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Download A 1040ez Federal Tax Form

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Download a 1040ez federal tax form 11. Download a 1040ez federal tax form   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Download a 1040ez federal tax form Nondeductible losses. Download a 1040ez federal tax form Family pet. Download a 1040ez federal tax form Progressive deterioration. Download a 1040ez federal tax form Decline in market value of stock. Download a 1040ez federal tax form Mislaid or lost property. Download a 1040ez federal tax form Farming Losses How To Figure a Loss Deduction Limits on Losses of Personal-Use Property When Loss Is Deductible Proof of Loss Figuring a Gain Other Involuntary ConversionsCondemnation Irrigation Project Livestock Losses Tree Seedlings Postponing GainException. Download a 1040ez federal tax form Related persons. Download a 1040ez federal tax form Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Download a 1040ez federal tax form Covered disaster area. Download a 1040ez federal tax form Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Download a 1040ez federal tax form A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Download a 1040ez federal tax form A theft occurs when property is stolen. Download a 1040ez federal tax form A condemnation occurs when private property is legally taken for public use without the owner's consent. Download a 1040ez federal tax form A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Download a 1040ez federal tax form You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation. Download a 1040ez federal tax form An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter. Download a 1040ez federal tax form If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. Download a 1040ez federal tax form For more information, see Postponing Gain , later. Download a 1040ez federal tax form Topics - This chapter discusses: Casualties and thefts How to figure a loss or gain Other involuntary conversions Postponing gain Disaster area losses Reporting gains and losses Drought involving property connected with a trade or business or a transaction entered into for profit Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 4684 Casualties and Thefts 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Download a 1040ez federal tax form Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Download a 1040ez federal tax form If the insurance or other reimbursement is more than the adjusted basis of the destroyed, damaged, or stolen property, you may have a taxable gain. Download a 1040ez federal tax form Casualty. Download a 1040ez federal tax form   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Download a 1040ez federal tax form A sudden event is one that is swift, not gradual or progressive. Download a 1040ez federal tax form An unexpected event is one that is ordinarily unanticipated and unintended. Download a 1040ez federal tax form 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. Download a 1040ez federal tax form Deductible losses. Download a 1040ez federal tax form   Deductible casualty losses can result from a number of different causes, including the following. Download a 1040ez federal tax form Airplane crashes. Download a 1040ez federal tax form Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Download a 1040ez federal tax form Earthquakes. Download a 1040ez federal tax form Fires (but see Nondeductible losses next for exceptions). Download a 1040ez federal tax form Floods. Download a 1040ez federal tax form Freezing. Download a 1040ez federal tax form 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. Download a 1040ez federal tax form Lightning. Download a 1040ez federal tax form Storms, including hurricanes and tornadoes. Download a 1040ez federal tax form Terrorist attacks. Download a 1040ez federal tax form Vandalism. Download a 1040ez federal tax form Volcanic eruptions. Download a 1040ez federal tax form Nondeductible losses. Download a 1040ez federal tax form   A casualty loss is not deductible if the damage or destruction is caused by the following. Download a 1040ez federal tax form Accidentally breaking articles such as glassware or china under normal conditions. Download a 1040ez federal tax form A family pet (explained below). Download a 1040ez federal tax form A fire if you willfully set it, or pay someone else to set it. Download a 1040ez federal tax form A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Download a 1040ez federal tax form The same is true if the willful act or willful negligence of someone acting for you caused the accident. Download a 1040ez federal tax form Progressive deterioration (explained below). Download a 1040ez federal tax form Family pet. Download a 1040ez federal tax form   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed above under Casualty are met. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form You keep your horse in your yard. Download a 1040ez federal tax form The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Download a 1040ez federal tax form Some of the trees were completely girdled and died. Download a 1040ez federal tax form Because the damage was not unexpected or unusual, the loss is not deductible. Download a 1040ez federal tax form Progressive deterioration. Download a 1040ez federal tax form   Loss of property due to progressive deterioration is not deductible as a casualty loss. Download a 1040ez federal tax form This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Download a 1040ez federal tax form Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Download a 1040ez federal tax form However, weather-related conditions or disease may cause another type of involuntary conversion. Download a 1040ez federal tax form See Other Involuntary Conversions , later. Download a 1040ez federal tax form Theft. Download a 1040ez federal tax form   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Download a 1040ez federal tax form The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Download a 1040ez federal tax form You do not need to show a conviction for theft. Download a 1040ez federal tax form   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Download a 1040ez federal tax form The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Download a 1040ez federal tax form Decline in market value of stock. Download a 1040ez federal tax form   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. Download a 1040ez federal tax form 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. Download a 1040ez federal tax form You report a capital loss on Schedule D (Form 1040). Download a 1040ez federal tax form For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Download a 1040ez federal tax form Mislaid or lost property. Download a 1040ez federal tax form   The simple disappearance of money or property is not a theft. Download a 1040ez federal tax form 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. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Download a 1040ez federal tax form The diamond falls from the ring and is never found. Download a 1040ez federal tax form The loss of the diamond is a casualty. Download a 1040ez federal tax form Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Download a 1040ez federal tax form The following is a discussion of some losses you can deduct and some you cannot deduct. Download a 1040ez federal tax form Livestock or produce bought for resale. Download a 1040ez federal tax form   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Download a 1040ez federal tax form If you report your income on an accrual method, take casualty and theft losses on property bought for resale by omitting the item from the closing inventory for the year of the loss. Download a 1040ez federal tax form You cannot take a separate deduction. Download a 1040ez federal tax form Livestock, plants, produce, and crops raised for sale. Download a 1040ez federal tax form   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Download a 1040ez federal tax form You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Download a 1040ez federal tax form   For plants with a preproductive period of more than 2 years, you may have a deductible loss if you have a tax basis in the plants. Download a 1040ez federal tax form You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Download a 1040ez federal tax form The uniform capitalization rules are discussed in chapter 6. Download a 1040ez federal tax form   If you report your income on an accrual method, casualty or theft losses are deductible only if you included the items in your inventory at the beginning of your tax year. Download a 1040ez federal tax form You get the deduction by omitting the item from your inventory at the close of your tax year. Download a 1040ez federal tax form You cannot take a separate casualty or theft deduction. Download a 1040ez federal tax form Income loss. Download a 1040ez federal tax form   A loss of future income is not deductible. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form A severe flood destroyed your crops. Download a 1040ez federal tax form Because you are a cash method taxpayer and already deducted the cost of raising the crops as farm expenses, this loss is not deductible, as explained above under Livestock, plants, produce, and crops raised for sale . Download a 1040ez federal tax form You estimate that the crop loss will reduce your farm income by $25,000. Download a 1040ez federal tax form This loss of future income is also not deductible. Download a 1040ez federal tax form Loss of timber. Download a 1040ez federal tax form   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Download a 1040ez federal tax form If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Download a 1040ez federal tax form See Postponing Gain , later. Download a 1040ez federal tax form Property used in farming. Download a 1040ez federal tax form   Casualty and theft losses of property used in your farm business usually result in deductible losses. Download a 1040ez federal tax form If a fire or storm destroyed your barn, or you lose by casualty or theft an animal you bought for draft, breeding, dairy, or sport, you may have a deductible loss. Download a 1040ez federal tax form See How To Figure a Loss , later. Download a 1040ez federal tax form Raised draft, breeding, dairy, or sporting animals. Download a 1040ez federal tax form   Generally, losses of raised draft, breeding, dairy, or sporting animals do not result in deductible casualty or theft losses because you have no basis in the animals. Download a 1040ez federal tax form However, you may have a basis in the animal and therefore may be able to claim a deduction if either of the following situations applies to you. Download a 1040ez federal tax form You use inventories to determine your income and you included the animals in your inventory. Download a 1040ez federal tax form You capitalized the expenses associated with the animals under the uniform capitalization rules and therefore have a tax basis in the animals subject to a casualty or theft. Download a 1040ez federal tax form When you include livestock in inventory, its last inventory value is its basis. Download a 1040ez federal tax form When you lose an inventoried animal held for draft, breeding, dairy, or sport by casualty or theft during the year, decrease ending inventory by the amount you included in inventory for the animal. Download a 1040ez federal tax form You cannot take a separate deduction. Download a 1040ez federal tax form How To Figure a Loss How you figure a deductible casualty or theft loss depends on whether the loss was to farm or personal-use property and whether the property was stolen or partly or completely destroyed. Download a 1040ez federal tax form Farm property. Download a 1040ez federal tax form   Farm property is the property you use in your farming business. Download a 1040ez federal tax form If your farm property was completely destroyed or stolen, your loss is figured as follows:      Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive      You can use the schedules in Publication 584-B to list your stolen, damaged, or destroyed business property and to figure your loss. Download a 1040ez federal tax form   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Download a 1040ez federal tax form However, the deduction limits, discussed later, do not apply to farm property. Download a 1040ez federal tax form Personal-use property. Download a 1040ez federal tax form   Personal-use property is property used by you or your family members for personal purposes and not used in your farm business or for income-producing purposes. Download a 1040ez federal tax form The following items are examples of personal-use property: Your main home. Download a 1040ez federal tax form Furniture and electronics used in your main home and not used in a home office or for business purposes. Download a 1040ez federal tax form Clothing and jewelry. Download a 1040ez federal tax form An automobile used for nonbusiness purposes. Download a 1040ez federal tax form You figure the casualty or theft loss on this property by taking the following steps. Download a 1040ez federal tax form Determine your adjusted basis in the property before the casualty or theft. Download a 1040ez federal tax form Determine the decrease in fair market value of the property as a result of the casualty or theft. Download a 1040ez federal tax form