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Tax Deductions For Military

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Tax Deductions For Military

Tax deductions for military Index A Abortion, Abortion Acupuncture, Acupuncture Adopted child's medical expenses, Adopted child. Tax deductions for military AGI limitation, Introduction, Community property states. Tax deductions for military Alcoholism, Alcoholism Ambulances, Ambulance Archer MSAs Health coverage tax credit, How To Take the Credit Medical expenses paid for decedent from, Decedent Artificial limbs, Artificial Limb Artificial teeth, Artificial Teeth Aspirin, Nonprescription Drugs and Medicines Assistance (see Tax help) Assisted living homes, Nursing Home Athletic club dues, Health Club Dues Automobiles (see Cars) B Baby sitting, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Bandages, Bandages Basis Medical equipment or property (Worksheet D), Worksheet D. Tax deductions for military Adjusted Basis of Medical Equipment or Property Sold Birth control pills, Birth Control Pills Body scan, Body Scan Braille books and magazines, Braille Books and Magazines Breast pumps and supplies, Breast Pumps and Supplies Breast reconstruction surgery, Breast Reconstruction Surgery C Calculation of deduction, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Capital expenses, Capital Expenses Improvements to rented property, Improvements to property rented by a person with a disability. Tax deductions for military Operation and upkeep, Operation and upkeep. Tax deductions for military Worksheet A, Capital expense worksheet. Tax deductions for military Cars, Car Out-of-pocket expenses, Car expenses. Tax deductions for military Standard medical mileage rates, Car expenses. Tax deductions for military Child care, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Children's medical expenses Adopted child, Adopted child. Tax deductions for military Dependents, Dependent Chiropractor, Chiropractor Christian Scientist practitioner, Christian Science Practitioner Chronically ill persons, Chronically ill individual. Tax deductions for military COBRA assistance Recapture of COBRA premium assistance, Worksheet F. Tax deductions for military Recapture of COBRA Premium Assistance for Higher Income Taxpayers COBRA premium assistance, COBRA Premium Assistance Community property states, Community property states. Tax deductions for military Computer banks to track medical information, Medical Information Plan Contact lenses, Contact Lenses Controlled substances, Controlled Substances Cosmetic surgery, Cosmetic Surgery Credit (see Health coverage tax credit) Crutches, Crutches D Dancing lessons, Dancing Lessons Decedent's medical expenses, Decedent, What if you pay medical expenses of a deceased spouse or dependent? Deductible amount, How Much of the Expenses Can You Deduct? Deductible expenses, Whose Medical Expenses Can You Include?, X-ray Definition of medical expenses Doctor, What Are Medical Expenses? Physician, What Are Medical Expenses? Dental treatment, Dental Treatment Artificial teeth, Artificial Teeth Teeth whitening, Teeth Whitening Dentures, Artificial Teeth Dependent's medical expenses Adopted child, Adopted child. Tax deductions for military Multiple support agreement, Support claimed under a multiple support agreement. Tax deductions for military Qualifying child, Dependent Qualifying relative, Dependent Dependents Disabled dependent care, Disabled Dependent Care Expenses, Dependents with disabilities. Tax deductions for military Diagnostic devices, Diagnostic Devices Diaper services, Diaper Service Disabilities, persons with Dependent care expenses, Disabled Dependent Care Expenses, Dependents with disabilities. Tax deductions for military Improvements to rented property, Improvements to property rented by a person with a disability. Tax deductions for military Special education, Special Education Divorced taxpayers Medical expenses of child, Child of divorced or separated parents. Tax deductions for military Drug addiction, Drug Addiction Drugs (see Medicines) Dues Health club, Health Club Dues E Education, special, Special Education Electrolysis, Cosmetic Surgery Employer-sponsored health insurance plans, Employer-Sponsored Health Insurance Plan Employment taxes, Employment taxes. Tax deductions for military Excluded expenses Insurance premiums, Insurance Premiums You Cannot Include Eye surgery, Eye Surgery Eyeglasses, Eyeglasses F Fertility enhancement Eggs, temporary storage of, Fertility Enhancement Fertility, Fertility Enhancement In vitro fertilization, Fertility Enhancement Figuring the deduction, How Do You Figure and Report the Deduction on Your Tax Return? Final return for decedent Medical expenses paid, Decedent Flexible spending account, Flexible Spending Account Food (see Weight-loss programs) Form 1040 Health coverage tax credit, How To Take the Credit Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 1040, Schedule A Impairment-related work expenses, Where to report. Tax deductions for military Medical and dental expenses, Introduction, What Tax Form Do You Use? Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 1040, Schedule C Impairment-related work expenses, Where to report. Tax deductions for military Form 1040, Schedule C-EZ Impairment-related work expenses, Where to report. Tax deductions for military Form 1040, Schedule E Impairment-related work expenses, Where to report. Tax deductions for military Form 1040, Schedule F Impairment-related work expenses, Where to report. Tax deductions for military Form 1040NR Health coverage tax credit, How To Take the Credit Form 1040X Amended return, What Expenses Can You Include This Year? Deceased taxpayer, What if the decedent's return had been filed and the medical expenses were not included? Form 1099-H Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 2106 Impairment-related work expenses, Where to report. Tax deductions for military Form 2106-EZ Impairment-related work expenses, Where to report. Tax deductions for military Form 2555 Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 2555-EZ Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 8453 Health coverage tax credit, How To Take the Credit Form 8885 Health coverage tax credit, How To Take the Credit Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Founder's fee (see Lifetime care, advance payments) Free tax services, Free help with your tax return. Tax deductions for military Funeral expenses, Funeral Expenses Future medical care, Payments for future medical care. Tax deductions for military , Future Medical Care G Glasses, Eyeglasses Guide dog or other animal, Guide Dog or Other Service Animal H Hair Removal, Cosmetic Surgery Transplants, Cosmetic Surgery Wigs, Wig Health club dues, Health Club Dues Health coverage tax credit, Health Coverage Tax Credit Advanced payments, Monthly HCTC Alternative TAA recipient, Health Coverage Tax Credit Archer MSAs, How To Take the Credit Both spouses eligible, Qualifying Family Member Children of divorced parents, Health Coverage Tax Credit, Qualifying Family Member Eligible coverage month, Eligible Coverage Month Insurance that covers other individuals, Insurance that covers other individuals. Tax deductions for military Legally separated, Legally separated. Tax deductions for military Married persons filing separate returns, Qualifying Family Member Monthly HCTC, Monthly HCTC Nonqualified health insurance, Nonqualified Health Insurance Other specified coverage Benefits from the Veterans Administration, Other Specified Coverage Pension Benefit Guaranty Corporation (PBGC) recipient, Health Coverage Tax Credit Qualified health insurance, Qualified Health Insurance Qualifying family member, Qualifying Family Member Reimbursement credit, Monthly HCTC Reporting, How To Take the Credit State-qualified health insurance, State-qualified health insurance. Tax deductions for military TAA recipient, Health Coverage Tax Credit Yearly HCTC, Yearly HCTC Health Coverage Tax Credit Alternative TAA recipient, Who Can Take This Credit? PBGC pension payee, Who Can Take This Credit? TAA recipient, Who Can Take This Credit? Health institutes, Health Institute Health insurance Credit (see Health coverage tax credit) Employer-sponsored plan, Employer-Sponsored Health Insurance Plan Premiums Deductible, Insurance Premiums Nondeductible, Insurance Premiums You Cannot Include Paid by employer, Premiums paid by your employer. Tax deductions for military Paid by employer and you, Premiums paid by you and your employer. Tax deductions for military Paid by you, Premiums paid by you. Tax deductions for military Prepaid, Prepaid Insurance Premiums Unused sick leave used to pay, Unused Sick Leave Used To Pay Premiums Reimbursements (see Reimbursements) Self-employed persons, Health Insurance Costs for Self-Employed Persons Health maintenance organizations (HMOs), Health Maintenance Organization (HMO) Health reimbursement arrangements (HRAs), Health reimbursement arrangement (HRA). Tax deductions for military Health savings accounts (HSAs) Payments from, Health Savings Accounts Hearing aids, Hearing Aids Hearing-impaired persons Guide dog or other animal for, Guide Dog or Other Service Animal Help (see Tax help) HMOs (Health maintenance organizations), Health Maintenance Organization (HMO) Home care (see Nursing services) Home improvements (see Capital expenses:) Hospital services, Hospital Services Hotels, Lodging Household help, Household Help HRAs (Health reimbursement arrangements), Health reimbursement arrangement (HRA). Tax deductions for military I Illegal operations and treatments, Illegal Operations and Treatments Illegal substances, Controlled Substances Impairment-related work expenses, Workers' compensation. Tax deductions for military , Impairment-related expenses defined. Tax deductions for military Reporting of, Where to report. Tax deductions for military Insulin, Nonprescription Drugs and Medicines Insurance (see Health insurance) Intellectually and developmentally disabled persons Mentally retarded, Intellectually and Developmentally Disabled, Special Home for Special homes for, Intellectually and Developmentally Disabled, Special Home for L Laboratory fees, Laboratory Fees Lactation expenses (see Breast pumps and supplies) Laser eye surgery, Eye Surgery Lead-based paint removal, Lead-Based Paint Removal Learning disabilities, Special Education Legal fees, Legal Fees Lessons, dancing and swimming, Dancing Lessons Lifetime care Advance payments for, Lifetime Care—Advance Payments Lodging, Lodging, Trips (see also Trips) Long-term care, Long-Term Care Chronically ill individuals, Chronically ill individual. Tax deductions for military Maintenance and personal care services, Maintenance and personal care services. Tax deductions for military Qualified insurance contracts, Qualified Long-Term Care Insurance Contracts Qualified services, Qualified Long-Term Care Services M Maintenance and personal care services, Maintenance and personal care services. Tax deductions for military Maternity clothes, Maternity Clothes Meals, Meals, Weight-Loss Program (see also Weight-loss programs) Medical conferences, Medical Conferences Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. Tax deductions for military Adjusted Basis of Medical Equipment or Property Sold Medical expense records, What Tax Form Do You Use? Medical information plans, Medical Information Plan Medical savings accounts (MSAs), Medical Savings Account (MSA) Medicare Medicare A, deductible expense, Medicare A Medicare B, deductible expense, Medicare B Medicare D, deductible expense, Medicare D Medicines, Medicines Imported, Imported medicines and drugs. Tax deductions for military , Medicines and Drugs From Other Countries Nonprescription drugs and medicines, Nonprescription Drugs and Medicines Missing children, photographs of in IRS publications, Reminders Multiple support agreement, Support claimed under a multiple support agreement. Tax deductions for military N Nondeductible expenses, What Expenses Are Not Includible?, Weight-Loss Program Nonprescription drugs and medicines, Nonprescription Drugs and Medicines Nursing homes, Nursing Home Nursing services, Nursing Services, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Chronically ill individuals, Chronically ill individual. Tax deductions for military Nutritional supplements Natural medicines, Nutritional Supplements O Operations, Operations Cosmetic surgery, Cosmetic Surgery Eye surgery, Eye Surgery Illegal operations and treatments, Illegal Operations and Treatments Optometrist, Optometrist Optometrist services, Eyeglasses Organ donors, Transplants Osteopath, Osteopath Oxygen, Oxygen P Paint removal, for lead-based, Lead-Based Paint Removal Parking fees and tolls, Car expenses. Tax deductions for military Personal injury damages, Damages for Personal Injuries Personal use items, Personal Use Items Photographs of missing children in IRS publications, Reminders Physical examination, Physical Examination Physical therapy, Therapy Plastic surgery, Cosmetic Surgery Pregnancy test kit, Pregnancy Test Kit Premiums (see Health insurance) Prepaid insurance premiums, Prepaid Insurance Premiums Prosthesis, Artificial Limb Psychiatric care, Psychiatric Care Psychoanalysis, Psychoanalysis Psychologists, Psychologist Publications (see Tax help) R Radial keratotomy, Eye Surgery Recordkeeping, What Tax Form Do You Use? Rehabilitation facilities, Nursing Home Reimbursements, How Do You Treat Reimbursements?, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Excess includible in income More than one policy (Worksheet C), More than one policy. Tax deductions for military One policy (Worksheet B), Worksheet B. Tax deductions for military Excess Reimbursement Includible in Income When You Have Only One Policy Excess may be taxable (Figure 1), What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Health Reimbursement Arrangement (HRA), Health reimbursement