2012 Other types of reimbursements are discussed next. Free tax forms 2012 Also see the Instructions for Form 4684. Free tax forms 2012 Employer's emergency disaster fund. Free tax forms 2012   If you receive money from your employer's emergency disaster fund and you must use that money to rehabilitate or replace property on which you are claiming a casualty loss deduction, you must take that money into consideration in computing the casualty loss deduction. Free tax forms 2012 Take into consideration only the amount you used to replace your destroyed or damaged property. Free tax forms 2012 Example. Free tax forms 2012 Your home was extensively damaged by a tornado. Free tax forms 2012 Your loss after reimbursement from your insurance company was $10,000. Free tax forms 2012 Your employer set up a disaster relief fund for its employees. Free tax forms 2012 Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. Free tax forms 2012 You received $4,000 from the fund and spent the entire amount on repairs to your home. Free tax forms 2012 In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. Free tax forms 2012 Your casualty loss before applying the deduction limits discussed later is $6,000. Free tax forms 2012 Cash gifts. Free tax forms 2012   If you receive excludable cash gifts as a disaster victim and there are no limits on how you can use the money, you do not reduce your casualty loss by these excludable cash gifts. Free tax forms 2012 This applies even if you use the money to pay for repairs to property damaged in the disaster. Free tax forms 2012 Example. Free tax forms 2012 Your home was damaged by a hurricane. Free tax forms 2012 Relatives and neighbors made cash gifts to you that were excludable from your income. Free tax forms 2012 You used part of the cash gifts to pay for repairs to your home. Free tax forms 2012 There were no limits or restrictions on how you could use the cash gifts. Free tax forms 2012 Because it was an excludable gift, the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. Free tax forms 2012 Insurance payments for living expenses. Free tax forms 2012   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. Free tax forms 2012 You lose the use of your main home because of a casualty. Free tax forms 2012 Government authorities do not allow you access to your main home because of a casualty or threat of one. Free tax forms 2012 Inclusion in income. Free tax forms 2012   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. Free tax forms 2012 Report this amount on Form 1040, line 21. Free tax forms 2012 However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. Free tax forms 2012 See Qualified disaster relief payments, under Disaster Area Losses in Publication 547. Free tax forms 2012   A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. Free tax forms 2012 Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. Free tax forms 2012 Generally, these expenses include the amounts you pay for the following. Free tax forms 2012 Rent for suitable housing. Free tax forms 2012 Transportation. Free tax forms 2012 Food. Free tax forms 2012 Utilities. Free tax forms 2012 Miscellaneous services. Free tax forms 2012 Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one. Free tax forms 2012 Example. Free tax forms 2012 As a result of a fire, you vacated your apartment for a month and moved to a motel. Free tax forms 2012 You normally pay $525 a month for rent. Free tax forms 2012 None was charged for the month the apartment was vacated. Free tax forms 2012 Your motel rent for this month was $1,200. Free tax forms 2012 You normally pay $200 a month for food. Free tax forms 2012 Your food expenses for the month you lived in the motel were $400. Free tax forms 2012 You received $1,100 from your insurance company to cover your living expenses. Free tax forms 2012 You determine the payment you must include in income as follows. Free tax forms 2012 1) Insurance payment for living expenses $1,100 2) Actual expenses during the month you are unable to use your home because of fire 1,600   3) Normal living expenses 725   4) Temporary increase in living  expenses: Subtract line 3 from line 2 875 5) Amount of payment includible  in income: Subtract line 4  from line 1 $ 225 Tax year of inclusion. Free tax forms 2012   You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment. Free tax forms 2012 Example. Free tax forms 2012 Your main home was destroyed by a tornado in August 2011. Free tax forms 2012 You regained use of your home in November 2012. Free tax forms 2012 The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. Free tax forms 2012 You include this amount in income on your 2012 Form 1040. Free tax forms 2012 If, in 2013, you receive further payments to cover the living expenses you had in 2011 and 2012, you must include those payments in income on your 2013 Form 1040. Free tax forms 2012 Disaster relief. Free tax forms 2012   Food, medical supplies, and other forms of assistance you receive do not reduce your casualty loss unless they are replacements for lost or destroyed property. Free tax forms 2012 Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Free tax forms 2012 For more information, see Disaster Area Losses in Publication 547. Free tax forms 2012 Disaster unemployment assistance payments are unemployment benefits that are taxable. Free tax forms 2012 Generally, disaster relief grants and qualified disaster mitigation payments made under the Robert T. Free tax forms 2012 Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not includible in your income. Free tax forms 2012 See Disaster Area Losses in Publication 547. Free tax forms 2012 Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you receive your actual reimbursement. Free tax forms 2012 This