From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Download a 1040ez federal tax form You must apply the deduction limits, discussed later, to determine your deductible loss. Download a 1040ez federal tax form    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Download a 1040ez federal tax form It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Download a 1040ez federal tax form Adjusted basis. Download a 1040ez federal tax form   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Download a 1040ez federal tax form For more information about adjusted basis, see chapter 6. Download a 1040ez federal tax form Decrease in fair market value (FMV). Download a 1040ez federal tax form   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Download a 1040ez federal tax form FMV is defined in chapter 10 under Payments Received or Considered Received . Download a 1040ez federal tax form Appraisal. Download a 1040ez federal tax form   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Download a 1040ez federal tax form But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Download a 1040ez federal tax form   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. Download a 1040ez federal tax form The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Download a 1040ez federal tax form This information is needed to limit any deduction to the actual loss resulting from damage to the property. Download a 1040ez federal tax form Cost of cleaning up or making repairs. Download a 1040ez federal tax form   The cost of cleaning up after a casualty is not part of a casualty loss. Download a 1040ez federal tax form Neither is the cost of repairing damaged property after a casualty. Download a 1040ez federal tax form 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. Download a 1040ez federal tax form The repairs are actually made. Download a 1040ez federal tax form The repairs are necessary to bring the property back to its condition before the casualty. Download a 1040ez federal tax form The amount spent for repairs is not excessive. Download a 1040ez federal tax form The repairs fix the damage only. Download a 1040ez federal tax form The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Download a 1040ez federal tax form Related expenses. Download a 1040ez federal tax form   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, temporary housing, or a rental car, are not part of your casualty or theft loss. Download a 1040ez federal tax form However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Download a 1040ez federal tax form Separate computations for more than one item of property. Download a 1040ez federal tax form   Generally, if a single casualty or theft involves more than one item of property, you must figure your loss separately for each item of property. Download a 1040ez federal tax form Then combine the losses to determine your total loss. Download a 1040ez federal tax form    There is an exception to this rule for personal-use real property. Download a 1040ez federal tax form See Exception for personal-use real property, later. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form A fire on your farm damaged a tractor and the barn in which it was stored. Download a 1040ez federal tax form The tractor had an adjusted basis of $3,300. Download a 1040ez federal tax form Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Download a 1040ez federal tax form The barn had an adjusted basis of $28,000. Download a 1040ez federal tax form Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Download a 1040ez federal tax form You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Download a 1040ez federal tax form Figure your deductible casualty loss separately for the two items of property. Download a 1040ez federal tax form     Tractor Barn 1) Adjusted basis $3,300 $28,000 2) FMV before fire $28,000 $55,000 3) FMV after fire 10,000 25,000 4) Decrease in FMV  (line 2 − line 3) $18,000 $30,000 5) Loss (lesser of line 1 or line 4) $3,300 $28,000 6) Minus: Insurance 2,100 26,000 7) Deductible casualty loss $1,200 $2,000 8) Total deductible casualty loss $3,200 Exception for personal-use real property. Download a 1040ez federal tax form   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. Download a 1040ez federal tax form Figure the loss using the smaller of the following. Download a 1040ez federal tax form The decrease in FMV of the entire property. Download a 1040ez federal tax form The adjusted basis of the entire property. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form You bought a farm in 1990 for $160,000. Download a 1040ez federal tax form The adjusted basis of the residential part is now $128,000. Download a 1040ez federal tax form In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Download a 1040ez federal tax form The adjusted basis of the residential part includes the $7,500. Download a 1040ez federal tax form The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Download a 1040ez federal tax form The trees were not covered by insurance. Download a 1040ez federal tax form 1) Adjusted basis $128,000 2) FMV before the storm $400,000 3) FMV after the storm 385,000 4) Decrease in FMV (line 2 − line 3) $15,000 5) Loss before insurance (lesser of line 1 or line 4) $15,000 6) Minus: Insurance -0- 7) Amount of loss $15,000 Insurance and other reimbursements. Download a 1040ez federal tax form   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Download a 1040ez federal tax form You do not have a casualty or theft loss to the extent you are reimbursed. Download a 1040ez federal tax form   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Download a 1040ez federal tax form You must reduce your loss even if you do not receive payment until a later tax year. Download a 1040ez federal tax form    Do not subtract from your loss any insurance payments you receive for living expenses if you lose the use of your main home or are denied access to it because of a casualty. Download a 1040ez federal tax form You may have to include a portion of these payments in your income. Download a 1040ez federal tax form See Insurance payments for living expenses in Publication 547 for details. Download a 1040ez federal tax form Disaster relief. Download a 1040ez federal tax form   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. Download a 1040ez federal tax form Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Download a 1040ez federal tax form   Generally, disaster relief grants received under the Robert T. Download a 1040ez federal tax form Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Download a 1040ez federal tax form See Federal disaster relief grants , later, under Disaster Area Losses . Download a 1040ez federal tax form   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Download a 1040ez federal tax form See Qualified disaster relief payments , later, under Disaster Area Losses . Download a 1040ez federal tax form Reimbursement received after deducting loss. Download a 1040ez federal tax form   If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Download a 1040ez federal tax form Actual reimbursement less than expected. Download a 1040ez federal tax form   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. Download a 1040ez federal tax form Actual reimbursement more than expected. Download a 1040ez federal tax form   If you later receive more reimbursement than you expected after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Download a 1040ez federal tax form However, if any part of your original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Download a 1040ez federal tax form Do not refigure your tax for the year you claimed the deduction. Download a 1040ez federal tax form See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Download a 1040ez federal tax form 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. Download a 1040ez federal tax form See Figuring a Gain in Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft. Download a 1040ez federal tax form Actual reimbursement same as expected. Download a 1040ez federal tax form   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. Download a 1040ez federal tax form Lump-sum reimbursement. Download a 1040ez federal tax form   If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. Download a 1040ez federal tax form Figure the gain or loss separately for each asset that has a separate basis. Download a 1040ez federal tax form Adjustments to basis. Download a 1040ez federal tax form   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. Download a 1040ez federal tax form The result is your adjusted basis in the property. Download a 1040ez federal tax form Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Download a 1040ez federal tax form See Adjusted Basis in chapter 6 for more information. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form You built a new silo for $25,000. Download a 1040ez federal tax form This is the basis in your silo because that is the total cost you incurred to build it. Download a 1040ez federal tax form During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Download a 1040ez federal tax form In addition, your insurance company reimbursed you $4,000 for the damage and you spent $6,000 to restore the silo to its pre-casualty condition. Download a 1040ez federal tax form Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Download a 1040ez federal tax form Deduction Limits on Losses of Personal-Use Property Casualty and theft losses of property held for personal use may be deductible if you itemize deductions on Schedule A (Form 1040). Download a 1040ez federal tax form There are two limits on the deduction for casualty or theft loss of personal-use property. Download a 1040ez federal tax form You figure these limits on Form 4684. Download a 1040ez federal tax form $100 rule. Download a 1040ez federal tax form   You must reduce each casualty or theft loss on personal-use property by $100. Download a 1040ez federal tax form This rule applies after you have subtracted any reimbursement. Download a 1040ez federal tax form 10% rule. Download a 1040ez federal tax form   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Download a 1040ez federal tax form Apply this rule after you reduce each loss by $100. Download a 1040ez federal tax form Adjusted gross income is on line 38 of Form 1040. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form In June, you discovered that your house had been burglarized. Download a 1040ez federal tax form Your loss after insurance reimbursement was $2,000. Download a 1040ez federal tax form Your adjusted gross income for the year you discovered the burglary is $57,000. Download a 1040ez federal tax form Figure your theft loss deduction as follows: 1. Download a 1040ez federal tax form Loss after insurance $2,000 2. Download a 1040ez federal tax form Subtract $100 100 3. Download a 1040ez federal tax form Loss after $100 rule $1,900 4. Download a 1040ez federal tax form Subtract 10% (. Download a 1040ez federal tax form 10) × $57,000 AGI $5,700 5. Download a 1040ez federal tax form Theft loss deduction -0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($5,700). Download a 1040ez federal tax form    If you have a casualty or theft gain in addition to a loss, you will have to make a special computation before you figure your 10% limit. Download a 1040ez federal tax form See 10% Rule in Publication 547. Download a 1040ez federal tax form When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Download a 1040ez federal tax form You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Download a 1040ez federal tax form However, losses in federally declared disaster areas are subject to different rules. Download a 1040ez federal tax form See Disaster Area Losses , later, for an exception. Download a 1040ez federal tax form 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. Download a 1040ez federal tax form Leased property. Download a 1040ez federal tax form   If you lease property from someone else, you can deduct a loss on the property in the year your liability for the loss is fixed. Download a 1040ez federal tax form This is true even if the loss occurred or the liability was paid in a different year. Download a 1040ez federal tax form You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Download a 1040ez federal tax form Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form Robert leased a tractor from First Implement, Inc. Download a 1040ez federal tax form , for use in his farm business. Download a 1040ez federal tax form The tractor was destroyed by a tornado in June 2012. Download a 1040ez federal tax form The loss was not insured. 