arrangement (HRA). Tax deductions for military Insurance, Insurance Reimbursement, What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Medical expenses not deducted, What If You Receive Insurance Reimbursement in a Later Year? More than one policy, More than one policy. Tax deductions for military Received in later year, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Rental property Improvements to, Improvements to property rented by a person with a disability. Tax deductions for military Reporting Health coverage tax credit, How To Take the Credit Impairment-related work expenses, Where to report. Tax deductions for military Medical and dental expenses, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Medical deduction (see Form 1040, Schedule A) Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons S Sale of medical equipment or property, Sale of Medical Equipment or Property Adjusted basis (Worksheet D), Worksheet D. Tax deductions for military Adjusted Basis of Medical Equipment or Property Sold Schedules (see Form 1040) Seeing-eye dogs, Guide Dog or Other Service Animal Self-employed persons Health coverage tax credit, How To Take the Credit Health insurance costs, Health Insurance Costs for Self-Employed Persons Senior housing, Nursing Home Separate returns Community property states, Community property states. Tax deductions for military Medical and dental expenses, Separate returns. Tax deductions for military Separated taxpayers Health coverage tax credit, Legally separated. Tax deductions for military Medical expenses of child, Child of divorced or separated parents. Tax deductions for military Service animals, Guide Dog or Other Service Animal Sick leave Used to pay health insurance premiums, Unused Sick Leave Used To Pay Premiums Special education, Special Education Spouse's medical expenses, Spouse Deceased spouse, What if you pay medical expenses of a deceased spouse or dependent? Sterilization, Sterilization Stop-smoking programs, Stop-Smoking Programs Surgery (see Operations) Swimming lessons, Dancing Lessons T Tables and figures Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. Tax deductions for military Adjusted Basis of Medical Equipment or Property Sold Reimbursements, excess includible in income More than one policy (Worksheet C), More than one policy. Tax deductions for military One policy (Worksheet B), Worksheet B. Tax deductions for military Excess Reimbursement Includible in Income When You Have Only One Policy Reimbursements, excess may be taxable (Figure 1), What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Tax help, How To Get Tax Help Teeth Artificial, Artificial Teeth Dental treatment, Dental Treatment Whitening, Teeth Whitening Telephone, Telephone Television, Television Therapy, Therapy Transplants, Transplants Travel and transportation expenses, Transportation Car expenses, Car expenses. Tax deductions for military Includible expenses, You can include:, Transportation expenses you cannot include. Tax deductions for military Parking fees and tolls, Car expenses. Tax deductions for military Trips, Trips TTY/TDD information, How To Get Tax Help Tuition, Tuition V Vasectomy, Vasectomy Veterinary fees, Veterinary Fees Vision correction surgery, Eye Surgery Visually impaired persons Guide dog or other animal for, Guide Dog or Other Service Animal Vitamins or minerals, Nutritional Supplements Voluntary Employee's Beneficiary Association (VEBA) Qualified health insurance, Voluntary Employee's Beneficiary Association (VEBA) W Weight-loss programs, Weight-Loss Program, Weight-Loss Program What's new COBRA continuous coverage, What's New Health coverage tax credit, What's New Standard medical mileage rate, What's New Wheelchairs, Wheelchair Wigs, Wig Work expenses Disabled dependent care, Disabled Dependent Care Expenses Impairment-related, Impairment-Related Work Expenses Workers' compensation, Workers' compensation. Tax deductions for military Worksheets Capital expenses (Worksheet A), Capital expense worksheet. Tax deductions for military Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. Tax deductions for military Adjusted Basis of Medical Equipment or Property Sold Reimbursements, excess includible in income More than one policy (Worksheet C), More than one policy. Tax deductions for military One policy (Worksheet B), Worksheet B. Tax deductions for military Excess Reimbursement Includible in Income When You Have Only One Policy X X-rays, X-ray Prev  Up     Home   More Online Publications
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IRS Warns of New Email Phishing Scheme Falsely Claiming to be from the Taxpayer Advocate Service