section explains the adjustment you may have to make. Free tax forms 2012 Actual reimbursement less than expected. Free tax forms 2012   If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement. Free tax forms 2012 Example. Free tax forms 2012 Your personal car had an FMV of $2,000 when it was destroyed in a collision with another car in 2012. Free tax forms 2012 The accident was due to the negligence of the other driver. Free tax forms 2012 At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. Free tax forms 2012 You did not have a deductible loss in 2012. Free tax forms 2012 In January 2013, the court awarded you a judgment of $2,000. Free tax forms 2012 However, in July it became apparent that you will be unable to collect any amount from the other driver. Free tax forms 2012 You can deduct the loss in 2013 subject to the limits discussed later. Free tax forms 2012 Actual reimbursement more than expected. Free tax forms 2012   If you later receive more reimbursement than you expected after you claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Free tax forms 2012 However, if any part of the original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Free tax forms 2012 You do not refigure your tax for the year you claimed the deduction. Free tax forms 2012 For more information, see Recoveries in chapter 12. Free tax forms 2012 If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. Free tax forms 2012 If you have already taken a deduction for a loss and you receive the reimbursement in a later year, you may have to include the gain in your income for the later year. Free tax forms 2012 Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. Free tax forms 2012 See Figuring a Gain in Publication 547 for more information on how to treat a gain from the reimbursement of a casualty or theft. Free tax forms 2012 Actual reimbursement same as expected. Free tax forms 2012   If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss. Free tax forms 2012 Example. Free tax forms 2012 In December 2013, you had a collision while driving your personal car. Free tax forms 2012 Repairs to the car cost $950. Free tax forms 2012 You had $100 deductible collision insurance. Free tax forms 2012 Your insurance company agreed to reimburse you for the rest of the damage. Free tax forms 2012 Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. Free tax forms 2012 Due to the $100 rule (discussed later under Deduction Limits ), you cannot deduct the $100 you paid as the deductible. Free tax forms 2012 When you receive the $850 from the insurance company in 2014, do not report it as income. Free tax forms 2012 Single Casualty on Multiple Properties Personal property. Free tax forms 2012   Personal property is any property that is not real property. Free tax forms 2012 If your personal property is stolen or is damaged or destroyed by a casualty, you must figure your loss separately for each item of property. Free tax forms 2012 Then combine these separate losses to figure the total loss from that casualty or theft. Free tax forms 2012 Example. Free tax forms 2012 A fire in your home destroyed an upholstered chair, an oriental rug, and an antique table. Free tax forms 2012 You did not have fire insurance to cover your loss. Free tax forms 2012 (This was the only casualty or theft you had during the year. Free tax forms 2012 ) You paid $750 for the chair and you established that it had an FMV of $500 just before the fire. Free tax forms 2012 The rug cost $3,000 and had an FMV of $2,500 just before the fire. Free tax forms 2012 You bought the table at an auction for $100 before discovering it was an antique. Free tax forms 2012 It had been appraised at $900 before the fire. Free tax forms 2012 You figure your loss on each of these items as follows:     Chair Rug Table 1) Basis (cost) $750 $3,000 $100 2) FMV before fire $500 $2,500 $900 3) FMV after fire –0– –0– –0– 4) Decrease in FMV $500 $2,500 $900 5) Loss (smaller of (1) or  (4)) $500 $2,500 $100           6) Total loss     $3,100 Real property. Free tax forms 2012   In figuring a casualty loss on personal-use real property, treat the entire property (including any improvements, such as buildings, trees, and shrubs) as one item. Free tax forms 2012 Figure the loss using the smaller of the adjusted basis or the decrease in FMV of the entire property. Free tax forms 2012 Example. Free tax forms 2012 You bought your home a few years ago. Free tax forms 2012 You paid $160,000 ($20,000 for the land and $140,000 for the house). Free tax forms 2012 You also spent $2,000 for landscaping. Free tax forms 2012 This year a fire destroyed your home. Free tax forms 2012 The fire also damaged the shrubbery and trees in your yard. Free tax forms 2012 The fire was your only casualty or theft loss this year. Free tax forms 2012 Competent appraisers valued the property as a whole at $200,000 before the fire, but only $30,000 after the fire. Free tax forms 2012 (The loss to your household furnishings is not shown in this example. Free tax forms 2012 It would be figured separately on each item, as explained earlier under Personal property . Free tax forms 2012 ) Shortly after the fire, the insurance company paid you $155,000 for the loss. Free tax forms 2012 You figure your casualty loss as follows: 1) Adjusted basis of the entire property (land, building, and landscaping) $162,000 2) FMV of entire property before fire $200,000 3) FMV of entire property after fire 30,000 4) Decrease in FMV of entire  property $170,000 5) Loss (smaller of (1) or (4)) $162,000 6) Subtract insurance 155,000 7) Amount of loss after reimbursement $7,000 Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. Free tax forms 2012 If the loss was to property for your personal use or your family's