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Download a 1040ez federal tax form Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Download a 1040ez federal tax form Theft loss proof. Download a 1040ez federal tax form   For a theft loss, your records should show all the following information. Download a 1040ez federal tax form When you discovered your property was missing. Download a 1040ez federal tax form That your property was stolen. Download a 1040ez federal tax form That you were the owner of the property. Download a 1040ez federal tax form Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Download a 1040ez federal tax form Figuring a Gain A casualty or theft may result in a taxable gain. Download a 1040ez federal tax form If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. Download a 1040ez federal tax form You generally report your gain as income in the year you receive the reimbursement. Download a 1040ez federal tax form However, depending on the type of property you receive, you may not have to report your gain. Download a 1040ez federal tax form See Postponing Gain , later. Download a 1040ez federal tax form Your gain is figured as follows: The amount you receive, minus Your adjusted basis in the property at the time of the casualty or theft. Download a 1040ez federal tax form Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. Download a 1040ez federal tax form Amount you receive. Download a 1040ez federal tax form   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Download a 1040ez federal tax form It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form A tornado severely damaged your barn. Download a 1040ez federal tax form The adjusted basis of the barn was $25,000. Download a 1040ez federal tax form Your insurance company reimbursed you $40,000 for the damaged barn. Download a 1040ez federal tax form However, you had legal expenses of $2,000 to collect that insurance. Download a 1040ez federal tax form Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Download a 1040ez federal tax form 1) Insurance reimbursement $40,000 2) Legal expenses 2,000 3) Amount received  (line 1 − line 2) $38,000 4) Adjusted basis 25,000 5) Gain on casualty (line 3 − line 4) $13,000 Other Involuntary Conversions In addition to casualties and thefts, other events cause involuntary conversions of property. Download a 1040ez federal tax form Some of these are discussed in the following paragraphs. Download a 1040ez federal tax form Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Download a 1040ez federal tax form You report the gain or deduct the loss on your tax return for the year you realize it. Download a 1040ez federal tax form However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Download a 1040ez federal tax form See Postponing Gain , later. Download a 1040ez federal tax form Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Download a 1040ez federal tax form The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take property. Download a 1040ez federal tax form The owner receives a condemnation award (money or property) in exchange for the property taken. Download a 1040ez federal tax form A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Download a 1040ez federal tax form Threat of condemnation. Download a 1040ez federal tax form   Treat the sale of your property under threat of condemnation as a condemnation, provided you have reasonable grounds to believe that your property will be condemned. Download a 1040ez federal tax form Main home condemned. Download a 1040ez federal tax form   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. Download a 1040ez federal tax form For information on this exclusion, see Publication 523. Download a 1040ez federal tax form If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. Download a 1040ez federal tax form See Postponing Gain , later. Download a 1040ez federal tax form (You cannot deduct a loss from the condemnation of your main home. Download a 1040ez federal tax form ) More information. Download a 1040ez federal tax form   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Download a 1040ez federal tax form Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Download a 1040ez federal tax form Irrigation Project The sale or other disposition of property located within an irrigation project to conform to the acreage limits of federal reclamation laws is an involuntary conversion. Download a 1040ez federal tax form Livestock Losses Diseased livestock. Download a 1040ez federal tax form   If your livestock die from disease, or are destroyed, sold, or exchanged because of disease, even though the disease is not of epidemic proportions, treat these occurrences as involuntary conversions. Download a 1040ez federal tax form If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Download a 1040ez federal tax form Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Download a 1040ez federal tax form If you replace the livestock, you may be able to postpone reporting the gain. Download a 1040ez federal tax form See Postponing Gain below. Download a 1040ez federal tax form Reporting dispositions of diseased livestock. Download a 1040ez federal tax form   If you choose to postpone reporting gain on the disposition of diseased livestock, you must attach a statement to your return explaining that the livestock were disposed of because of disease. Download a 1040ez federal tax form You must also include other information on this statement. Download a 1040ez federal tax form See How To Postpone Gain , later, under Postponing Gain . Download a 1040ez federal tax form Weather-related sales of livestock. Download a 1040ez federal tax form   If you sell or exchange livestock (other than poultry) held for draft, breeding, or dairy purposes solely because of drought, flood, or other weather-related conditions, treat the sale or exchange as an involuntary conversion. 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Download a 1040ez federal tax form Related persons. Download a 1040ez federal tax form   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. Download a 1040ez federal tax form For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Download a 1040ez federal tax form Death of a taxpayer. Download a 1040ez federal tax form   If a taxpayer dies after having a gain, but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. Download a 1040ez federal tax form The executor of the estate or the person succeeding to the funds from the involuntary conversion cannot postpone reporting the gain by buying replacement property. Download a 1040ez federal tax form Replacement Property You must buy replacement property for the specific purpose of replacing your property. Download a 1040ez federal tax form Your replacement property must be similar or related in service or use to the property it replaces. Download a 1040ez federal tax form You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Download a 1040ez federal tax form If you spend the money you receive for other purposes, and borrow money to buy replacement property, you can still choose to postpone reporting the gain if you meet the other requirements. Download a 1040ez federal tax form Property you acquire by gift or inheritance does not qualify as replacement property. Download a 1040ez federal tax form Owner-user. Download a 1040ez federal tax form   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. Download a 1040ez federal tax form Examples of property that functions in the same way as the property it replaces are a home that replaces another home, a dairy cow that replaces another dairy cow, and farm land that replaces other farm land. Download a 1040ez federal tax form A grinding mill that replaces a tractor does not qualify. Download a 1040ez federal tax form Neither does a breeding or draft animal that replaces a dairy cow. Download a 1040ez federal tax form Soil or other environmental contamination. 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Download a 1040ez federal tax form   If your destroyed business or income-producing property was located in a federally declared disaster area, any tangible replacement property you acquire for use in any business is treated as similar or related in service or use to the destroyed property. Download a 1040ez federal tax form For more information, see Disaster Area Losses in Publication 547. Download a 1040ez federal tax form Substituting replacement property. Download a 1040ez federal tax form   Once you have acquired qualified replacement property that you designate as replacement property in a statement attached to your tax return, you cannot substitute other qualified replacement property. Download a 1040ez federal tax form This is true even if you acquire the other property within the replacement period. 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Download a 1040ez federal tax form The replacement period generally ends 2 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form You are a calendar year taxpayer. Download a 1040ez federal tax form While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Download a 1040ez federal tax form You discovered the theft when you returned to your farm on November 11, 2012. Download a 1040ez federal tax form Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Download a 1040ez federal tax form You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Download a 1040ez federal tax form Main home in disaster area. Download a 1040ez federal tax form   For your main home (or its contents) located in a federally declared disaster area, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Download a 1040ez federal tax form See Disaster Area Losses , later. Download a 1040ez federal tax form Property in the Midwestern disaster areas. Download a 1040ez federal tax form   For property located in the Midwestern disaster areas (defined in Table 4 in the 2008 Publication 547) that was destroyed, damaged, stolen, or condemned, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Download a 1040ez federal tax form This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Download a 1040ez federal tax form Property in the Kansas disaster area. Download a 1040ez federal tax form   For property located in the Kansas disaster area that was destroyed, damaged, stolen, or condemned after May 3, 2007, as a result of the Kansas storms and tornadoes, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Download a 1040ez federal tax form This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Download a 1040ez federal tax form Property in the Hurricane Katrina disaster area. Download a 1040ez federal tax form   For property located in the Hurricane Katrina disaster area that was destroyed, damaged, stolen, or condemned after August 24, 2005, as a result of Hurricane Katrina, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Download a 1040ez federal tax form This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Download a 1040ez federal tax form Weather-related sales of livestock in an area eligible for federal assistance. Download a 1040ez federal tax form   For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. Download a 1040ez federal tax form The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Download a 1040ez federal tax form   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Download a 1040ez federal tax form R. Download a 1040ez federal tax form B. Download a 1040ez federal tax form 529, available at  www. Download a 1040ez federal tax form irs. Download a 1040ez federal tax form gov/irb/2006-39_IRB/ar11. Download a 1040ez federal tax form html. Download a 1040ez federal tax form For a list of counties for which exceptional, extreme, or severe drought was reported during the 12 months ending August 31, 2013, see Notice 2013-62, available at IRS. Download a 1040ez federal tax form gov. Download a 1040ez federal tax form Condemnation. Download a 1040ez federal tax form   The replacement period for a condemnation begins on the earlier of the following dates. Download a 1040ez federal tax form The date on which you disposed of the condemned property. Download a 1040ez federal tax form The date on which the threat of condemnation began. Download a 1040ez federal tax form The replacement period generally ends 2 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Download a 1040ez federal tax form But see Main home in disaster area , Property in the Midwestern disaster areas , Property in the Kansas disaster area , and Property in the Hurricane Katrina disaster area , earlier, for exceptions. Download a 1040ez federal tax form Business or investment real property. Download a 1040ez federal tax form   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Download a 1040ez federal tax form Extension. Download a 1040ez federal tax form   You can apply for an extension of the replacement period. Download a 1040ez federal tax form Send your written application to the Internal Revenue Service Center where you file your tax return. Download a 1040ez federal tax form See your tax return instructions for the address. Download a 1040ez federal tax form Include all the details about your need for an extension. Download a 1040ez federal tax form Make your application before the end of the replacement period. Download a 1040ez federal tax form However, you can file an application within a reasonable time after the replacement period ends if you can show a good reason for the delay. Download a 1040ez federal tax form You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Download a 1040ez federal tax form How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Download a 1040ez federal tax form You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Download a 1040ez federal tax form Required statement. Download a 1040ez federal tax form   You should attach a statement to your return for the year you have the gain. Download a 1040ez federal tax form This statement should include all the following information. Download a 1040ez federal tax form The date and details of the casualty, theft, or other involuntary conversion. Download a 1040ez federal tax form The insurance or other reimbursement you received. Download a 1040ez federal tax form How you figured the gain. Download a 1040ez federal tax form Replacement property acquired before return filed. Download a 1040ez federal tax form   If you acquire replacement property before you file