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Information About Tax Returns For Students

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Information About Tax Returns For Students

Information about tax returns for students Publication 3 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Information about tax returns for students Tax questions. Information about tax returns for students Useful Items - You may want to see: What's New Earned income credit. Information about tax returns for students  The maximum income you can earn and still claim the earned income credit has increased. Information about tax returns for students You may be able to take the earned income credit if you earned less than $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children; $43,038 ($48,378 for married filing jointly) if you have two qualifying children; $37,870 ($43,210 for married filing jointly) if you have one qualifying child; and $14,340 ($19,680 for married filing jointly) if you do not have any qualifying children. Information about tax returns for students See Earned Income Credit , later, under Credits. Information about tax returns for students Standard mileage rate. Information about tax returns for students  The standard mileage rate for the cost of operating your car for business use in 2013 is 56. Information about tax returns for students 5 cents a mile. Information about tax returns for students The standard mileage rate for operating your car during 2013 to get medical care or to move is 24 cents a mile. Information about tax returns for students The standard mileage rate for charitable use of your vehicle is 14 cents a mile. Information about tax returns for students Filing status for same-sex married couples. Information about tax returns for students  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Information about tax returns for students See Filing Returns , later. Information about tax returns for students Reminders Change of address. Information about tax returns for students  If you change your mailing address, be sure to notify the Internal Revenue Service (IRS) using Form 8822, Change of Address. Information about tax returns for students Mail it to the Internal Revenue Service Center for your old address. Information about tax returns for students (Addresses for the Service Centers are on the back of the form. Information about tax returns for students ) Use Form 8822-B, Change of Address or Responsible Party—Business, if you are changing a business address. Information about tax returns for students Third party designee. Information about tax returns for students  You can check the “Yes” box in the Third Party Designee area of your return to authorize the IRS to discuss your return with your preparer, a friend, a family member, or any other person you choose. Information about tax returns for students This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your tax return. Information about tax returns for students It also allows your designee to perform certain actions. Information about tax returns for students See your income tax instructions for details. Information about tax returns for students Future developments. Information about tax returns for students  For the latest information about developments related to Publication 3, such as legislation enacted after it was published, go to www. Information about tax returns for students irs. Information about tax returns for students gov/pub3. Information about tax returns for students Photographs of missing children. Information about tax returns for students  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Information about tax returns for students Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Information about tax returns for students You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Information about tax returns for students Introduction This publication covers the special tax situations of active members of the U. Information about tax returns for students S. Information about tax returns for students Armed Forces. Information about tax returns for students It does not cover military pensions or veterans' benefits or give the basic tax rules that apply to all taxpayers. Information about tax returns for students For information on military pensions or veterans' benefits, see Publication 525, Taxable and Nontaxable Income. Information about tax returns for students If you need the basic tax rules or information on another subject not covered here, you can check our other free publications. Information about tax returns for students See Publication 910, IRS Guide to Free Tax Services, for a list and descriptions of the different tax publications. Information about tax returns for students For federal tax purposes, the U. Information about tax returns for students S. Information about tax returns for students Armed Forces includes commissioned officers, warrant officers, and enlisted personnel in all regular and reserve units under control of the Secretaries of the Defense, Army, Navy, and Air Force. Information about tax returns for students The U. Information about tax returns for students S. Information about tax returns for students Armed Forces also includes the Coast Guard. Information about tax returns for students It does not include the U. Information about tax returns for students S. Information about tax returns for students Merchant Marine or the American Red Cross. Information about tax returns for students Members serving in an area designated or treated as a combat zone are granted special tax benefits. Information about tax returns for students In the event an area ceases to be a combat zone, the IRS will do its best to notify you. Information about tax returns for students Many of the relief provisions will end at that time. Information about tax returns for students Comments and suggestions. Information about tax returns for students   We welcome your comments about this publication and your suggestions for future editions. Information about tax returns for students   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Information about tax returns for students NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Information about tax returns for students Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Information about tax returns for students   You can send your comments from www. Information about tax returns for students irs. Information about tax returns for students gov/formspubs. Information about tax returns for students Click on “More Information” and then on “Comment on Tax Forms and Publications. Information about tax returns for students ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Information about tax returns for students Ordering forms and publications. Information about tax returns for students   Visit www. Information about tax returns for students irs. Information about tax returns for students gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Information about tax returns for students Internal Revenue Service 1201 N. Information about tax returns for students Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Information about tax returns for students   If you have a tax question, check the information available on IRS. Information about tax returns for students gov or call 1-800-829-1040. Information about tax returns for students We cannot answer tax questions sent to either of the above addresses. Information about tax returns for students Useful Items - You may want to see: Publication 54 Tax Guide for U. Information about tax returns for students S. Information about tax returns for students Citizens and Resident Aliens Abroad 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 505 Tax Withholding and Estimated Tax 516 U. Information about tax returns for students S. Information about tax returns for students Government Civilian Employees Stationed Abroad 519 U. Information about tax returns for students S. Information about tax returns for students Tax Guide for Aliens 521 Moving Expenses 523 Selling Your Home 525 Taxable and Nontaxable Income 527 Residential Rental Property 529 Miscellaneous Deductions 559 Survivors, Executors, and Administrators 590 Individual Retirement Arrangements (IRAs) 596 Earned Income Credit (EIC) 970 Tax Benefits for Education 3920 Tax Relief for Victims of Terrorist Attacks Form (and Instructions) 1040X Amended U. Information about tax returns for students S. Information about tax returns for students Individual Income Tax Return 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer 2848 Power of Attorney and Declaration of Representative 3903 Moving Expenses 4868 Application for Automatic Extension of Time To File U. Information about tax returns for students S. Information about tax returns for students Individual Income Tax Return 8822 Change of Address 8822-B Change of Address or Responsible Party—Business 9465 Installment Agreement Request See How To Get Tax Help near the end of this publication, for information about getting IRS publications and forms. Information about tax returns for students Prev  Up  Next   Home   More Online Publications
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The Information About Tax Returns For Students

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