use, there are two limits on the amount you can deduct for your casualty or theft loss. Free tax forms 2012 You must reduce each casualty or theft loss by $100 ($100 rule). Free tax forms 2012 You must further reduce the total of all your casualty or theft losses by 10% of your adjusted gross income (10% rule). Free tax forms 2012 You make these reductions on Form 4684. Free tax forms 2012 These rules are explained next and Table 25-1 summarizes how to apply the $100 rule and the 10% rule in various situations. Free tax forms 2012 For more detailed explanations and examples, see Publication 547. Free tax forms 2012 Table 25-1. Free tax forms 2012 How To Apply the Deduction Limits for Personal-Use Property   $100 Rule 10% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. Free tax forms 2012 Apply this rule after you have figured the amount of your loss. Free tax forms 2012 You must reduce your total casualty or theft loss by 10% of your adjusted gross income. Free tax forms 2012 Apply this rule after you reduce each loss by $100 (the $100 rule). Free tax forms 2012 Single Event Apply this rule only once, even if many pieces of property are affected. Free tax forms 2012 Apply this rule only once, even if many pieces of property are affected. Free tax forms 2012 More Than One Event Apply to the loss from each event. Free tax forms 2012 Apply to the total of all your losses from all events. Free tax forms 2012 More Than One Person— With Loss From the Same Event (other than a married couple filing jointly) Apply separately to each person. Free tax forms 2012 Apply separately to each person. Free tax forms 2012 Married Couple—With Loss From the Same Event Filing Jointly Apply as if you were one person. Free tax forms 2012 Apply as if you were one person. Free tax forms 2012 Filing Separately Apply separately to each spouse. Free tax forms 2012 Apply separately to each spouse. Free tax forms 2012 More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. Free tax forms 2012 Apply separately to each owner of jointly owned property. Free tax forms 2012 Property used partly for business and partly for personal purposes. Free tax forms 2012   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use part and for the business or income-producing part. Free tax forms 2012 You must figure each loss separately because the $100 rule and the 10% rule apply only to the loss on the personal-use part of the property. Free tax forms 2012 $100 Rule After you have figured your casualty or theft loss on personal-use property, you must reduce that loss by $100. Free tax forms 2012 This reduction applies to each total casualty or theft loss. Free tax forms 2012 It does not matter how many pieces of property are involved in an event. Free tax forms 2012 Only a single $100 reduction applies. Free tax forms 2012 Example. Free tax forms 2012 A hailstorm damages your home and your car. Free tax forms 2012 Determine the amount of loss, as discussed earlier, for each of these items. Free tax forms 2012 Since the losses are due to a single event, you combine the losses and reduce the combined amount by $100. Free tax forms 2012 Single event. Free tax forms 2012   Generally, events closely related in origin cause a single casualty. Free tax forms 2012 It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. Free tax forms 2012 10% Rule You must reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Free tax forms 2012 Apply this rule after you reduce each loss by $100. Free tax forms 2012 For more information, see the Form 4684 instructions. Free tax forms 2012 If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. Free tax forms 2012 Example 1. Free tax forms 2012 In June, you discovered that your house had been burglarized. Free tax forms 2012 Your loss after insurance reimbursement was $2,000. Free tax forms 2012 Your adjusted gross income for the year you discovered the theft is $29,500. Free tax forms 2012 You first apply the $100 rule and then the 10% rule. Free tax forms 2012 Figure your theft loss deduction as follows. Free tax forms 2012 1) Loss after insurance $2,000 2) Subtract $100 100 3) Loss after $100 rule $1,900 4) Subtract 10% × $29,500 AGI 2,950 5) Theft loss deduction –0– You do not have a theft loss deduction because your loss after you apply the $100 rule ($1,900) is less than 10% of your adjusted gross income ($2,950). Free tax forms 2012 Example 2. Free tax forms 2012 In March, you had a car accident that totally destroyed your car. Free tax forms 2012 You did not have collision insurance on your car, so you did not receive any insurance reimbursement. Free tax forms 2012 Your loss on the car was $1,800. Free tax forms 2012 In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items stored there. Free tax forms 2012 Your loss on the basement items after reimbursement was $2,100. Free tax forms 2012 Your adjusted gross income for the year that the accident and fire occurred is $25,000. Free tax forms 2012 You figure your casualty loss deduction as follows. Free tax forms 2012       Base-     Car ment 1) Loss $1,800 $2,100 2) Subtract $100 per incident 100 100 3) Loss after $100 rule $1,700 $2,000 4) Total loss $3,700 5) Subtract 10% × $25,000 AGI 2,500 6) Casualty loss deduction $1,200 Gains and losses. Free tax forms 2012   If you had both gains and losses from casualties or thefts to personal-use property, you must compare your total gains to your total losses. Free tax forms 2012 Do this after you have reduced each loss by any reimbursements and by $100, but before you have reduced the losses by 10% of your adjusted gross income. Free tax forms 2012 Casualty or theft gains do not include gains you choose to postpone. Free tax forms 2012 See Publication 547 for information on the postponement of gain. Free