your return for the year you have the gain, your statement should also include detailed information about all the following items. Download a 1040ez federal tax form The replacement property. Download a 1040ez federal tax form The postponed gain. Download a 1040ez federal tax form The basis adjustment that reflects the postponed gain. Download a 1040ez federal tax form Any gain you are reporting as income. Download a 1040ez federal tax form Replacement property acquired after return filed. Download a 1040ez federal tax form   If you intend to buy replacement property after you file your return for the year you realize gain, your statement should also say that you are choosing to replace the property within the required replacement period. Download a 1040ez federal tax form   You should then attach another statement to your return for the year in which you buy the replacement property. Download a 1040ez federal tax form This statement should contain detailed information on the replacement property. Download a 1040ez federal tax form If you acquire part of your replacement property in one year and part in another year, you must attach a statement to each year's return. Download a 1040ez federal tax form Include in the statement detailed information on the replacement property bought in that year. Download a 1040ez federal tax form Reporting weather-related sales of livestock. Download a 1040ez federal tax form   If you choose to postpone reporting the gain on weather-related sales or exchanges of livestock, show all the following information on a statement attached to your return for the tax year in which you first realize any of the gain. Download a 1040ez federal tax form Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Download a 1040ez federal tax form The gain realized on the sale or exchange. Download a 1040ez federal tax form The number and kind of livestock sold or exchanged. Download a 1040ez federal tax form The number of livestock of each kind you would have sold or exchanged under your usual business practice. Download a 1040ez federal tax form   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Download a 1040ez federal tax form The dates you bought the replacement property. Download a 1040ez federal tax form The cost of the replacement property. Download a 1040ez federal tax form Description of the replacement property (for example, the number and kind of the replacement livestock). Download a 1040ez federal tax form Amended return. Download a 1040ez federal tax form   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Download a 1040ez federal tax form You do not acquire replacement property within the replacement period, plus extensions. 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Download a 1040ez federal tax form However, if you have a deductible loss from a disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct that loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster happened. Download a 1040ez federal tax form If you make this choice, the loss is treated as having occurred in the preceding year. Download a 1040ez federal tax form    Claiming a qualifying disaster loss on the previous year's return may result in a lower tax for that year, often producing or increasing a cash refund. Download a 1040ez federal tax form   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Download a 1040ez federal tax form The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Download a 1040ez federal tax form The due date (with extensions) for the return for the preceding tax year. Download a 1040ez federal tax form Federal disaster relief grants. Download a 1040ez federal tax form   Do not include post-disaster relief grants received under the Robert T. Download a 1040ez federal tax form Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. Download a 1040ez federal tax form Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Download a 1040ez federal tax form If the casualty loss was specifically reimbursed by the grant and you received the grant after the year in which you deducted the casualty loss, see Reimbursement received after deducting loss , earlier. Download a 1040ez federal tax form Unemployment assistance payments under the Act are taxable unemployment compensation. Download a 1040ez federal tax form Qualified disaster relief payments. Download a 1040ez federal tax form   Qualified disaster relief payments are not included in the income of individuals to the extent any expenses compensated by these payments are not otherwise compensated for by insurance or other reimbursement. Download a 1040ez federal tax form These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Download a 1040ez federal tax form No withholding applies to these payments. Download a 1040ez federal tax form   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Download a 1040ez federal tax form Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Download a 1040ez federal tax form Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Download a 1040ez federal tax form (A personal residence can be a rented residence or one you own. Download a 1040ez federal tax form ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Download a 1040ez federal tax form   Qualified disaster relief payments include amounts paid by a federal, state, or local government in connection with a federally declared disaster to individuals affected by the disaster. Download a 1040ez federal tax form    Qualified disaster relief payments do not include: Payments for expenses otherwise paid for by insurance or other reimbursements, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Download a 1040ez federal tax form Qualified disaster mitigation payments. Download a 1040ez federal tax form   Qualified disaster mitigation payments made under the Robert T. Download a 1040ez federal tax form Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not included in income. Download a 1040ez federal tax form These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Download a 1040ez federal tax form You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Download a 1040ez federal tax form Sale of property under hazard mitigation program. Download a 1040ez federal tax form   Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. Download a 1040ez federal tax form You report the gain or deduct the loss on your tax return for the year you realize it. Download a 1040ez federal tax form (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Download a 1040ez federal tax form ) However, if you sell or otherwise transfer property to the Federal Government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. Download a 1040ez federal tax form See Postponing Gain , earlier, for the rules that apply. Download a 1040ez federal tax form Other federal assistance programs. Download a 1040ez federal tax form    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Download a 1040ez federal tax form Postponed tax deadlines. Download a 1040ez federal tax form   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Download a 1040ez federal tax form The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns, paying income, excise, and employment taxes, and making contributions to a traditional IRA or Roth IRA. Download a 1040ez federal tax form   If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Download a 1040ez federal tax form Go to http://www. Download a 1040ez federal tax form irs. Download a 1040ez federal tax form gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Download a 1040ez federal tax form Who is eligible. Download a 1040ez federal tax form   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Download a 1040ez federal tax form Any individual whose main home is located in a covered disaster area (defined next). Download a 1040ez federal tax form Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Download a 1040ez federal tax form Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Download a 1040ez federal tax form 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. Download a 1040ez federal tax form The main home or principal place of business does not have to be located in the covered disaster area. Download a 1040ez federal tax form 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. Download a 1040ez federal tax form The spouse on a joint return with a taxpayer who is eligible for postponements. Download a 1040ez federal tax form Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose necessary records to meet a postponed tax deadline are located in the covered disaster area. Download a 1040ez federal tax form Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Download a 1040ez federal tax form Any other person determined by the IRS to be affected by a federally declared disaster. Download a 1040ez federal tax form Covered disaster area. Download a 1040ez federal tax form   This is an area of a federally declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year. Download a 1040ez federal tax form Abatement of interest and penalties. Download a 1040ez federal tax form   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Download a 1040ez federal tax form Reporting Gains and Losses You will have to file one or more of the following forms to report your gains or losses from involuntary conversions. Download a 1040ez federal tax form Form 4684. Download a 1040ez federal tax form   Use this form to report your gains and losses from casualties and thefts. Download a 1040ez federal tax form Form 4797. Download a 1040ez federal tax form   Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Download a 1040ez federal tax form Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income. Download a 1040ez federal tax form Form 8949. Download a 1040ez federal tax form   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Download a 1040ez federal tax form Schedule A (Form 1040). Download a 1040ez federal tax form   Use this form to deduct your losses from casualties and thefts of personal-use property and income-producing property, that you reported on Form 4684. Download a 1040ez federal tax form Schedule D (Form 1040). Download a 1040ez federal tax form   Use this form to carry over the following gains. Download a 1040ez federal tax form Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Download a 1040ez federal tax form Net gain shown on Form 4684 from the casualty or theft of personal-use property. Download a 1040ez federal tax form    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Download a 1040ez federal tax form Schedule F (Form 1040). Download a 1040ez federal tax form   Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 32, if you use the cash method of accounting and have not otherwise deducted these losses. Download a 1040ez federal tax form Prev  Up  Next   Home   More Online Publications
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IRS Statement on Court Ruling Related to Return Preparers

Update Feb. 21, 2014

On Feb. 11, 2014, the U.S. Court of Appeals for the District of Columbia Circuit upheld the decision of the lower court in the case of Loving vs. IRS, finding insufficient statutory support for the IRS’ regulation of federal tax return preparers.

Taxpayer reliance on paid tax return preparers and effective tax administration are inextricably linked to quality return preparation. As we assess the scope and impact of the court’s decision and determine our way forward, our focus on improved competency will continue.  

Please continue to check this site for additional information as it becomes available.

Background

On Friday, Jan. 18, 2013, the United States District Court for the District of Columbia enjoined the Internal Revenue Service from enforcing the regulatory requirements for registered tax return preparers. In accordance with this order, tax return preparers covered by this program are not required to complete competency testing or secure continuing education. The ruling does not affect the regulatory practice requirements for CPAs, attorneys, enrolled agents, enrolled retirement plan agents or enrolled actuaries.

On Friday, Feb. 1, 2013, the court modified its order to clarify that the order does not affect the requirement for all paid tax return preparers to obtain a preparer tax identification number (PTIN). Consistent with this modification, the IRS has reopened the online PTIN system. On March 29, 2013, the IRS appealed the district court opinion.

In July 2013, the IRS refunded testing fees to return preparers who tested or were scheduled to test on or after Jan. 18, 2013 (the date the registered tax return preparer test was enjoined). No decisions have been made about additional refunds related to registered tax return preparer regulations at this time.

 

 

Page Last Reviewed or Updated: 05-Mar-2014

The Download A 1040ez Federal Tax Form