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IR-2014-39, March 28, 2014

WASHINGTON —The Internal Revenue Service today warned consumers to be on the lookout for a new email phishing scam. The emails appear to be from the IRS Taxpayer Advocate Service and include a bogus case number. 

‪The fake emails may include the following message: “Your reported 2013 income is flagged for review due to a document processing error. Your case has been forwarded to the Taxpayer Advocate Service for resolution assistance. To avoid delays processing your 2013 filing contact the Taxpayer Advocate Service for resolution assistance.” 

‪Recipients are directed to click on links that supposedly provide information about the "advocate" assigned to their case or that let them "review reported income." The links lead to web pages that solicit personal information. 

‪Taxpayers who get these messages should not respond to the email or click on the links. Instead, they should forward the scam emails to the IRS at phishing@irs.gov. For more information, visit the IRS's Report Phishing web page.

The Taxpayer Advocate Service is a legitimate IRS organization that helps taxpayers resolve federal tax issues that have not been resolved through the normal IRS channels. The IRS, including TAS, does not initiate contact with taxpayers by email, texting or any social media. 

‪For more on scams to guard against see the "Dirty Dozen" list on IRS.gov.

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Page Last Reviewed or Updated: 28-Mar-2014

The Tax Deductions For Military

Tax deductions for military 2. Tax deductions for military   Foreclosures and Repossessions Table of Contents Amount realized and ordinary income on a recourse debt. Tax deductions for military Amount realized on a nonrecourse debt. Tax deductions for military If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Tax deductions for military The foreclosure or repossession is treated as a sale from which you may realize gain or loss. Tax deductions for military This is true even if you voluntarily return the property to the lender. Tax deductions for military If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you also may realize ordinary income from the cancellation of debt. Tax deductions for military You must report this income on your return unless certain exceptions or exclusions apply. Tax deductions for military See chapter 1 for more details. Tax deductions for military Borrower's gain or loss. Tax deductions for military    You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale. Tax deductions for military The gain is the difference between the amount realized and your adjusted basis in the transferred property (amount realized minus adjusted basis). Tax deductions for military The loss is the difference between your adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized). Tax deductions for military For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Publication 544. Tax deductions for military You can use Table 1-1 to figure your ordinary income from the cancellation of debt and your gain or loss from a foreclosure or repossession. Tax deductions for military Amount realized and ordinary income on a recourse debt. Tax deductions for military    If you are personally liable for the debt, the amount realized on the foreclosure or repossession includes the smaller of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The FMV of the transferred property. Tax deductions for military The amount realized also includes any proceeds you received from the foreclosure sale. Tax deductions for military If the FMV of the transferred property is less than the total outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, the difference is ordinary income from the cancellation of debt. Tax deductions for military You must report this income on your return unless certain exceptions or exclusions apply. Tax deductions for military See chapter 1 for more details. Tax deductions for military       Example 1. Tax deductions for military Tara bought a new car for $15,000. Tax deductions for military She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Tax deductions for military Tara is personally liable for the loan (recourse debt) and the car is pledged as security for the loan. Tax deductions for military On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Tax deductions for military The balance due after taking into account the payments Tara made was $10,000. Tax deductions for military The FMV of the car when it was repossessed was $9,000. Tax deductions for military On November 15, 2013, the credit company forgave the remaining $1,000 balance on the loan due to insufficient assets. Tax deductions for military In this case, the amount Tara realizes is $9,000. Tax deductions for military This is the smaller of: The $10,000 outstanding debt immediately before the repossession reduced by the $1,000 for which she remains personally liable immediately after the repossession ($10,000 − $1,000 = $9,000), or The $9,000 FMV of the car. Tax deductions for military Tara figures her gain or loss on the repossession by comparing the $9,000 amount realized with her $15,000 adjusted basis. Tax deductions for military She has a $6,000 nondeductible loss. Tax deductions for military After the cancellation of the remaining balance on the loan in November, Tara also has ordinary income from cancellation of debt in the amount of $1,000 (the remaining balance on the $10,000 loan after the $9,000 amount satisfied by the FMV of the repossessed car). Tax deductions for military Tara must report this $1,000 on her return unless one of the exceptions or exclusions described in chapter 1 applies. Tax deductions for military Example 2. Tax deductions for military Lili paid $200,000 for her home. Tax deductions for military She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Tax deductions for military Lili is personally liable for the mortgage loan and the house secures the loan. Tax deductions for military In 2013, the bank foreclosed on the mortgage because Lili stopped making payments. Tax deductions for military When the bank foreclosed