tax forms 2012 Losses more than gains. Free tax forms 2012   If your losses are more than your recognized gains, subtract your gains from your losses and reduce the result by 10% of your adjusted gross income. Free tax forms 2012 The rest, if any, is your deductible loss from personal-use property. Free tax forms 2012 Gains more than losses. Free tax forms 2012   If your recognized gains are more than your losses, subtract your losses from your gains. Free tax forms 2012 The difference is treated as capital gain and must be reported on Schedule D (Form 1040). Free tax forms 2012 The 10% rule does not apply to your gains. Free tax forms 2012 When To Report Gains and Losses Gains. Free tax forms 2012   If you receive an insurance or other reimbursement that is more than your adjusted basis in the destroyed or stolen property, you have a gain from the casualty or theft. Free tax forms 2012 You must include this gain in your income in the year you receive the reimbursement, unless you choose to postpone reporting the gain as explained in Publication 547. Free tax forms 2012 If you have a loss, see Table 25-2 . Free tax forms 2012 Table 25-2. Free tax forms 2012 When To Deduct a Loss IF you have a loss. Free tax forms 2012 . Free tax forms 2012 . Free tax forms 2012 THEN deduct it in the year. Free tax forms 2012 . Free tax forms 2012 . Free tax forms 2012 from a casualty, the loss occurred. Free tax forms 2012 in a federally declared disaster area, the disaster occurred or the year immediately before the disaster. Free tax forms 2012 from a theft, the theft was discovered. Free tax forms 2012 on a deposit treated as a:   • casualty or any ordinary loss, a reasonable estimate can be made. Free tax forms 2012 • bad debt, deposits are totally worthless. Free tax forms 2012 Losses. Free tax forms 2012   Generally, you can deduct a casualty loss that is not reimbursable only in the tax year in which the casualty occurred. Free tax forms 2012 This is true even if you do not repair or replace the damaged property until a later year. Free tax forms 2012   You can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Free tax forms 2012   If you are not sure whether part of your casualty or theft loss will be reimbursed, do not deduct that part until the tax year when you become reasonably certain that it will not be reimbursed. Free tax forms 2012 Loss on deposits. Free tax forms 2012   If your loss is a loss on deposits in an insolvent or bankrupt financial institution, see Loss on Deposits , earlier. Free tax forms 2012 Disaster Area Loss You generally must deduct a casualty loss in the year it occurred. Free tax forms 2012 However, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct the loss on your tax return or amended return for either of the following years. Free tax forms 2012 The year the disaster occurred. Free tax forms 2012 The year immediately preceding the year the disaster occurred. Free tax forms 2012 Gains. Free tax forms 2012    Special rules apply if you choose to postpone reporting gain on property damaged or destroyed in a federally declared disaster area. Free tax forms 2012 For those special rules, see Publication 547. Free tax forms 2012 Postponed tax deadlines. Free tax forms 2012   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Free tax forms 2012 The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. Free tax forms 2012   If any tax deadline is postponed, the IRS will publicize the postponement in your area by publishing a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Free tax forms 2012 Go to www. Free tax forms 2012 irs. Free tax forms 2012 gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Free tax forms 2012 Who is eligible. Free tax forms 2012   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Free tax forms 2012 Any individual whose main home is located in a covered disaster area (defined next). Free tax forms 2012 Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Free tax forms 2012 Any individual who is a relief worker affiliated with a recognized government or philanthropic organization who is assisting in a covered disaster area. Free tax forms 2012 Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Free tax forms 2012 The main home or principal place of business does not have to be located in the covered disaster area. Free tax forms 2012 Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Free tax forms 2012 The spouse on a joint return with a taxpayer who is eligible for postponements. Free tax forms 2012 Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose records necessary to meet a postponed tax deadline are located in the covered disaster area. Free tax forms 2012 Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Free tax forms 2012 Any other person determined by the IRS to be affected by a federally declared disaster. Free tax forms 2012 Covered disaster area. Free tax forms 2012   This is an area of a federally declared disaster in which the IRS has decided to postpone tax deadlines for up to 1 year. Free tax forms 2012 Abatement of interest and penalties. Free tax forms 2012   The IRS may abate the interest and penalties on underpaid income tax for the length of any postponement of tax deadlines. Free tax forms 2012 More information. Free tax forms 2012   For more information, see Disaster Area Losses in Publication 547. Free tax forms 2012 How To Report Gains and Losses Use Form 4684 to report a gain or a deductible loss from a casualty or theft. Free tax forms 2012 If you have more than one casualty or theft, use a separate Form 4684 to determine your gain or loss for each event. Free tax forms 2012 Combine the gains and losses on one Form 4684. Free tax forms 2012 Follow the form instructions as to which lines to fill out. Free