Download a 1040ez federal tax form 2. Download a 1040ez federal tax form   Roth IRAs Table of Contents What's New for 2013 What's New for 2014 Reminders Introduction What Is a Roth IRA? When Can a Roth IRA Be Opened? Can You Contribute to a Roth IRA?How Much Can Be Contributed? When Can You Make Contributions? What if You Contribute Too Much? Can You Move Amounts Into a Roth IRA?Conversions Rollover From Employer's Plan Into a Roth IRA Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments Rollover From a Roth IRA Rollover of Exxon Valdez Settlement Income Rollover of Airline Payments Are Distributions Taxable?What Are Qualified Distributions? Additional Tax on Early Distributions Ordering Rules for Distributions How Do You Figure the Taxable Part? Must You Withdraw or Use Assets?Minimum distributions. Download a 1040ez federal tax form Recognizing Losses on Investments Distributions After Owner's Death What's New for 2013 Roth IRA contribution limit. Download a 1040ez federal tax form  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Download a 1040ez federal tax form If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Download a 1040ez federal tax form However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Download a 1040ez federal tax form For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in this chapter. Download a 1040ez federal tax form Modified AGI limit for Roth IRA contributions increased. Download a 1040ez federal tax form  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Download a 1040ez federal tax form Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Download a 1040ez federal tax form You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Download a 1040ez federal tax form Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Download a 1040ez federal tax form You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Download a 1040ez federal tax form Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Download a 1040ez federal tax form You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Download a 1040ez federal tax form See Can You Contribute to a Roth IRA? in this chapter. Download a 1040ez federal tax form Net Investment Income Tax. Download a 1040ez federal tax form  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). Download a 1040ez federal tax form However, these distributions are taken into account when determining the modified adjusted gross income threshold. Download a 1040ez federal tax form Distributions from a nonqualified retirement plan are included in net investment income. Download a 1040ez federal tax form See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Download a 1040ez federal tax form What's New for 2014 Modified AGI limit for Roth IRA contributions increased. Download a 1040ez federal tax form  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. Download a 1040ez federal tax form Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. Download a 1040ez federal tax form You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. Download a 1040ez federal tax form Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. Download a 1040ez federal tax form You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. Download a 1040ez federal tax form Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Download a 1040ez federal tax form You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Download a 1040ez federal tax form Reminders Deemed IRAs. Download a 1040ez federal tax form  For plan years beginning after 2002, a qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. Download a 1040ez federal tax form If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. Download a 1040ez federal tax form An employee's account can be treated as a traditional IRA or a Roth IRA. Download a 1040ez federal tax form For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. Download a 1040ez federal tax form Designated Roth accounts. Download a 1040ez federal tax form  Designated Roth accounts are separate accounts under 401(k), 403(b), or 457(b) plans that accept elective deferrals that are referred to as Roth contributions. Download a 1040ez federal tax form These elective deferrals are included in your income, but qualified distributions from these accounts are not included in your income. Download a 1040ez federal tax form Designated Roth accounts are not IRAs and should not be confused with Roth IRAs. Download a 1040ez federal tax form Contributions, up to their respective limits, can be made to Roth IRAs and designated Roth accounts according to your eligibility to participate. Download a 1040ez federal tax form A contribution to one does not impact your eligibility to contribute to the other. Download a 1040ez federal tax form See Publication 575, for more information on designated Roth accounts. Download a 1040ez federal tax form Introduction Regardless of your age, you may be able to establish and make nondeductible contributions to an individual retirement plan called a Roth IRA. Download a 1040ez federal tax form Contributions not reported. Download a 1040ez federal tax form   You do not report Roth IRA contributions on your return. Download a 1040ez federal tax form What Is a Roth IRA? A Roth IRA is an individual retirement plan that, except as explained in this chapter, is subject to the rules that apply to a traditional IRA (defined next). Download a 1040ez federal tax form It can be either an account or an annuity. Download a 1040ez federal tax form Individual retirement accounts and annuities are described in chapter 1 under How Can a Traditional IRA Be Opened. Download a 1040ez federal tax form To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened. Download a 1040ez federal tax form A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA. Download a 1040ez federal tax form Unlike a traditional IRA, you cannot deduct contributions to a Roth IRA. Download a 1040ez federal tax form But, if you satisfy the requirements, qualified distributions (discussed later) are tax free. Download a 1040ez federal tax form Contributions can be made to your Roth IRA after you reach age 70½ and you can leave amounts in your Roth IRA as long as you live. Download a 1040ez federal tax form Traditional IRA. Download a 1040ez federal tax form   A traditional IRA is any IRA that is not a Roth IRA or SIMPLE IRA. Download a 1040ez federal tax form Traditional IRAs are discussed in chapter 1. Download a 1040ez federal tax form When Can a Roth IRA Be Opened? You can open a Roth IRA at any time. Download a 1040ez federal tax form However, the time for making contributions for any year is limited. Download a 1040ez federal tax form See When Can You Make Contributions , later under Can You Contribute to a Roth IRA. Download a 1040ez federal tax form Can You Contribute to a Roth IRA? Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than: $188,000 for married filing jointly or qualifying widow(er), $127,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year, and $10,000 for married filing separately and you lived with your spouse at any time during the year. Download a 1040ez federal tax form You may be able to claim a credit for contributions to your Roth IRA. Download a 1040ez federal tax form For more information, see chapter 4. Download a 1040ez federal tax form Is there an age limit for contributions?   Contributions can be made to your Roth IRA regardless of your age. Download a 1040ez federal tax form Can you contribute to a Roth IRA for your spouse?   You can contribute to a Roth IRA for your spouse provided the contributions satisfy the Kay Bailey Hutchison Spousal IRA limit discussed in chapter 1 under How Much Can Be Contributed, you file jointly, and your modified AGI is less than $188,000. Download a 1040ez federal tax form Compensation. Download a 1040ez federal tax form   Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services. Download a 1040ez federal tax form It also includes commissions, self-employment income, nontaxable combat pay, military differential pay, and taxable alimony and separate maintenance payments. Download a 1040ez federal tax form For more information, see What Is Compensation? under Who Can Open a Traditional IRA? in chapter 1. Download a 1040ez federal tax form Modified AGI. Download a 1040ez federal tax form   Your modified AGI for Roth IRA purposes is your adjusted gross income (AGI) as shown on your return with some adjustments. Download a 1040ez federal tax form Use Worksheet 2-1 , later, to determine your modified AGI. Download a 1040ez federal tax form    Do not subtract conversion income when figuring your other AGI-based phaseouts and taxable income, such as your deduction for medical and dental expenses. Download a 1040ez federal tax form Subtract them from AGI only for the purpose of figuring your modified AGI for Roth IRA purposes. Download a 1040ez federal tax form How Much Can Be Contributed? The contribution limit for Roth IRAs generally depends on whether contributions are made only to Roth IRAs or to both traditional IRAs and Roth IRAs. Download a 1040ez federal tax form Worksheet 2-1. Download a 1040ez federal tax form Modified Adjusted Gross Income for Roth IRA Purposes Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes. Download a 1040ez federal tax form 1. Download a 1040ez federal tax form Enter your adjusted gross income from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37 1. Download a 1040ez federal tax form   2. Download a 1040ez federal tax form Enter any income resulting from the conversion of an IRA (other than a Roth IRA) to a Roth IRA (included on Form 1040, line 15b, Form 1040A, line 11b, or Form 1040NR, line 16b) and a rollover from a qualified retirement plan to a Roth IRA (included on Form 1040, line 16b, Form 1040A, line 12b, or Form 1040NR, line 17b) 2. Download a 1040ez federal tax form   3. Download a 1040ez federal tax form Subtract line 2 from line 1 3. Download a 1040ez federal tax form   4. Download a 1040ez federal tax form Enter any traditional IRA deduction from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 4. Download a 1040ez federal tax form   5. Download a 1040ez federal tax form Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 5. Download a 1040ez federal tax form   6. Download a 1040ez federal tax form Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 6. Download a 1040ez federal tax form   7. Download a 1040ez federal tax form Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 7. Download a 1040ez federal tax form   8. Download a 1040ez federal tax form Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 8. Download a 1040ez federal tax form   9. Download a 1040ez federal tax form Enter any foreign housing deduction from Form 2555, line 50 9. Download a 1040ez federal tax form   10. Download a 1040ez federal tax form Enter any excludable qualified savings bond interest from Form 8815, line 14 10. Download a 1040ez federal tax form   11. Download a 1040ez federal tax form Enter any excluded employer-provided adoption benefits from Form 8839, line 28 11. Download a 1040ez federal tax form   12. Download a 1040ez federal tax form Add the amounts on lines 3 through 11 12. Download a 1040ez federal tax form   13. Download a 1040ez federal tax form Enter: $188,000 if married filing jointly or qualifying widow(er), $10,000 if married filing separately and you lived with your spouse at any time during the year, or $127,000 for all others 13. Download a 1040ez federal tax form   Is the amount on line 12 more than the amount on line 13? If yes, see the note below. Download a 1040ez federal tax form  If no, the amount on line 12 is your modified adjusted gross income for Roth IRA purposes. Download a 1040ez federal tax form       Note. Download a 1040ez federal tax form If the amount on line 12 is more than the amount on line 13 and you have other income or loss items, such as social security income or passive activity losses, that are subject to AGI-based phaseouts, you can refigure your AGI solely for the purpose of figuring your modified AGI for Roth IRA purposes. Download a 1040ez federal tax form (If you receive social security benefits, use Worksheet 1 in Appendix B to refigure your AGI. Download a 1040ez federal tax form ) Then go to line 3 above in this Worksheet 2-1 to refigure your modified AGI. Download a 1040ez federal tax form If you do not have other income or loss items subject to AGI-based phaseouts, your modified adjusted gross income for Roth IRA purposes is the amount on line 12 above. Download a 1040ez federal tax form Roth IRAs only. Download a 1040ez federal tax form   If contributions are made only to Roth IRAs, your contribution limit generally is the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation. Download a 1040ez federal tax form   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained later under Contribution limit reduced . Download a 1040ez federal tax form Roth IRAs and traditional IRAs. Download a 1040ez federal tax form   If contributions are made to both Roth IRAs and traditional IRAs established for your benefit, your contribution limit for Roth IRAs generally is the same as your limit would be if contributions were made only to Roth IRAs, but then reduced by all contributions for the year to all IRAs other than Roth IRAs. Download a 1040ez federal tax form Employer contributions under a SEP or SIMPLE IRA plan do not affect this limit. Download a 1040ez federal tax form   This means that your contribution limit is the lesser of: $5,500 ($6,500 if you are age 50 or older) minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs, or Your taxable compensation minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs. Download a 1040ez federal tax form   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained below under Contribution limit reduced . Download a 1040ez federal tax form   Simplified employee pensions (SEPs) are discussed in Publication 560. Download a 1040ez federal tax form Savings incentive match plans for employees (SIMPLEs) are discussed in chapter 3. Download a 1040ez federal tax form Repayment of reservist distributions. Download a 1040ez federal tax form   You can repay qualified reservist distributions even if the repayments would cause your total contributions