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Federal Tax Forms 1040ez 2013

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Federal Tax Forms 1040ez 2013

Federal tax forms 1040ez 2013 11. Federal tax forms 1040ez 2013   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Federal tax forms 1040ez 2013 Nondeductible losses. Federal tax forms 1040ez 2013 Family pet. Federal tax forms 1040ez 2013 Progressive deterioration. Federal tax forms 1040ez 2013 Decline in market value of stock. Federal tax forms 1040ez 2013 Mislaid or lost property. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Related persons. Federal tax forms 1040ez 2013 Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Federal tax forms 1040ez 2013 Covered disaster area. Federal tax forms 1040ez 2013 Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Federal tax forms 1040ez 2013 A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Federal tax forms 1040ez 2013 A theft occurs when property is stolen. Federal tax forms 1040ez 2013 A condemnation occurs when private property is legally taken for public use without the owner's consent. Federal tax forms 1040ez 2013 A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 For more information, see Postponing Gain , later. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Casualty. Federal tax forms 1040ez 2013   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Federal tax forms 1040ez 2013 A sudden event is one that is swift, not gradual or progressive. Federal tax forms 1040ez 2013 An unexpected event is one that is ordinarily unanticipated and unintended. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Deductible losses. Federal tax forms 1040ez 2013   Deductible casualty losses can result from a number of different causes, including the following. Federal tax forms 1040ez 2013 Airplane crashes. Federal tax forms 1040ez 2013 Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Federal tax forms 1040ez 2013 Earthquakes. Federal tax forms 1040ez 2013 Fires (but see Nondeductible losses next for exceptions). Federal tax forms 1040ez 2013 Floods. Federal tax forms 1040ez 2013 Freezing. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Lightning. Federal tax forms 1040ez 2013 Storms, including hurricanes and tornadoes. Federal tax forms 1040ez 2013 Terrorist attacks. Federal tax forms 1040ez 2013 Vandalism. Federal tax forms 1040ez 2013 Volcanic eruptions. Federal tax forms 1040ez 2013 Nondeductible losses. Federal tax forms 1040ez 2013   A casualty loss is not deductible if the damage or destruction is caused by the following. Federal tax forms 1040ez 2013 Accidentally breaking articles such as glassware or china under normal conditions. Federal tax forms 1040ez 2013 A family pet (explained below). Federal tax forms 1040ez 2013 A fire if you willfully set it, or pay someone else to set it. Federal tax forms 1040ez 2013 A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Federal tax forms 1040ez 2013 The same is true if the willful act or willful negligence of someone acting for you caused the accident. Federal tax forms 1040ez 2013 Progressive deterioration (explained below). Federal tax forms 1040ez 2013 Family pet. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 You keep your horse in your yard. Federal tax forms 1040ez 2013 The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Federal tax forms 1040ez 2013 Some of the trees were completely girdled and died. Federal tax forms 1040ez 2013 Because the damage was not unexpected or unusual, the loss is not deductible. Federal tax forms 1040ez 2013 Progressive deterioration. Federal tax forms 1040ez 2013   Loss of property due to progressive deterioration is not deductible as a casualty loss. Federal tax forms 1040ez 2013 This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Federal tax forms 1040ez 2013 Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Federal tax forms 1040ez 2013 However, weather-related conditions or disease may cause another type of involuntary conversion. Federal tax forms 1040ez 2013 See Other Involuntary Conversions , later. Federal tax forms 1040ez 2013 Theft. Federal tax forms 1040ez 2013   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 You do not need to show a conviction for theft. Federal tax forms 1040ez 2013   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Federal tax forms 1040ez 2013 The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Federal tax forms 1040ez 2013 Decline in market value of stock. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 You report a capital loss on Schedule D (Form 1040). Federal tax forms 1040ez 2013 For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Federal tax forms 1040ez 2013 Mislaid or lost property. Federal tax forms 1040ez 2013   The simple disappearance of money or property is not a theft. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Federal tax forms 1040ez 2013 The diamond falls from the ring and is never found. Federal tax forms 1040ez 2013 The loss of the diamond is a casualty. Federal tax forms 1040ez 2013 Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Federal tax forms 1040ez 2013 The following is a discussion of some losses you can deduct and some you cannot deduct. Federal tax forms 1040ez 2013 Livestock or produce bought for resale. Federal tax forms 1040ez 2013   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 You cannot take a separate deduction. Federal tax forms 1040ez 2013 Livestock, plants, produce, and crops raised for sale. Federal tax forms 1040ez 2013   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Federal tax forms 1040ez 2013 You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Federal tax forms 1040ez 2013 The uniform capitalization rules are discussed in chapter 6. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 You get the deduction by omitting the item from your inventory at the close of your tax year. Federal tax forms 1040ez 2013 You cannot take a separate casualty or theft deduction. Federal tax forms 1040ez 2013 Income loss. Federal tax forms 1040ez 2013   A loss of future income is not deductible. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 A severe flood destroyed your crops. Federal tax forms 1040ez 2013 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 . Federal tax forms 1040ez 2013 You estimate that the crop loss will reduce your farm income by $25,000. Federal tax forms 1040ez 2013 This loss of future income is also not deductible. Federal tax forms 1040ez 2013 Loss of timber. Federal tax forms 1040ez 2013   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Federal tax forms 1040ez 2013 If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Federal tax forms 1040ez 2013 See Postponing Gain , later. Federal tax forms 1040ez 2013 Property used in farming. Federal tax forms 1040ez 2013   Casualty and theft losses of property used in your farm business usually result in deductible losses. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 See How To Figure a Loss , later. Federal tax forms 1040ez 2013 Raised draft, breeding, dairy, or sporting animals. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 You use inventories to determine your income and you included the animals in your inventory. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 When you include livestock in inventory, its last inventory value is its basis. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 You cannot take a separate deduction. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Farm property. Federal tax forms 1040ez 2013   Farm property is the property you use in your farming business. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Federal tax forms 1040ez 2013 However, the deduction limits, discussed later, do not apply to farm property. Federal tax forms 1040ez 2013 Personal-use property. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 The following items are examples of personal-use property: Your main home. Federal tax forms 1040ez 2013 Furniture and electronics used in your main home and not used in a home office or for business purposes. Federal tax forms 1040ez 2013 Clothing and jewelry. Federal tax forms 1040ez 2013 An automobile used for nonbusiness purposes. Federal tax forms 1040ez 2013 You figure the casualty or theft loss on this property by taking the following steps. Federal tax forms 1040ez 2013 Determine your adjusted basis in the property before the casualty or theft. Federal tax forms 1040ez 2013 Determine the decrease in fair market value of the property as a result of the casualty or theft. Federal tax forms 1040ez 2013 From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Federal tax forms 1040ez 2013 You must apply the deduction limits, discussed later, to determine your deductible loss. Federal tax forms 1040ez 2013    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Federal tax forms 1040ez 2013 It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Federal tax forms 1040ez 2013 Adjusted basis. Federal tax forms 1040ez 2013   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Federal tax forms 1040ez 2013 For more information about adjusted basis, see chapter 6. Federal tax forms 1040ez 2013 Decrease in fair market value (FMV). Federal tax forms 1040ez 2013   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Federal tax forms 1040ez 2013 FMV is defined in chapter 10 under Payments Received or Considered Received . Federal tax forms 1040ez 2013 Appraisal. Federal tax forms 1040ez 2013   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Federal tax forms 1040ez 2013 But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Federal tax forms 1040ez 2013 This information is needed to limit any deduction to the actual loss resulting from damage to the property. Federal tax forms 1040ez 2013 Cost of cleaning up or making repairs. Federal tax forms 1040ez 2013   The cost of cleaning up after a casualty is not part of a casualty loss. Federal tax forms 1040ez 2013 Neither is the cost of repairing damaged property after a casualty. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 The repairs are actually made. Federal tax forms 1040ez 2013 The repairs are necessary to bring the property back to its condition before the casualty. Federal tax forms 1040ez 2013 The amount spent for repairs is not excessive. Federal tax forms 1040ez 2013 The repairs fix the damage only. Federal tax forms 1040ez 2013 The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Federal tax forms 1040ez 2013 Related expenses. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Federal tax forms 1040ez 2013 Separate computations for more than one item of property. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Then combine the losses to determine your total loss. Federal tax forms 1040ez 2013    There is an exception to this rule for personal-use real property. Federal tax forms 1040ez 2013 See Exception for personal-use real property, later. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 A fire on your farm damaged a tractor and the barn in which it was stored. Federal tax forms 1040ez 2013 The tractor had an adjusted basis of $3,300. Federal tax forms 1040ez 2013 Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Federal tax forms 1040ez 2013 The barn had an adjusted basis of $28,000. Federal tax forms 1040ez 2013 Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Federal tax forms 1040ez 2013 You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Federal tax forms 1040ez 2013 Figure your deductible casualty loss separately for the two items of property. Federal tax forms 1040ez 2013     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. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Figure the loss using the smaller of the following. Federal tax forms 1040ez 2013 The decrease in FMV of the entire property. Federal tax forms 1040ez 2013 The adjusted basis of the entire property. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 You bought a farm in 1990 for $160,000. Federal tax forms 1040ez 2013 The adjusted basis of the residential part is now $128,000. Federal tax forms 1040ez 2013 In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Federal tax forms 1040ez 2013 The adjusted basis of the residential part includes the $7,500. Federal tax forms 1040ez 2013 The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Federal tax forms 1040ez 2013 The trees were not covered by insurance. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Federal tax forms 1040ez 2013 You do not have a casualty or theft loss to the extent you are reimbursed. Federal tax forms 1040ez 2013   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Federal tax forms 1040ez 2013 You must reduce your loss even if you do not receive payment until a later tax year. Federal tax forms 1040ez 2013    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. Federal tax forms 1040ez 2013 You may have to include a portion of these payments in your income. Federal tax forms 1040ez 2013 See Insurance payments for living expenses in Publication 547 for details. Federal tax forms 1040ez 2013 Disaster relief. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Federal tax forms 1040ez 2013   Generally, disaster relief grants received under the Robert T. Federal tax forms 1040ez 2013 Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Federal tax forms 1040ez 2013 See Federal disaster relief grants , later, under Disaster Area Losses . Federal tax forms 1040ez 2013   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Federal tax forms 1040ez 2013 See Qualified disaster relief payments , later, under Disaster Area Losses . Federal tax forms 1040ez 2013 Reimbursement received after deducting loss. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Actual reimbursement less than expected. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Actual reimbursement more than expected. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Do not refigure your tax for the year you claimed the deduction. Federal tax forms 1040ez 2013 See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Actual reimbursement same as expected. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Lump-sum reimbursement. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Figure the gain or loss separately for each asset that has a separate basis. Federal tax forms 1040ez 2013 Adjustments to basis. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 The result is your adjusted basis in the property. Federal tax forms 1040ez 2013 Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Federal tax forms 1040ez 2013 See Adjusted Basis in chapter 6 for more information. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 You built a new silo for $25,000. Federal tax forms 1040ez 2013 This is the basis in your silo because that is the total cost you incurred to build it. Federal tax forms 1040ez 2013 During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Federal tax forms 1040ez 2013 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). Federal tax forms 1040ez 2013 There are two limits on the deduction for casualty or theft loss of personal-use property. Federal tax forms 1040ez 2013 You figure these limits on Form 4684. Federal tax forms 1040ez 2013 $100 rule. Federal tax forms 1040ez 2013   You must reduce each casualty or theft loss on personal-use property by $100. Federal tax forms 1040ez 2013 This rule applies after you have subtracted any reimbursement. Federal tax forms 1040ez 2013 10% rule. Federal tax forms 1040ez 2013   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Federal tax forms 1040ez 2013 Apply this rule after you reduce each loss by $100. Federal tax forms 1040ez 2013 Adjusted gross income is on line 38 of Form 1040. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 In June, you discovered that your house had been burglarized. Federal tax forms 1040ez 2013 Your loss after insurance reimbursement was $2,000. Federal tax forms 1040ez 2013 Your adjusted gross income for the year you discovered the burglary is $57,000. Federal tax forms 1040ez 2013 Figure your theft loss deduction as follows: 1. Federal tax forms 1040ez 2013 Loss after insurance $2,000 2. Federal tax forms 1040ez 2013 Subtract $100 100 3. Federal tax forms 1040ez 2013 Loss after $100 rule $1,900 4. Federal tax forms 1040ez 2013 Subtract 10% (. Federal tax forms 1040ez 2013 10) × $57,000 AGI $5,700 5. Federal tax forms 1040ez 2013 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). Federal tax forms 1040ez 2013    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. Federal tax forms 1040ez 2013 See 10% Rule in Publication 547. Federal tax forms 1040ez 2013 When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Federal tax forms 1040ez 2013 You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Federal tax forms 1040ez 2013 However, losses in federally declared disaster areas are subject to different rules. Federal tax forms 1040ez 2013 See Disaster Area Losses , later, for an exception. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Leased property. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 This is true even if the loss occurred or the liability was paid in a different year. Federal tax forms 1040ez 2013 You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Federal tax forms 1040ez 2013 Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 Robert leased a tractor from First Implement, Inc. Federal tax forms 1040ez 2013 , for use in his farm business. Federal tax forms 1040ez 2013 The tractor was destroyed by a tornado in June 2012. Federal tax forms 1040ez 2013 The loss was not insured. Federal tax forms 1040ez 2013 First Implement billed Robert for the fair market value of the tractor on the date of the loss. Federal tax forms 1040ez 2013 Robert disagreed with the bill and refused to pay it. Federal tax forms 1040ez 2013 First Implement later filed suit in court against Robert. Federal tax forms 1040ez 2013 In 2013, Robert and First Implement agreed to settle the suit for $20,000, and the court entered a judgment in favor of First Implement. Federal tax forms 1040ez 2013 Robert paid $20,000 in June 2013. Federal tax forms 1040ez 2013 He can claim the $20,000 as a loss on his 2013 tax return. Federal tax forms 1040ez 2013 Net operating loss (NOL). Federal tax forms 1040ez 2013   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Federal tax forms 1040ez 2013 An NOL can be carried back or carried forward and deducted from income in other years. Federal tax forms 1040ez 2013 See Publication 536 for more information on NOLs. Federal tax forms 1040ez 2013 Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Federal tax forms 1040ez 2013 You must have records to support the amount you claim for the loss. Federal tax forms 1040ez 2013 Casualty loss proof. Federal tax forms 1040ez 2013   For a casualty loss, your records should show all the following information. Federal tax forms 1040ez 2013 The type of casualty (car accident, fire, storm, etc. Federal tax forms 1040ez 2013 ) and when it occurred. Federal tax forms 1040ez 2013 That the loss was a direct result of the casualty. Federal tax forms 1040ez 2013 That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage. Federal tax forms 1040ez 2013 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Federal tax forms 1040ez 2013 Theft loss proof. Federal tax forms 1040ez 2013   For a theft loss, your records should show all the following information. Federal tax forms 1040ez 2013 When you discovered your property was missing. Federal tax forms 1040ez 2013 That your property was stolen. Federal tax forms 1040ez 2013 That you were the owner of the property. Federal tax forms 1040ez 2013 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Federal tax forms 1040ez 2013 Figuring a Gain A casualty or theft may result in a taxable gain. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 You generally report your gain as income in the year you receive the reimbursement. Federal tax forms 1040ez 2013 However, depending on the type of property you receive, you may not have to report your gain. Federal tax forms 1040ez 2013 See Postponing Gain , later. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Amount you receive. Federal tax forms 1040ez 2013   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Federal tax forms 1040ez 2013 It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 A tornado severely damaged your barn. Federal tax forms 1040ez 2013 The adjusted basis of the barn was $25,000. Federal tax forms 1040ez 2013 Your insurance company reimbursed you $40,000 for the damaged barn. Federal tax forms 1040ez 2013 However, you had legal expenses of $2,000 to collect that insurance. Federal tax forms 1040ez 2013 Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Some of these are discussed in the following paragraphs. Federal tax forms 1040ez 2013 Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Federal tax forms 1040ez 2013 You report the gain or deduct the loss on your tax return for the year you realize it. Federal tax forms 1040ez 2013 However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Federal tax forms 1040ez 2013 See Postponing Gain , later. Federal tax forms 1040ez 2013 Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 The owner receives a condemnation award (money or property) in exchange for the property taken. Federal tax forms 1040ez 2013 A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Federal tax forms 1040ez 2013 Threat of condemnation. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Main home condemned. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 For information on this exclusion, see Publication 523. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 See Postponing Gain , later. Federal tax forms 1040ez 2013 (You cannot deduct a loss from the condemnation of your main home. Federal tax forms 1040ez 2013 ) More information. Federal tax forms 1040ez 2013   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Federal tax forms 1040ez 2013 Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Livestock Losses Diseased livestock. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Federal tax forms 1040ez 2013 Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Federal tax forms 1040ez 2013 If you replace the livestock, you may be able to postpone reporting the gain. Federal tax forms 1040ez 2013 See Postponing Gain below. Federal tax forms 1040ez 2013 Reporting dispositions of diseased livestock. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 You must also include other information on this statement. Federal tax forms 1040ez 2013 See How To Postpone Gain , later, under Postponing Gain . Federal tax forms 1040ez 2013 Weather-related sales of livestock. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Only livestock sold in excess of the number you normally would sell under usual business practice, in the absence of weather-related conditions, are considered involuntary conversions. Federal tax forms 1040ez 2013 Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Federal tax forms 1040ez 2013 If you replace the livestock, you may be able to postpone reporting the gain. Federal tax forms 1040ez 2013 See Postponing Gain below. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 It is your usual business practice to sell five of your dairy animals during the year. Federal tax forms 1040ez 2013 This year you sold 20 dairy animals because of drought. Federal tax forms 1040ez 2013 The sale of 15 animals is treated as an involuntary conversion. Federal tax forms 1040ez 2013    If you do not replace the livestock, you may be able to report the gain in the following year's income. Federal tax forms 1040ez 2013 This rule also applies to other livestock (including poultry). Federal tax forms 1040ez 2013 See Sales Caused by Weather-Related Conditions in chapter 3. Federal tax forms 1040ez 2013 Tree Seedlings If, because of an abnormal drought, the failure of planted tree seedlings is greater than normally anticipated, you may have a deductible loss. Federal tax forms 1040ez 2013 Treat the loss as a loss from an involuntary conversion. Federal tax forms 1040ez 2013 The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Federal tax forms 1040ez 2013 You deduct the loss on the return for the year the seedlings died. Federal tax forms 1040ez 2013 Postponing Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed, stolen, or other involuntarily converted property. Federal tax forms 1040ez 2013 Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Federal tax forms 1040ez 2013 You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Federal tax forms 1040ez 2013 However, you can choose to postpone reporting the gain if you purchase replacement property similar or related in service or use to your destroyed, stolen, or other involuntarily converted property within a specific replacement period. Federal tax forms 1040ez 2013 If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Federal tax forms 1040ez 2013 To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Federal tax forms 1040ez 2013 If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. Federal tax forms 1040ez 2013 Example 1. Federal tax forms 1040ez 2013 In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Federal tax forms 1040ez 2013 In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Federal tax forms 1040ez 2013 In May of this year, the property was worth $100,000. Federal tax forms 1040ez 2013 In June the barn and silo were destroyed by a tornado. Federal tax forms 1040ez 2013 At the time of the tornado, you had an adjusted basis of $0 in the property. Federal tax forms 1040ez 2013 You received $85,000 from the insurance company. Federal tax forms 1040ez 2013 You had a gain of $85,000 ($85,000 – $0). Federal tax forms 1040ez 2013 You spent $80,000 to rebuild the barn and silo. Federal tax forms 1040ez 2013 Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Federal tax forms 1040ez 2013 Example 2. Federal tax forms 1040ez 2013 In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Federal tax forms 1040ez 2013 You made no further improvements or additions to it. Federal tax forms 1040ez 2013 When a storm destroyed the cabin this January, the cabin was worth $250,000. Federal tax forms 1040ez 2013 You received $146,000 from the insurance company in March. Federal tax forms 1040ez 2013 You had a gain of $128,000 ($146,000 − $18,000). Federal tax forms 1040ez 2013 You spent $144,000 to rebuild the cabin. Federal tax forms 1040ez 2013 Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Federal tax forms 1040ez 2013 Buying replacement property from a related person. Federal tax forms 1040ez 2013   You cannot postpone reporting a gain from a casualty, theft, or other involuntary conversion if you buy the replacement property from a related person (discussed later). Federal tax forms 1040ez 2013 This rule applies to the following taxpayers. Federal