tax forms 2012 In addition, you must use the appropriate schedule to report a gain or loss. Free tax forms 2012 The schedule you use depends on whether you have a gain or loss. Free tax forms 2012 If you have a: Report it on: Gain Schedule D (Form 1040) Loss Schedule A (Form 1040) Adjustments to basis. Free tax forms 2012   If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive, and by any deductible loss. Free tax forms 2012 Amounts you spend to restore your property after a casualty increase your adjusted basis. Free tax forms 2012 See Adjusted Basis in chapter 13 for more information. Free tax forms 2012 Net operating loss (NOL). Free tax forms 2012    If your casualty or theft loss deduction causes your deductions for the year to be more than your income for the year, you may have an NOL. Free tax forms 2012 You can use an NOL to lower your tax in an earlier year, allowing you to get a refund for tax you have already paid. Free tax forms 2012 Or, you can use it to lower your tax in a later year. Free tax forms 2012 You do not have to be in business to have an NOL from a casualty or theft loss. Free tax forms 2012 For more information, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Free tax forms 2012 Prev  Up  Next   Home   More Online Publications
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    The Free Tax Forms 2012

    Free tax forms 2012 6. Free tax forms 2012   Insurance Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Deductible PremiumsSelf-Employed Health Insurance Deduction Nondeductible Premiums Capitalized Premiums When To Deduct Premiums What's New Retiree drug subsidy. Free tax forms 2012  Beginning in 2013, sponsors of certain qualified retiree prescription drug plans must account for the subsidy received by reducing the amount of qualified retiree prescription drug plans expense by the subsidy received (taking into account the taxpayer's accounting method). Free tax forms 2012 For more information, see the retiree drug subsidy frequently asked questions on IRS. Free tax forms 2012 gov. Free tax forms 2012 Introduction You generally can deduct the ordinary and necessary cost of insurance as a business expense if it is for your trade, business, or profession. Free tax forms 2012 However, you may have to capitalize certain insurance costs under the uniform capitalization rules. Free tax forms 2012 For more information, see Capitalized Premiums , later. Free tax forms 2012 Topics - This chapter discusses: Deductible premiums Nondeductible premiums Capitalized premiums When to deduct premiums Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 538 Accounting Periods and Methods 547 Casualties, Disasters, and Thefts Form (and Instructions) 1040 U. Free tax forms 2012 S. Free tax forms 2012 Individual Income Tax Return See chapter 12 for information about getting publications and forms. Free tax forms 2012 Deductible Premiums You generally can deduct premiums you pay for the following kinds of insurance related to your trade or business. Free tax forms 2012 Insurance that covers fire, storm, theft, accident, or similar losses. Free tax forms 2012 Credit insurance that covers losses from business bad debts. Free tax forms 2012 Group hospitalization and medical insurance for employees, including long-term care insurance. Free tax forms 2012 If a partnership pays accident and health insurance premiums for its partners, it generally can deduct them as guaranteed payments to partners. Free tax forms 2012 If an S corporation pays accident and health insurance premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages subject to federal income tax withholding. Free tax forms 2012 See Publication 15-B. Free tax forms 2012 Liability insurance. Free tax forms 2012 Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. Free tax forms 2012 Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. Free tax forms 2012 If a partnership pays workers' compensation premiums for its partners, it generally can deduct them as guaranteed payments to partners. Free tax forms 2012 If an S corporation pays workers' compensation premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages. Free tax forms 2012 Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. Free tax forms 2012 Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. Free tax forms 2012 Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. Free tax forms 2012 If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. Free tax forms 2012 If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. Free tax forms 2012 Life insurance covering your officers and employees if you are not directly or indirectly a beneficiary under the contract. Free tax forms 2012 Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. Free tax forms 2012 Self-Employed Health Insurance Deduction You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. Free tax forms 2012 The insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Free tax forms 2012 A child includes your son, daughter, stepchild, adopted child, or foster child. Free tax forms 2012 A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Free tax forms 2012 One of the following statements must be true. Free tax forms 2012 You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ (Form 1040), Net Profit From Business; or Schedule F (Form 1040), Profit or Loss From Farming. Free tax forms 2012 You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free tax forms 2012 , box 14, code A. Free tax forms 2012 You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. Free tax forms 2012 You received wages in 2013 from an S corporation in which you were a more-than-2% shareholder. Free tax forms 2012 Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2, Wage and Tax Statement. Free tax