to the Roth IRA to be more than the general limit on contributions. Download a 1040ez federal tax form However, the total repayments cannot be more than the amount of your distribution. Download a 1040ez federal tax form Note. Download a 1040ez federal tax form If you make repayments of qualified reservist distributions to a Roth IRA, increase your basis in the Roth IRA by the amount of the repayment. Download a 1040ez federal tax form For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1. Download a 1040ez federal tax form Contribution limit reduced. Download a 1040ez federal tax form   If your modified AGI is above a certain amount, your contribution limit is gradually reduced. Download a 1040ez federal tax form Use Table 2-1, later, to determine if this reduction applies to you. Download a 1040ez federal tax form Table 2-1. Download a 1040ez federal tax form Effect of Modified AGI on Roth IRA Contribution This table shows whether your contribution to a Roth IRA is affected by the amount of your modified adjusted gross income (modified AGI). Download a 1040ez federal tax form IF you have taxable compensation and your filing status is . Download a 1040ez federal tax form . Download a 1040ez federal tax form . Download a 1040ez federal tax form AND your modified AGI is . Download a 1040ez federal tax form . Download a 1040ez federal tax form . Download a 1040ez federal tax form THEN . Download a 1040ez federal tax form . Download a 1040ez federal tax form . Download a 1040ez federal tax form married filing jointly or  qualifying widow(er) less than $178,000 you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . Download a 1040ez federal tax form at least $178,000 but less than $188,000 the amount you can contribute is reduced as explained under Contribution limit reduced . Download a 1040ez federal tax form $188,000 or more you cannot contribute to a Roth IRA. Download a 1040ez federal tax form married filing separately and you lived with your spouse at any time during the year zero (-0-) you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . Download a 1040ez federal tax form more than zero (-0-) but less than $10,000 the amount you can contribute is reduced as explained under Contribution limit reduced . Download a 1040ez federal tax form $10,000 or more you cannot contribute to a Roth IRA. Download a 1040ez federal tax form single, head of household,  or married filing separately and you did not live with your spouse at any time during the year less than $112,000 you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . Download a 1040ez federal tax form at least $112,000 but less than $127,000 the amount you can contribute is reduced as explained under Contribution limit reduced . Download a 1040ez federal tax form $127,000 or more you cannot contribute to a Roth IRA. Download a 1040ez federal tax form Figuring the reduction. Download a 1040ez federal tax form   If the amount you can contribute must be reduced, use Worksheet 2-2, later, to figure your reduced contribution limit. Download a 1040ez federal tax form Worksheet 2-2. Download a 1040ez federal tax form Determining Your Reduced Roth IRA Contribution Limit Before using this worksheet, check Table 2-1, earlier, to determine whether or not your Roth IRA contribution limit is reduced. Download a 1040ez federal tax form If it is, use this worksheet to determine how much it is reduced. Download a 1040ez federal tax form 1. Download a 1040ez federal tax form Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. Download a 1040ez federal tax form   2. Download a 1040ez federal tax form Enter: $178,000 if filing a joint return or qualifying widow(er), $-0- if married filing a separate return and you lived with your spouse at any time in 2013, or $112,000 for all others 2. Download a 1040ez federal tax form   3. Download a 1040ez federal tax form Subtract line 2 from line 1 3. Download a 1040ez federal tax form   4. Download a 1040ez federal tax form Enter: $10,000 if filing a joint return or qualifying widow(er) or married filing a separate return and you lived with your spouse at any time during the year, or $15,000 for all others 4. Download a 1040ez federal tax form   5. Download a 1040ez federal tax form Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). Download a 1040ez federal tax form If the result is 1. Download a 1040ez federal tax form 000 or more, enter 1. Download a 1040ez federal tax form 000 5. Download a 1040ez federal tax form   6. Download a 1040ez federal tax form Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. Download a 1040ez federal tax form   7. Download a 1040ez federal tax form Multiply line 5 by line 6 7. Download a 1040ez federal tax form   8. Download a 1040ez federal tax form Subtract line 7 from line 6. Download a 1040ez federal tax form Round the result up to the nearest $10. Download a 1040ez federal tax form If the result is less than $200, enter $200 8. Download a 1040ez federal tax form   9. Download a 1040ez federal tax form Enter contributions for the year to other IRAs 9. Download a 1040ez federal tax form   10. Download a 1040ez federal tax form Subtract line 9 from line 6 10. Download a 1040ez federal tax form   11. Download a 1040ez federal tax form Enter the lesser of line 8 or line 10. Download a 1040ez federal tax form This is your reduced Roth IRA contribution limit 11. Download a 1040ez federal tax form      Round your reduced contribution limit up to the nearest $10. Download a 1040ez federal tax form If your reduced contribution limit is more than $0, but less than $200, increase the limit to $200. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form You are a 45-year-old, single individual with taxable compensation of $113,000. Download a 1040ez federal tax form You want to make the maximum allowable contribution to your Roth IRA for 2013. Download a 1040ez federal tax form Your modified AGI for 2013 is $113,000. Download a 1040ez federal tax form You have not contributed to any traditional IRA, so the maximum contribution limit before the modified AGI reduction is $5,500. Download a 1040ez federal tax form You figure your reduced Roth IRA contribution of $5,140 as shown on Worksheet 2-2. Download a 1040ez federal tax form Example—Illustrated, later. Download a 1040ez federal tax form   Worksheet 2-2. Download a 1040ez federal tax form Example—Illustrated Before using this worksheet, check Table 2-1, earlier, to determine whether or not your Roth IRA contribution limit is reduced. Download a 1040ez federal tax form If it is, use this worksheet to determine how much it is reduced. Download a 1040ez federal tax form 1. Download a 1040ez federal tax form Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. Download a 1040ez federal tax form 113,000 2. Download a 1040ez federal tax form Enter: $178,000 if filing a joint return or qualifying widow(er), $-0- if married filing a separate return and you lived with your spouse at any time in 2013, or $112,000 for all others 2. Download a 1040ez federal tax form 112,000 3. Download a 1040ez federal tax form Subtract line 2 from line 1 3. Download a 1040ez federal tax form 1,000 4. Download a 1040ez federal tax form Enter: $10,000 if filing a joint return or qualifying widow(er) or married filing a separate return and you lived with your spouse at any time during the year, or $15,000 for all others 4. Download a 1040ez federal tax form 15,000 5. Download a 1040ez federal tax form Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). Download a 1040ez federal tax form If the result is 1. Download a 1040ez federal tax form 000 or more, enter 1. Download a 1040ez federal tax form 000 5. Download a 1040ez federal tax form . Download a 1040ez federal tax form 067 6. Download a 1040ez federal tax form Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. Download a 1040ez federal tax form 5,500 7. Download a 1040ez federal tax form Multiply line 5 by line 6 7. Download a 1040ez federal tax form 369 8. Download a 1040ez federal tax form Subtract line 7 from line 6. Download a 1040ez federal tax form Round the result up to the nearest $10. Download a 1040ez federal tax form If the result is less than $200, enter $200 8. Download a 1040ez federal tax form 5,140 9. Download a 1040ez federal tax form Enter contributions for the year to other IRAs 9. Download a 1040ez federal tax form 0 10. Download a 1040ez federal tax form Subtract line 9 from line 6 10. Download a 1040ez federal tax form 5,500 11. Download a 1040ez federal tax form Enter the lesser of line 8 or line 10. Download a 1040ez federal tax form This is your reduced Roth IRA contribution limit 11. Download a 1040ez federal tax form 5,140 When Can You Make Contributions? You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions). Download a 1040ez federal tax form You can make contributions for 2013 by the due date (not including extensions) for filing your 2013 tax return. Download a 1040ez federal tax form This means that most people can make contributions for 2013 by April 15, 2014. Download a 1040ez federal tax form What if You Contribute Too Much? A 6% excise tax applies to any excess contribution to a Roth IRA. Download a 1040ez federal tax form Excess contributions. Download a 1040ez federal tax form   These are the contributions to your Roth IRAs for a year that equal the total of: Amounts contributed for the tax year to your Roth IRAs (other than amounts properly and timely rolled over from a Roth IRA or properly converted from a traditional IRA or rolled over from a qualified retirement plan, as described later) that are more than your contribution limit for the year (explained earlier under How Much Can Be Contributed? ), plus Any excess contributions for the preceding year, reduced by the total of: Any distributions out of your Roth IRAs for the year, plus Your contribution limit for the year minus your contributions to all your IRAs for the year. Download a 1040ez federal tax form Withdrawal of excess contributions. Download a 1040ez federal tax form   For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. Download a 1040ez federal tax form This treatment only applies if any earnings on the contributions are also withdrawn. Download a 1040ez federal tax form The earnings are considered earned and received in the year the excess contribution was made. Download a 1040ez federal tax form   If you timely filed your 2013 tax return without withdrawing a contribution that you made in 2013, you can still have the contribution returned to you within 6 months of the due date of your 2013 tax return, excluding extensions. Download a 1040ez federal tax form If you do, file an amended return with “Filed pursuant to section 301. Download a 1040ez federal tax form 9100-2” written at the top. 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Download a 1040ez federal tax form You can receive a distribution from a traditional IRA and roll it over (contribute it) to a Roth IRA within 60 days after the distribution. Download a 1040ez federal tax form Trustee-to-trustee transfer. Download a 1040ez federal tax form You can direct the trustee of the traditional IRA to transfer an amount from the traditional IRA to the trustee of the Roth IRA. Download a 1040ez federal tax form Same trustee transfer. Download a 1040ez federal tax form If the trustee of the traditional IRA also maintains the Roth IRA, you can direct the trustee to transfer an amount from the traditional IRA to the Roth IRA. Download a 1040ez federal tax form Same trustee. Download a 1040ez federal tax form   Conversions made with the same trustee can be made by redesignating the traditional IRA as a Roth IRA, rather than opening a new account or issuing a new contract. Download a 1040ez federal tax form Income. Download a 1040ez federal tax form   You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you had not converted them into a Roth IRA. Download a 1040ez federal tax form These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA. Download a 1040ez federal tax form If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. Download a 1040ez federal tax form See Publication 505, Tax Withholding and Estimated Tax. Download a 1040ez federal tax form More information. Download a 1040ez federal tax form   For more information on conversions, see Converting From Any Traditional IRA Into a Roth IRA in chapter 1. 