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2012 Tax Return Amendment

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2012 Tax Return Amendment

2012 tax return amendment Publication 531 - Introductory Material Table of Contents Future Developments What's New Reminder IntroductionOrdering forms and publications. 2012 tax return amendment Tax questions. 2012 tax return amendment Future Developments For the latest information about developments related to Publication 531, such as legislation enacted after this publication was published, go to www. 2012 tax return amendment irs. 2012 tax return amendment gov/pub531. 2012 tax return amendment What's New Additional Medicare Tax. 2012 tax return amendment  Beginning in 2013, a 0. 2012 tax return amendment 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. 2012 tax return amendment An employer is required to withhold Additional Medicare Tax on any Medicare wages or RRTA compensation it pays to an employee in excess of $200,000 in a calendar year without regard to the employee's filing status. 2012 tax return amendment An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages or compensation in excess of $200,000 to an employee and continue to withhold it until the end of the calendar year. 2012 tax return amendment Additional Medicare Tax is only imposed on the employee. 2012 tax return amendment There is no employer share of Additional Medicare Tax. 2012 tax return amendment All wages and compensation that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 2012 tax return amendment Tips are subject to Additional Medicare Tax withholding, if, in combination with other wages paid by the employer, they exceed the $200,000 withholding threshold. 2012 tax return amendment Similarly, tips are subject to Additional Medicare Tax withholding, if, in combination with other RRTA compensation paid by the employer, they exceed the $200,000 withholding threshold. 2012 tax return amendment For more information on Additional Medicare Tax, go to www. 2012 tax return amendment irs. 2012 tax return amendment gov and enter “Additional Medicare Tax” in the search box. 2012 tax return amendment Reminder Photographs of missing children. 2012 tax return amendment  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2012 tax return amendment Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2012 tax return amendment 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. 2012 tax return amendment Introduction This publication is for employees who receive tips. 2012 tax return amendment All tips you receive are income and are subject to federal income tax. 2012 tax return amendment You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. 2012 tax return amendment The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. 2012 tax return amendment Reporting your tip income correctly is not difficult. 2012 tax return amendment You must do three things. 2012 tax return amendment Keep a daily tip record. 2012 tax return amendment Report tips to your employer. 2012 tax return amendment Report all your tips on your income tax return. 2012 tax return amendment  This publication will explain these three things and show you what to do on your tax return if you have not done the first two. 2012 tax return amendment This publication will also show you how to treat allocated tips. 2012 tax return amendment Comments and suggestions. 2012 tax return amendment   We welcome your comments about this publication and your suggestions for future editions. 2012 tax return amendment   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 2012 tax return amendment NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2012 tax return amendment Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2012 tax return amendment   You can send your comments from www. 2012 tax return amendment irs. 2012 tax return amendment gov/formspubs/. 2012 tax return amendment Click on “More Information” and then on “Comment on Tax Forms and Publications”. 2012 tax return amendment   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. 2012 tax return amendment Ordering forms and publications. 2012 tax return amendment   Visit www. 2012 tax return amendment irs. 2012 tax return amendment 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. 2012 tax return amendment Internal Revenue Service 1201 N. 2012 tax return amendment Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2012 tax return amendment   If you have a tax question, check the information available on IRS. 2012 tax return amendment gov or call 1-800-829-1040. 2012 tax return amendment We cannot answer tax questions sent to either of the above addresses. 2012 tax return amendment Prev  Up  Next   Home   More Online Publications
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The 2012 Tax Return Amendment

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