forms 2012 The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business. Free tax forms 2012 For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual. Free tax forms 2012 For partners, a policy can be either in the name of the partnership or in the name of the partner. Free tax forms 2012 You can either pay the premiums yourself or your partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Free tax forms 2012 However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Free tax forms 2012 Otherwise, the insurance plan will not be considered to be established under your business. Free tax forms 2012 For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. Free tax forms 2012 You can either pay the premiums yourself or your S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. Free tax forms 2012 However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 as wages to be included in your gross income. Free tax forms 2012 Otherwise, the insurance plan will not be considered to be established under your business. Free tax forms 2012 Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. Free tax forms 2012 If you previously filed returns without using Medicare premiums to figure the deduction, you can file timely amended returns to refigure the deduction. Free tax forms 2012 For more information, see Form 1040X, Amended U. Free tax forms 2012 S. Free tax forms 2012 Individual Income Tax Return. Free tax forms 2012 Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer cannot be used to figure the deduction. Free tax forms 2012 Take the deduction on Form 1040, line 29. Free tax forms 2012 Qualified long-term care insurance. Free tax forms 2012   You can include premiums paid on a qualified long-term care insurance contract when figuring your deduction. Free tax forms 2012 But, for each person covered, you can include only the smaller of the following amounts. Free tax forms 2012 The amount paid for that person. Free tax forms 2012 The amount shown below. Free tax forms 2012 Use the person's age at the end of the tax year. Free tax forms 2012 Age 40 or younger–$360 Age 41 to 50–$680 Age 51 to 60–$1,360 Age 61 to 70–$3,640 Age 71 or older–$4,550 Qualified long-term care insurance contract. Free tax forms 2012   A qualified long-term care insurance contract is an insurance contract that only provides coverage of qualified long-term care services. Free tax forms 2012 The contract must meet all the following requirements. Free tax forms 2012 It must be guaranteed renewable. Free tax forms 2012 It must 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 may be used only to reduce future premiums or increase future benefits. Free tax forms 2012 It must not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed. Free tax forms 2012 It generally must 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. Free tax forms 2012 Qualified long-term care services. Free tax forms 2012   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and Maintenance or personal care services. Free tax forms 2012 The services must be required by a chronically ill individual and prescribed by a licensed health care practitioner. Free tax forms 2012 Worksheet 6-A. Free tax forms 2012 Self-Employed Health Insurance Deduction Worksheet Note. Free tax forms 2012 Use a separate worksheet for each trade or business under which an insurance plan is established. Free tax forms 2012 1. Free tax forms 2012 Enter the total amount paid in 2013 for health insurance coverage established under your business for 2013 for you, your spouse, and your dependents. Free tax forms 2012 Your insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Free tax forms 2012 But do not include the following. Free tax forms 2012   Amounts for any month you were eligible to participate in a health plan subsidized by your or your spouse's employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Free tax forms 2012 Any amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer. Free tax forms 2012 Any amounts you included on Form 8885, line 4. Free tax forms 2012 Any qualified health insurance premiums you paid to “U. Free tax forms 2012 S. Free tax forms 2012 Treasury-HCTC. Free tax forms 2012 ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H. Free tax forms 2012 Any payments for qualified long-term care insurance (see line 2) 1. Free tax forms 2012   2. Free tax forms 2012 For coverage under a qualified long-term care insurance contract, enter for each person covered the smaller of the following amounts. Free tax forms 2012       a) Total payments made for that person during the year. Free tax forms 2012       b) The amount shown below. Free tax forms 2012 Use the person's age at the end of the tax year. Free tax forms 2012         $360— if that person is age 40 or younger          $680— if age 41 to 50         $1,360— if age 51 to 60         $3,640— if age 61 to 70         $4,550— if age 71 or older         Do not include payments for any month you were eligible to participate in a long-term care insurance plan subsidized by your or your spouse’s employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Free tax forms 2012 If more than one person is covered, figure separately the amount to enter for each person. Free tax forms 2012 Then enter the total of those amounts 2. Free tax forms 2012   3. Free tax forms 2012 Add lines 1 and 2 3. Free tax forms 2012   4. Free tax forms 2012 Enter your net profit* and any other earned income** from the trade or business under which the insurance plan is established. Free tax forms 2012 Do not include Conservation Reserve Program payments exempt from self-employment tax. Free tax forms 2012 If the business is an S corporation, skip to line 11 4. Free tax forms 2012   5. Free tax forms 2012 Enter the total