the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Tax deductions for military At the time of the foreclosure, the bank forgave $2,000 of the $10,000 debt in excess of the FMV ($180,000 minus $170,000). Tax deductions for military She remained personally liable for the $8,000 balance. Tax deductions for military In this case, Lili has ordinary income from the cancellation of debt in the amount of $2,000. Tax deductions for military The $2,000 income from the cancellation of debt is figured by subtracting the $170,000 FMV of the house from the $172,000 difference between her total outstanding debt immediately before the transfer of property and the amount for which she remains personally liable immediately after the transfer ($180,000 minus $8,000). Tax deductions for military She is able to exclude the $2,000 of canceled debt from her income under the qualified principal residence indebtedness rules discussed earlier. Tax deductions for military Lili must also determine her gain or loss from the foreclosure. Tax deductions for military In this case, the amount that she realizes is $170,000. Tax deductions for military This is the smaller of: (a) the $180,000 outstanding debt immediately before the transfer reduced by the $8,000 for which she remains personally liable immediately after the transfer ($180,000 − $8,000 = $172,000) or (b) the $170,000 FMV of the house. Tax deductions for military Lili figures her gain or loss on the foreclosure by comparing the $170,000 amount realized with her $175,000 adjusted basis. Tax deductions for military She has a $5,000 nondeductible loss. Tax deductions for military Table 1-1. Tax deductions for military Worksheet for Foreclosures and Repossessions Part 1. Tax deductions for military Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Tax deductions for military Otherwise, go to Part 2. Tax deductions for military 1. Tax deductions for military Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property   2. Tax deductions for military Enter the fair market value of the transferred property   3. Tax deductions for military Ordinary income from the cancellation of debt upon foreclosure or repossession. Tax deductions for military * Subtract line 2 from line 1. Tax deductions for military If less than zero, enter zero. Tax deductions for military Next, go to Part 2   Part 2. Tax deductions for military Gain or loss from foreclosure or repossession. Tax deductions for military   4. Tax deductions for military Enter the smaller of line 1 or line 2. Tax deductions for military If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property   5. Tax deductions for military Enter any proceeds you received from the foreclosure sale   6. Tax deductions for military Add line 4 and line 5   7. Tax deductions for military Enter the adjusted basis of the transferred property   8. Tax deductions for military Gain or loss from foreclosure or repossession. Tax deductions for military Subtract line 7 from line 6   * The income may not be taxable. Tax deductions for military See chapter 1 for more details. Tax deductions for military Amount realized on a nonrecourse debt. Tax deductions for military    If you are not personally liable for repaying the debt secured by the transferred property, the amount you realize includes the full amount of the outstanding debt immediately before the transfer. Tax deductions for military This is true even if the FMV of the property is less than the outstanding debt immediately before the transfer. Tax deductions for military Example 1. Tax deductions for military Tara bought a new car for $15,000. Tax deductions for military She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Tax deductions for military Tara is not personally liable for the loan (nonrecourse), but pledged the new car as security for the loan. Tax deductions for military On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Tax deductions for military The balance due after taking into account the payments Tara made was $10,000. Tax deductions for military The FMV of the car when it was repossessed was $9,000. Tax deductions for military The amount Tara realized on the repossession is $10,000. Tax deductions for military That is the outstanding amount of debt immediately before the repossession, even though the FMV of the car is less than $10,000. Tax deductions for military Tara figures her gain or loss on the repossession by comparing the $10,000 amount realized with her $15,000 adjusted basis. Tax deductions for military Tara has a $5,000 nondeductible loss. Tax deductions for military Example 2. Tax deductions for military Lili paid $200,000 for her home. Tax deductions for military She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Tax deductions for military She is not personally liable for the loan, but grants the bank a mortgage. Tax deductions for military The bank foreclosed on the mortgage because Lili stopped making payments. Tax deductions for military When the bank foreclosed on the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Tax deductions for military The amount Lili realized on the foreclosure is $180,000, the outstanding debt immediately before the foreclosure. Tax deductions for military She figures her gain or loss by comparing the $180,000 amount realized with her $175,000 adjusted basis. Tax deductions for military Lili has a $5,000 realized gain. Tax deductions for military See Publication 523 to figure and report any taxable amount. Tax deductions for military Forms 1099-A and 1099-C. Tax deductions for military    A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A, Acquisition or Abandonment of Secured Property, showing information you need to figure your gain or loss. Tax deductions for military However, if the lender also cancels part of your debt and must file Form 1099-C, the lender can include the information about the foreclosure or repossession on that form instead of on Form 1099-A. Tax deductions for military The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Tax deductions for military For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. Tax deductions for military Prev  Up  Next   Home   More Online Publications