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Download a 1040ez federal tax form However, rollovers from retirement plans other than Roth IRAs are disregarded for purposes of the 1-year waiting period between rollovers. Download a 1040ez federal tax form A rollover from a Roth IRA to an employer retirement plan is not allowed. Download a 1040ez federal tax form A rollover from a designated Roth account can only be made to another designated Roth account or to a Roth IRA. Download a 1040ez federal tax form If you roll over an amount from one Roth IRA to another Roth IRA, the 5-year period used to determine qualified distributions does not change. Download a 1040ez federal tax form The 5-year period begins with the first taxable year for which the contribution was made to the initial Roth IRA. Download a 1040ez federal tax form See What are Qualified Distributions , later. Download a 1040ez federal tax form Rollover of Exxon Valdez Settlement Income If you are a qualified taxpayer (defined in chapter 1, earlier) and you received qualified settlement income (defined in chapter 1, earlier), you can contribute all or part of the amount received to an eligible retirement plan which includes a Roth IRA. Download a 1040ez federal tax form The rules for contributing qualified settlement income to a Roth IRA are the same as the rules for contributing qualified settlement income to a traditional IRA with the following exception. Download a 1040ez federal tax form Qualified settlement income that is contributed to a Roth IRA, or to a designated Roth account, will be: Included in your taxable income for the year the qualified settlement income was received, and Treated as part of your cost basis (investment in the contract) in the Roth IRA that is not taxable when distributed. Download a 1040ez federal tax form For more information, see Rollover of Exxon Valdez Settlement Income in chapter 1. Download a 1040ez federal tax form Rollover of Airline Payments If you are a qualified airline employee (defined next), you may contribute any portion of an airline payment (defined below) you receive to a Roth IRA. Download a 1040ez federal tax form The contribution must be made within 180 days from the date you received the payment. Download a 1040ez federal tax form The contribution will be treated as a qualified rollover contribution. Download a 1040ez federal tax form The rollover contribution is included in income to the extent it would be included in income if it were not part of the rollover contribution. Download a 1040ez federal tax form Also, any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can contribute to your Roth IRA. Download a 1040ez federal tax form Qualified airline employee. Download a 1040ez federal tax form    A current or former employee of a commercial airline carrier who was a participant in a qualified defined benefit plan maintained by the carrier which was terminated or became subject to restrictions under Section 402(b) of the Pension Protection Act of 2006. Download a 1040ez federal tax form These provisions also apply to surviving spouses of qualified airline employees. Download a 1040ez federal tax form Airline payment. Download a 1040ez federal tax form    An airline payment is any payment of money or other property that is paid to a qualified airline employee from a commercial airline carrier. Download a 1040ez federal tax form The payment also must be made both: Under the approval of an order of federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, and In respect of the qualified airline employee’s interest in a bankruptcy claim against the airline carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed obligation of the carrier to pay a lump sum amount. Download a 1040ez federal tax form Any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can roll over to your traditional IRA. Download a 1040ez federal tax form Also, an airline payment shall not include any amount payable on the basis of the airline carrier’s future earnings or profits. Download a 1040ez federal tax form Are Distributions Taxable? You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). Download a 1040ez federal tax form You also do not include distributions from your Roth IRA that you roll over tax free into another Roth IRA. Download a 1040ez federal tax form You may have to include part of other distributions in your income. Download a 1040ez federal tax form See Ordering Rules for Distributions , later. Download a 1040ez federal tax form Basis of distributed property. Download a 1040ez federal tax form   The basis of property distributed from a Roth IRA is its fair market value (FMV) on the date of distribution, whether or not the distribution is a qualified distribution. Download a 1040ez federal tax form Withdrawals of contributions by due date. Download a 1040ez federal tax form   If you withdraw contributions (including any net earnings on the contributions) by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them. Download a 1040ez federal tax form If you have an extension of time to file your return, you can withdraw the contributions and earnings by the extended due date. Download a 1040ez federal tax form The withdrawal of contributions is tax free, but you must include the earnings on the contributions in income for the year in which you made the contributions. Download a 1040ez federal tax form What Are Qualified Distributions? A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements. Download a 1040ez federal tax form It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and The payment or distribution is: Made on or after the date you reach age 59½, Made because you are disabled (defined earlier), Made to a beneficiary or to your estate after your death, or One that meets the requirements listed under First home under Exceptions in chapter 1 (up to a $10,000 lifetime limit). Download a 1040ez federal tax form Additional Tax on Early Distributions If you receive a distribution that is not a qualified distribution, you may have to pay the 10% additional tax on early distributions as explained in the following paragraphs. Download a 1040ez federal tax form Distributions of conversion and certain rollover contributions within 5-year period. Download a 1040ez federal tax form   If, within the 5-year period starting with the first day of your tax year in which you convert an amount from a traditional IRA or rollover an amount from a qualified retirement plan to a Roth IRA, you take a distribution from a Roth IRA, you may have to pay the 10% additional tax on early distributions. Download a 1040ez federal tax form You generally must pay the 10% additional tax on any amount attributable to the part of the amount converted or rolled over (the conversion or rollover contribution) that you had to include in income (recapture amount). Download a 1040ez federal tax form A separate 5-year period applies to each conversion and rollover. Download a 1040ez federal tax form See Ordering Rules for Distributions , later, to determine the recapture amount, if any. Download a 1040ez federal tax form   The 5-year period used for determining whether the 10% early distribution tax applies to a distribution from a conversion or rollover contribution is separately determined for each conversion and rollover, and is not necessarily the same as the 5-year period used for determining whether a distribution is a qualified distribution. Download a 1040ez federal tax form See What Are Qualified Distributions , earlier. Download a 1040ez federal tax form   For example, if a calendar-year taxpayer makes a conversion contribution on February 25, 2013, and makes a regular contribution for 2012 on the same date, the 5-year period for the conversion begins January 1, 2013, while the 5-year period for the regular contribution begins on January 1, 2012. Download a 1040ez federal tax form   Unless one of the exceptions listed later applies, you must pay the additional tax on the portion of the distribution attributable to the part of the conversion or rollover contribution that you had to include in income because of the conversion or rollover. Download a 1040ez federal tax form   You must pay the 10% additional tax in the year of the distribution, even if you had included the conversion or rollover contribution in an earlier year. Download a 1040ez federal tax form You also must pay the additional tax on any portion of the distribution attributable to earnings on contributions. Download a 1040ez federal tax form Other early distributions. Download a 1040ez federal tax form   Unless one of the exceptions listed below applies, you must pay the 10% additional tax on the taxable part of any distributions that are not qualified distributions. Download a 1040ez federal tax form Exceptions. Download a 1040ez federal tax form   You may not have to pay the 10% additional tax in the following situations. Download a 1040ez federal tax form You have reached age 59½. Download a 1040ez federal tax form You are totally and permanently disabled. Download a 1040ez federal tax form You are the beneficiary of a deceased IRA owner. Download a 1040ez federal tax form You use the distribution to buy, build, or rebuild a first home. Download a 1040ez federal tax form The distributions are part of a series of substantially equal payments. Download a 1040ez federal tax form You have unreimbursed medical expenses that are more than 10% (or 7. Download a 1040ez federal tax form 5% if you or your spouse was born before January 2, 1949) of your adjusted gross income (defined earlier) for the year. Download a 1040ez federal tax form You are paying medical insurance premiums during a period of unemployment. Download a 1040ez federal tax form The distributions are not more than your qualified higher education expenses. Download a 1040ez federal tax form The distribution is due to an IRS levy of the qualified plan. Download a 1040ez federal tax form The distribution is a qualified reservist distribution. Download a 1040ez federal tax form Most of these exceptions are discussed earlier in chapter 1 under Early Distributions . Download a 1040ez federal tax form Please click here for the text description of the image. Download a 1040ez federal tax form Is Roth Distributions a Qualified Distribution? Ordering Rules for Distributions If you receive a distribution from your Roth IRA that is not a qualified distribution, part of it may be taxable. Download a 1040ez federal tax form There is a set order in which contributions (including conversion contributions and rollover contributions from qualified retirement plans) and earnings are considered to be distributed from your Roth IRA. Download a 1040ez federal tax form For these purposes, disregard the withdrawal of excess contributions and the earnings on them (discussed earlier under What if You Contribute Too Much ). Download a 1040ez federal tax form Order the distributions as follows. Download a 1040ez federal tax form Regular contributions. Download a 1040ez federal tax form Conversion and rollover contributions, on a first-in, first-out basis (generally, total conversions and rollovers from the earliest year first). Download a 1040ez federal tax form See Aggregation (grouping and adding) rules, later. Download a 1040ez federal tax form Take these conversion and rollover contributions into account as follows: Taxable portion (the amount required to be included in gross income because of the conversion or rollover) first, and then the Nontaxable portion. Download a 1040ez federal tax form Earnings on contributions. Download a 1040ez federal tax form Disregard rollover contributions from other Roth IRAs for this purpose. Download a 1040ez federal tax form Aggregation (grouping and adding) rules. Download a 1040ez federal tax form   Determine the taxable amounts distributed (withdrawn), distributions, and contributions by grouping and adding them together as follows. Download a 1040ez federal tax form Add all distributions from all your Roth IRAs during the year together. Download a 1040ez federal tax form Add all regular contributions made for the year (including contributions made after the close of the year, but before the due date of your return) together. Download a 1040ez federal tax form Add this total to the total undistributed regular contributions made in prior years. Download a 1040ez federal tax form Add all conversion and rollover contributions made during the year together. Download a 1040ez federal tax form For purposes of the ordering rules, in the case of any conversion or rollover in which the conversion or rollover distribution is made in 2013 and the conversion or rollover contribution is made in 2014, treat the conversion or rollover contribution as contributed before any other conversion or rollover contributions made in 2014. Download a 1040ez federal tax form Add any recharacterized contributions that end up in a Roth IRA to the appropriate contribution group for the year that the original contribution would have been taken into account if it had been made directly to the Roth IRA. Download a 1040ez federal tax form   Disregard any recharacterized contribution that ends up in an IRA other than a Roth IRA for the purpose of grouping (aggregating) both contributions and distributions. Download a 1040ez federal tax form Also disregard any amount withdrawn to correct an excess contribution (including the earnings withdrawn) for this purpose. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form On October 15, 2009, Justin converted all $80,000 in his traditional IRA to his Roth IRA. Download a 1040ez federal tax form His Forms 8606 from prior years show that $20,000 of the amount converted is his basis. Download a 1040ez federal tax form Justin included $60,000 ($80,000 − $20,000) in his gross income. Download a 1040ez federal tax form On February 23, 2013, Justin made a regular contribution of $5,000 to a Roth IRA. Download a 1040ez federal tax form On November 8, 2013, at age 60, Justin took a $7,000 distribution from his Roth IRA. Download a 1040ez federal tax form The first $5,000 of the distribution is a return of Justin's regular contribution and is not includible in his income. Download a 1040ez federal tax form The next $2,000 of the distribution is not includible in income because it was included previously. Download a 1040ez federal tax form Figuring your recapture amount. Download a 1040ez federal tax form   If you had an early distribution from your Roth IRAs in 2013, you must allocate the early distribution by using the Recapture Amount—Allocation Chart, later. Download a 1040ez federal tax form Recapture Amount—Allocation Chart Enter the amount from your 2013 Form 8606, line 19   Before you begin: You will need your prior year Form(s) 8606 and income tax return(s) if you entered an amount on any line(s) as indicated below. Download a 1040ez federal tax form   You will now allocate the amount you entered above (2013 Form 8606, line 19) in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount). Download a 1040ez federal tax form The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. Download a 1040ez federal tax form Note. Download a 1040ez federal tax form Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. Download a 1040ez federal tax form See the Example , earlier. Download a 1040ez federal tax form Tax Year Your Form 2013 Form 8606, line 20   Form 8606, line 22   1998 Form 8606, line 16   Form 8606, line 15   1999 Form 8606, line 16   Form 8606, line 15   2000 Form 8606, line 16   Form 8606, line 15   2001 Form 8606, line 18   Form 8606, line 17   2002 Form 8606, line 18   Form 8606, line 17   2003 Form 8606, line 18   Form 8606, line 17   2004 Form 8606, line 18   Form 8606, line 17   2005 Form 8606, line 18   Form 8606, line 17   2006 Form 8606, line 18   Form 8606, line 17   2007 Form 8606, line 18   Form 8606, line 17   2008 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2009 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2010 Form 8606, lines 18 and 23   Form 8606, lines 17 and 22   2011 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2012 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 25       *Only include those amounts rolled over to a Roth IRA. Download a 1040ez federal tax form  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. Download a 1040ez federal tax form Amount to include on Form 5329, line 1. Download a 1040ez federal tax form   Include on line 1 of your 2013 Form 5329 the following four amounts from the Recapture Amount—Allocation Chart that you filled out. Download a 1040ez federal tax form The amount you allocated to line 20 of your 2013 Form 8606. Download a 1040ez federal tax form The amount(s) allocated to your 2009 through 2013 Forms 8606, line 18, and your 2010 Form 8606, line 23. Download a 1040ez federal tax form The amount(s) allocated to your 2009, 2011, 2012, and 2013 Forms 1040, line 16b; Forms 1040A, line 12b; and Forms 1040NR, line 17b. Download a 1040ez federal tax form The amount from your 2013 Form 8606, line 25. Download a 1040ez federal tax form   Also, include any amount you allocated to line 20 of your 2013 Form 8606 on your 2013 Form 5329, line 2, and enter exception number 09. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form Ishmael, age 32, opened a Roth IRA in 2000. Download a 1040ez federal tax form He made the maximum contributions to it every year. Download a 1040ez federal tax form In addition, he made the following transactions into his Roth IRA. Download a 1040ez federal tax form In 2005, he converted $10,000 from his traditional IRA into his Roth IRA. Download a 1040ez federal tax form He filled out a 2005 Form 8606 and attached it with his 2005 Form 1040. Download a 1040ez federal tax form He entered $0 on line 17 of Form 8606 because he took a deduction for all the contributions to the traditional IRA, therefore he has no basis. Download a 1040ez federal tax form He entered $10,000 on line 18 of Form 8606. Download a 1040ez federal tax form In 2011, he rolled over the entire balance of his qualified retirement plan, $20,000, into a Roth IRA when he changed jobs. Download a 1040ez federal tax form He used a 2011 Form 1040 to file his taxes. Download a 1040ez federal tax form He entered $20,000 on line 16a of Form 1040 because that was the amount reported in box 1 of his 2011 Form 1099-R. Download a 1040ez federal tax form Box 5 of his 2011 Form 1099-R reported $0 since he did not make any after-tax contributions to the qualified retirement plan. Download a 1040ez federal tax form He entered $20,000 on line 16b of Form 1040 since that is the taxable amount that was rolled over in 2011. Download a 1040ez federal tax form The total balance in his Roth IRA as of January 1, 2013 was $105,000 ($50,000 in contributions from 2000 through 2012 + $10,000 from the 2005 conversion + $20,000 from the 2011 rollover + $25,000 from earnings). Download a 1040ez federal tax form He has not taken any early distribution from his Roth IRA before 2013. Download a 1040ez federal tax form In 2013, he made the maximum contribution of $5,500 to his Roth IRA. Download a 1040ez federal tax form In August of 2013, he took a $85,500 early distribution from his Roth IRA to use as a down payment on the purchase of his first home. Download a 1040ez federal tax form See his filled out Illustrated Recapture Amount—Allocation Chart, later, to see how he allocated the amounts from the above transactions. Download a 1040ez federal tax form Based on his allocation, he would enter $20,000 on his 2013 Form 5329, line 1 (see Amount to include on Form 5329, line 1 , above). Download a 1040ez federal tax form He should also report $10,000 on his 2013 Form 5329, line 2, and enter exception 09 since that amount is not subject to the 10% additional tax on early distributions. Download a 1040ez federal tax form Illustrated Recapture Amount—Allocation Chart Enter the amount from your 2013 Form 8606, line 19 $85,500 Before you begin: You will need your prior year Form(s) 8606 and income tax return(s) if you entered an amount on any line(s) as indicated below. Download a 1040ez federal tax form   You will now allocate the amount you entered above (2013 Form 8606, line 19) in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount). Download a 1040ez federal tax form The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. Download a 1040ez federal tax form Note. Download a 1040ez federal tax form Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. Download a 1040ez federal tax form See the Example , earlier. Download a 1040ez federal tax form Tax Year Your Form 2013 Form 8606, line 20 $10,000 Form 8606, line 22 $55,500 1998 Form 8606, line 16   Form 8606, line 15   1999 Form 8606, line 16   Form 8606, line 15   2000 Form 8606, line 16   Form 8606, line 15   2001 Form 8606, line 18   Form 8606, line 17   2002 Form 8606, line 18   Form 8606, line 17   2003 Form 8606, line 18   Form 8606, line 17   2004 Form 8606, line 18   Form 8606, line 17   2005 Form 8606, line 18 $10,000 Form 8606, line 17 $-0- 2006 Form 8606, line 18   Form 8606, line 17   2007 Form 8606, line 18   Form 8606, line 17   2008 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2009 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2010 Form 8606, lines 18 and 23   Form 8606, lines 17 and 22   2011 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b* $10,000 Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2012 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 25       *Only include those amounts rolled over to a Roth IRA. Download a 1040ez federal tax form  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. Download a 1040ez federal tax form How Do You Figure the Taxable Part? To figure the taxable part of a distribution that is not a qualified distribution, complete Form 8606, Part III. Download a 1040ez federal tax form Must You Withdraw or Use Assets? You are not required to take distributions from your Roth IRA at any age. Download a 1040ez federal tax form The minimum distribution rules that apply to traditional IRAs do not apply to Roth IRAs while the owner is alive. Download a 1040ez federal tax form However, after the death of a Roth IRA owner, certain of the minimum distribution rules that apply to traditional IRAs also apply to Roth IRAs as explained later under Distributions After Owner's Death . Download a 1040ez federal tax form Minimum distributions. Download a 1040ez federal tax form   You cannot use your Roth IRA to satisfy minimum distribution requirements for your traditional IRA. Download a 1040ez federal tax form Nor can you use distributions from traditional IRAs for required distributions from Roth IRAs. Download a 1040ez federal tax form See Distributions to beneficiaries , later. Download a 1040ez federal tax form Recognizing Losses on Investments If you have a loss on your Roth IRA investment, you can recognize the loss on your income tax return, but only when all the amounts in all of your Roth IRA accounts have been distributed to you and the total distributions are less than your unrecovered basis. Download a 1040ez federal tax form Your basis is the total amount of contributions in your Roth IRAs. Download a 1040ez federal tax form You claim the loss as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions on Schedule A (Form 1040). Download a 1040ez federal tax form Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax. Download a 1040ez federal tax form Distributions After Owner's Death If a Roth IRA owner dies, the minimum distribution rules that apply to traditional IRAs apply to Roth IRAs as though the Roth IRA owner died before his or her required beginning date. Download a 1040ez federal tax form See When Can You Withdraw or Use Assets? in chapter 1. Download a 1040ez federal tax form Distributions to beneficiaries. Download a 1040ez federal tax form   Generally, the entire interest in the Roth IRA must be distributed by the end of the fifth calendar year after the year of the owner's death unless the interest is payable to a designated beneficiary over the life or life expectancy of the designated beneficiary. Download a 1040ez federal tax form (See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. Download a 1040ez federal tax form )   If paid as an annuity, the entire interest must be payable over a period not greater than the designated beneficiary's life expectancy and distributions must begin before the end of the calendar year following the year of death. Download a 1040ez federal tax form Distributions from another Roth IRA cannot be substituted for these distributions unless the other Roth IRA was inherited from the same decedent. Download a 1040ez federal tax form   If the sole beneficiary is the spouse, he or she can either delay distributions until the decedent would have reached age 70½ or treat the Roth IRA as his or her own. Download a 1040ez federal tax form Combining with other Roth IRAs. Download a 1040ez federal tax form   A beneficiary can combine an inherited Roth IRA with another Roth IRA maintained by the beneficiary only if the beneficiary either: Inherited the other Roth IRA from the same decedent, or Was the spouse of the decedent and the sole beneficiary of the Roth IRA and elects to treat it as his or her own IRA. Download a 1040ez federal tax form Distributions that are not qualified distributions. Download a 1040ez federal tax form   If a distribution to a beneficiary is not a qualified distribution, it is generally includible in the beneficiary's gross income in the same manner as it would have been included in the owner's income had it been distributed to the IRA owner when he or she was alive. Download a 1040ez federal tax form   If the owner of a Roth IRA dies before the end of: The 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for the owner's benefit, or The 5-year period starting with the year of a conversion contribution from a traditional IRA or a rollover from a qualified retirement plan to a Roth IRA, each type of contribution is divided among multiple beneficiaries according to the pro-rata share of each. Download a 1040ez federal tax form See Ordering Rules for Distributions , earlier in this chapter under Are Distributions Taxable. Download a 1040ez federal tax form Example. Download a 1040ez federal tax form When Ms. Download a 1040ez federal tax form Hibbard died in 2013, her Roth IRA contained regular contributions of $4,000, a conversion contribution of $10,000 that was made in 2009, and earnings of $2,000. Download a 1040ez federal tax form No distributions had been made from her IRA. Download a 1040ez federal tax form She had no basis in the conversion contribution in 2009. Download a 1040ez federal tax form When she established this Roth IRA (her first) in 2009, she named each of her four children as equal beneficiaries. Download a 1040ez federal tax form Each child will receive one-fourth of each type of contribution and one-fourth of the earnings. Download a 1040ez federal tax form An immediate distribution of $4,000 to each child will be treated as $1,000 from regular contributions, $2,500 from conversion contributions, and $500 from earnings. Download a 1040ez federal tax form In this case, because the distributions are made before the end of the applicable 5-year period for a qualified distribution, each beneficiary includes $500 in income for 2013. Download a 1040ez federal tax form The 10% additional tax on early distributions does not apply because the distribution was made to the beneficiaries as a result of the death of the IRA owner. Download a 1040ez federal tax form If distributions from an inherited Roth IRA are less than the required minimum distribution for the year, discussed in chapter 1 under When Must You Withdraw Assets? (Required Minimum Distributions), you may have to pay a 50% excise tax for that year on the amount not distributed as required. Download a 1040ez federal tax form For the tax on excess accumulations (insufficient distributions), see Excess Accumulations (Insufficient Distributions) under What Acts Result in Penalties or Additional Taxes? in chapter 1. Download a 1040ez federal tax form If this applies to you, substitute “Roth IRA” for “traditional IRA” in that discussion. Download a 1040ez federal tax form Prev  Up  Next   Home   More Online Publications