of all net profits* from: Schedule C (Form 1040), line 31; Schedule C-EZ (Form 1040), line 3; Schedule F (Form 1040), line 34; or Schedule K-1 (Form 1065), box 14, code A; plus any other income allocable to the profitable businesses. Free tax forms 2012 Do not include Conservation Reserve Program payments exempt from self-employment tax. Free tax forms 2012 See the Instructions for Schedule SE (Form 1040). Free tax forms 2012 Do not include any net losses shown on these schedules. Free tax forms 2012 5. Free tax forms 2012   6. Free tax forms 2012 Divide line 4 by line 5 6. Free tax forms 2012   7. Free tax forms 2012 Multiply Form 1040, line 27, by the percentage on line 6 7. Free tax forms 2012   8. Free tax forms 2012 Subtract line 7 from line 4 8. Free tax forms 2012   9. Free tax forms 2012 Enter the amount, if any, from Form 1040, line 28, attributable to the same trade or business in which the insurance plan is established 9. Free tax forms 2012   10. Free tax forms 2012 Subtract line 9 from line 8 10. Free tax forms 2012   11. Free tax forms 2012 Enter your Medicare wages (Form W-2, box 5) from an S corporation in which you are a more-than-2% shareholder and in which the insurance plan is established 11. Free tax forms 2012   12. Free tax forms 2012 Enter any amount from Form 2555, line 45, attributable to the amount entered on line 4 or 11 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 11 above 12. Free tax forms 2012   13. Free tax forms 2012 Subtract line 12 from line 10 or 11, whichever applies 13. Free tax forms 2012   14. Free tax forms 2012 Enter the smaller of line 3 or line 13 here and on Form 1040, line 29. Free tax forms 2012 Do not include this amount when figuring any medical expense deduction on Schedule A (Form 1040). Free tax forms 2012 14. Free tax forms 2012   * If you used either optional method to figure your net earnings from self-employment from any business, do not enter your net profit from the business. Free tax forms 2012 Instead, enter the amount attributable to that business from Schedule SE (Form 1040), Section B, line 4b. Free tax forms 2012 * *Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. Free tax forms 2012 However, it does not include capital gain income. Free tax forms 2012 Chronically ill individual. Free tax forms 2012   A chronically ill individual is a person who has been certified as one of the following. Free tax forms 2012 An individual who has been unable, due to loss of functional capacity for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual. Free tax forms 2012 Activities of daily living are eating, toileting, transferring (general mobility), bathing, dressing, and continence. Free tax forms 2012 An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Free tax forms 2012 The certification must have been made by a licensed health care practitioner within the previous 12 months. Free tax forms 2012 Benefits received. Free tax forms 2012   For information on excluding benefits you receive from a long-term care contract from gross income, see Publication 525. Free tax forms 2012 Other coverage. Free tax forms 2012   You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. Free tax forms 2012 In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2013, do not use amounts paid for coverage for that month to figure the deduction. Free tax forms 2012   These rules are applied separately to plans that provide long-term care insurance and plans that do not provide long-term care insurance. Free tax forms 2012 However, any medical insurance payments not deductible on Form 1040, line 29, can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, if you itemize deductions. Free tax forms 2012 Effect on itemized deductions. Free tax forms 2012   Subtract the health insurance deduction from your medical insurance when figuring medical expenses on Schedule A (Form 1040) if you itemize deductions. Free tax forms 2012 Effect on self-employment tax. Free tax forms 2012   For tax years beginning before or after 2010, you cannot subtract the self-employed health insurance deduction when figuring net earnings for your self-employment tax from the business under which the insurance plan is established, or considered to be established as discussed earlier. Free tax forms 2012 For more information, see Schedule SE (Form 1040). Free tax forms 2012 How to figure the deduction. Free tax forms 2012   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. Free tax forms 2012 However, if any of the following apply, you must use Worksheet 6-A in this chapter. Free tax forms 2012 You had more than one source of income subject to self-employment tax. Free tax forms 2012 You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Free tax forms 2012 You are using amounts paid for qualified long-term care insurance to figure the deduction. Free tax forms 2012 If you are claiming the health coverage tax credit, complete Form 8885, Health Coverage Tax Credit, before you figure this deduction. Free tax forms 2012 Health coverage tax credit. Free tax forms 2012   You may be able to take this credit only if you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment trade adjustment assistance (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient. Free tax forms 2012 Use Form 8885 to figure the amount, if any, of this credit. Free tax forms 2012   When figuring the amount to enter on line 1 of Worksheet 6-A, do not include the following. Free tax forms 2012 Any amounts you included on Form 8885, line 4. Free tax forms 2012 Any qualified health insurance premiums you paid to “U. Free tax forms 2012 S. Free tax forms 2012 Treasury-HCTC. Free tax forms 2012 ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Free tax forms 2012 More than one health plan and business. Free tax forms 2012   If you have more than one health plan during the year and each plan is established under a different business, you must use separate worksheets (Worksheet 6-A) to figure each plan's net earnings limit. Free tax forms 2012 Include the premium you paid under each plan on line 1 or line 2 of that separate worksheet and your net profit (or wages) from that business on line 4 (or line 11). Free tax forms 2012 For a plan that provides long-term care insurance, the total of the amounts entered for each person on line 2 of all worksheets cannot be more than the appropriate limit shown on line 2 for that person. Free tax forms 2012 Nondeductible Premiums You cannot deduct premiums on the following kinds of insurance. Free tax forms 2012 Self-insurance reserve funds. Free tax forms 2012 You cannot deduct amounts credited to a reserve set up for self-insurance. Free tax forms 2012 This applies even if you cannot get business insurance coverage for certain business risks. Free tax forms 2012 However, your actual losses may be deductible. Free tax forms 2012 See Publication 547. Free tax forms 2012 Loss of earnings. Free tax forms 2012 You cannot deduct premiums for a policy that pays for lost earnings due to sickness or disability. Free tax forms 2012 However, see the discussion on overhead insurance, item (8), under Deductible Premiums , earlier. Free tax forms 2012 Certain life insurance and annuities. Free tax forms 2012 For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. Free tax forms 2012 You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. Free tax forms 2012 A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. Free tax forms 2012 For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. Free tax forms 2012 The disallowance applies without regard to whom the policy covers. Free tax forms 2012 Partners. Free tax forms 2012 If, as a partner in a partnership, you take out an insurance policy on your own life and name your partners as beneficiaries to induce them to retain their investments in the partnership, you are considered a beneficiary. Free tax forms 2012 You cannot deduct the insurance premiums. Free tax forms 2012 Insurance to secure a loan. Free tax forms 2012 If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. Free tax forms 2012 Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. Free tax forms 2012 In the event of death, the proceeds of the policy are generally not taxed as income even if they are used to liquidate the debt. Free tax forms 2012 Capitalized Premiums Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Free tax forms 2012 Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Free tax forms 2012 You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Free tax forms 2012 Indirect costs include premiums for insurance on your plant or facility, machinery, equipment, materials, property produced, or property acquired for resale. Free tax forms 2012 Uniform capitalization rules. Free tax forms 2012   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Free tax forms 2012 Produce real property or tangible personal property. Free tax forms 2012 For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Free tax forms 2012 Acquire property for resale. Free tax forms 2012 However, these rules do not apply to the following property. Free tax forms 2012 Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Free tax forms 2012 Property you produce if you meet either of the following conditions. Free tax forms 2012 Your indirect costs of producing the property are $200,000 or less. Free tax forms 2012 You use the cash method of accounting and do not account for inventories. Free tax forms 2012 More information. Free tax forms 2012   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Free tax forms 2012 When To Deduct Premiums You can usually deduct insurance premiums in the tax year to which they apply. Free tax forms 2012 Cash method. Free tax forms 2012   If you use the cash method of accounting, you generally deduct insurance premiums in the tax year you actually paid them, even if you incurred them in an earlier year. Free tax forms 2012 However, see Prepayment , later. Free tax forms 2012 Accrual method. Free tax forms 2012   If you use an accrual method of accounting, you cannot deduct insurance premiums before the tax year in which you incur a liability for them. Free tax forms 2012 In addition, you cannot deduct insurance premiums before the tax year in which you actually pay them (unless the exception for recurring items applies). Free tax forms 2012 For more information about the accrual method of accounting, see chapter 1. Free tax forms 2012 For information about the exception for recurring items, see Publication 538. Free tax forms 2012 Prepayment. Free tax forms 2012   You cannot deduct expenses in advance, even if you pay them in advance. Free tax forms 2012 This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Free tax forms 2012   Expenses such as insurance are generally allocable to a period of time. Free tax forms 2012 You can deduct insurance expenses for the year to which they are allocable. Free tax forms 2012 Example. Free tax forms 2012 In 2013, you signed a 3-year insurance contract. Free tax forms 2012 Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. Free tax forms 2012 You can deduct in 2014 and 2015 the premium allocable to those years. Free tax forms 2012 Dividends received. Free tax forms 2012   If you receive dividends from business insurance and you deducted the premiums in prior years, at least part of the dividends generally are income. Free tax forms 2012 For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1 under How Much Can I Deduct. Free tax forms 2012 Prev  Up  Next   Home   More Online Publications