tax forms 1040ez 2013 C corporations. Federal tax forms 1040ez 2013 Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Federal tax forms 1040ez 2013 Individuals, partnerships (other than those in (2) above), and S corporations if the total realized gain for the tax year on all involuntarily converted properties on which there are realized gains is more than $100,000. Federal tax forms 1040ez 2013 For involuntary conversions described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Federal tax forms 1040ez 2013 If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Federal tax forms 1040ez 2013 If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Federal tax forms 1040ez 2013 Exception. Federal tax forms 1040ez 2013   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the involuntarily converted property. Federal tax forms 1040ez 2013 Related persons. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Federal tax forms 1040ez 2013 Death of a taxpayer. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Replacement Property You must buy replacement property for the specific purpose of replacing your property. Federal tax forms 1040ez 2013 Your replacement property must be similar or related in service or use to the property it replaces. Federal tax forms 1040ez 2013 You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Property you acquire by gift or inheritance does not qualify as replacement property. Federal tax forms 1040ez 2013 Owner-user. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 A grinding mill that replaces a tractor does not qualify. Federal tax forms 1040ez 2013 Neither does a breeding or draft animal that replaces a dairy cow. Federal tax forms 1040ez 2013 Soil or other environmental contamination. Federal tax forms 1040ez 2013   If, because of soil or other environmental contamination, it is not feasible for you to reinvest your insurance money or other proceeds from destroyed or damaged livestock in property similar or related in service or use to the livestock, you can treat other property (including real property) used for farming purposes, as property similar or related in service or use to the destroyed or damaged livestock. Federal tax forms 1040ez 2013 Weather-related conditions. Federal tax forms 1040ez 2013   If, because of drought, flood, or other weather-related conditions, it is not feasible for you to reinvest the insurance money or other proceeds in property similar or related in service or use to the livestock, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the livestock you disposed of. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 Each year you normally sell 25 cows from your beef herd. Federal tax forms 1040ez 2013 However, this year you had to sell 50 cows. Federal tax forms 1040ez 2013 This is because a severe drought significantly reduced the amount of hay and pasture yield needed to feed your herd for the rest of the year. Federal tax forms 1040ez 2013 Because, as a result of the severe drought, it is not feasible for you to use the proceeds from selling the extra cows to buy new cows, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the cows you sold. Federal tax forms 1040ez 2013 Standing crop destroyed by casualty. Federal tax forms 1040ez 2013   If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. Federal tax forms 1040ez 2013 The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). Federal tax forms 1040ez 2013 In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period. Federal tax forms 1040ez 2013 Timber loss. Federal tax forms 1040ez 2013   Standing timber you bought with the proceeds from the sale of timber downed as a result of a casualty, such as high winds, earthquakes, or volcanic eruptions, qualifies as replacement property. Federal tax forms 1040ez 2013 If you bought the standing timber within the replacement period, you can postpone reporting the gain. Federal tax forms 1040ez 2013 Business or income-producing property located in a federally declared disaster area. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 For more information, see Disaster Area Losses in Publication 547. Federal tax forms 1040ez 2013 Substituting replacement property. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 This is true even if you acquire the other property within the replacement period. Federal tax forms 1040ez 2013 However, if you discover that the original replacement property was not qualified replacement property, you can, within the replacement period, substitute the new qualified replacement property. Federal tax forms 1040ez 2013 Basis of replacement property. Federal tax forms 1040ez 2013   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Federal tax forms 1040ez 2013 In this way, tax on the gain is postponed until you dispose of the replacement property. Federal tax forms 1040ez 2013 Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Federal tax forms 1040ez 2013 This is the replacement period. Federal tax forms 1040ez 2013 The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 You are a calendar year taxpayer. Federal tax forms 1040ez 2013 While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Federal tax forms 1040ez 2013 You discovered the theft when you returned to your farm on November 11, 2012. Federal tax forms 1040ez 2013 Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Federal tax forms 1040ez 2013 You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Federal tax forms 1040ez 2013 Main home in disaster area. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 See Disaster Area Losses , later. Federal tax forms 1040ez 2013 Property in the Midwestern disaster areas. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Federal tax forms 1040ez 2013 Property in the Kansas disaster area. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Federal tax forms 1040ez 2013 Property in the Hurricane Katrina disaster area. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Federal tax forms 1040ez 2013 Weather-related sales of livestock in an area eligible for federal assistance. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Federal tax forms 1040ez 2013   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Federal tax forms 1040ez 2013 R. Federal tax forms 1040ez 2013 B. Federal tax forms 1040ez 2013 529, available at  www. Federal tax forms 1040ez 2013 irs. Federal tax forms 1040ez 2013 gov/irb/2006-39_IRB/ar11. Federal tax forms 1040ez 2013 html. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 gov. Federal tax forms 1040ez 2013 Condemnation. Federal tax forms 1040ez 2013   The replacement period for a condemnation begins on the earlier of the following dates. Federal tax forms 1040ez 2013 The date on which you disposed of the condemned property. Federal tax forms 1040ez 2013 The date on which the threat of condemnation began. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Business or investment real property. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Extension. Federal tax forms 1040ez 2013   You can apply for an extension of the replacement period. Federal tax forms 1040ez 2013 Send your written application to the Internal Revenue Service Center where you file your tax return. Federal tax forms 1040ez 2013 See your tax return instructions for the address. Federal tax forms 1040ez 2013 Include all the details about your need for an extension. Federal tax forms 1040ez 2013 Make your application before the end of the replacement period. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Federal tax forms 1040ez 2013 How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Federal tax forms 1040ez 2013 You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Federal tax forms 1040ez 2013 Required statement. Federal tax forms 1040ez 2013   You should attach a statement to your return for the year you have the gain. Federal tax forms 1040ez 2013 This statement should include all the following information. Federal tax forms 1040ez 2013 The date and details of the casualty, theft, or other involuntary conversion. Federal tax forms 1040ez 2013 The insurance or other reimbursement you received. Federal tax forms 1040ez 2013 How you figured the gain. Federal tax forms 1040ez 2013 Replacement property acquired before return filed. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 The replacement property. Federal tax forms 1040ez 2013 The postponed gain. Federal tax forms 1040ez 2013 The basis adjustment that reflects the postponed gain. Federal tax forms 1040ez 2013 Any gain you are reporting as income. Federal tax forms 1040ez 2013 Replacement property acquired after return filed. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013   You should then attach another statement to your return for the year in which you buy the replacement property. Federal tax forms 1040ez 2013 This statement should contain detailed information on the replacement property. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Include in the statement detailed information on the replacement property bought in that year. Federal tax forms 1040ez 2013 Reporting weather-related sales of livestock. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Federal tax forms 1040ez 2013 The gain realized on the sale or exchange. Federal tax forms 1040ez 2013 The number and kind of livestock sold or exchanged. Federal tax forms 1040ez 2013 The number of livestock of each kind you would have sold or exchanged under your usual business practice. Federal tax forms 1040ez 2013   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Federal tax forms 1040ez 2013 The dates you bought the replacement property. Federal tax forms 1040ez 2013 The cost of the replacement property. Federal tax forms 1040ez 2013 Description of the replacement property (for example, the number and kind of the replacement livestock). Federal tax forms 1040ez 2013 Amended return. Federal tax forms 1040ez 2013   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Federal tax forms 1040ez 2013 You do not acquire replacement property within the replacement period, plus extensions. Federal tax forms 1040ez 2013 On this amended return, you must report the gain and pay any additional tax due. Federal tax forms 1040ez 2013 You acquire replacement property within the required replacement period, plus extensions, but at a cost less than the amount you receive from the casualty, theft, or other involuntary conversion. Federal tax forms 1040ez 2013 On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Federal tax forms 1040ez 2013 Disaster Area Losses Special rules apply to federally declared disaster area losses. Federal tax forms 1040ez 2013 A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. Federal tax forms 1040ez 2013 Stafford Disaster Relief and Emergency Assistance Act. Federal tax forms 1040ez 2013 It includes a major disaster or emergency declaration under the act. Federal tax forms 1040ez 2013 A list of the areas warranting public or individual assistance (or both) under the Act is available at the Federal Emergency Management Agency (FEMA) web site at www. Federal tax forms 1040ez 2013 fema. Federal tax forms 1040ez 2013 gov. Federal tax forms 1040ez 2013 This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Federal tax forms 1040ez 2013 For other special rules, see Disaster Area Losses in Publication 547. Federal tax forms 1040ez 2013 When to deduct the loss. Federal tax forms 1040ez 2013   You generally must deduct a casualty loss in the year it occurred. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 If you make this choice, the loss is treated as having occurred in the preceding year. Federal tax forms 1040ez 2013    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. Federal tax forms 1040ez 2013   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Federal tax forms 1040ez 2013 The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Federal tax forms 1040ez 2013 The due date (with extensions) for the return for the preceding tax year. Federal tax forms 1040ez 2013 Federal disaster relief grants. Federal tax forms 1040ez 2013   Do not include post-disaster relief grants received under the Robert T. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Unemployment assistance payments under the Act are taxable unemployment compensation. Federal tax forms 1040ez 2013 Qualified disaster relief payments. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Federal tax forms 1040ez 2013 No withholding applies to these payments. Federal tax forms 1040ez 2013   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Federal tax forms 1040ez 2013 Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Federal tax forms 1040ez 2013 Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Federal tax forms 1040ez 2013 (A personal residence can be a rented residence or one you own. Federal tax forms 1040ez 2013 ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013    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. Federal tax forms 1040ez 2013 Qualified disaster mitigation payments. Federal tax forms 1040ez 2013   Qualified disaster mitigation payments made under the Robert T. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Federal tax forms 1040ez 2013 You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Federal tax forms 1040ez 2013 Sale of property under hazard mitigation program. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 You report the gain or deduct the loss on your tax return for the year you realize it. Federal tax forms 1040ez 2013 (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Federal tax forms 1040ez 2013 ) 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. Federal tax forms 1040ez 2013 See Postponing Gain , earlier, for the rules that apply. Federal tax forms 1040ez 2013 Other federal assistance programs. Federal tax forms 1040ez 2013    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Federal tax forms 1040ez 2013 Postponed tax deadlines. Federal tax forms 1040ez 2013   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013   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). Federal tax forms 1040ez 2013 Go to http://www. Federal tax forms 1040ez 2013 irs. Federal tax forms 1040ez 2013 gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Federal tax forms 1040ez 2013 Who is eligible. Federal tax forms 1040ez 2013   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Federal tax forms 1040ez 2013 Any individual whose main home is located in a covered disaster area (defined next). Federal tax forms 1040ez 2013 Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Federal tax forms 1040ez 2013 Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 The main home or principal place of business does not have to be located in the covered disaster area. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 The spouse on a joint return with a taxpayer who is eligible for postponements. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Federal tax forms 1040ez 2013 Any other person determined by the IRS to be affected by a federally declared disaster. Federal tax forms 1040ez 2013 Covered disaster area. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Abatement of interest and penalties. Federal tax forms 1040ez 2013   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Form 4684. Federal tax forms 1040ez 2013   Use this form to report your gains and losses from casualties and thefts. Federal tax forms 1040ez 2013 Form 4797. Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 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. Federal tax forms 1040ez 2013 Form 8949. Federal tax forms 1040ez 2013   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Federal tax forms 1040ez 2013 Schedule A (Form 1040). Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Schedule D (Form 1040). Federal tax forms 1040ez 2013   Use this form to carry over the following gains. Federal tax forms 1040ez 2013 Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Federal tax forms 1040ez 2013 Net gain shown on Form 4684 from the casualty or theft of personal-use property. Federal tax forms 1040ez 2013    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Federal tax forms 1040ez 2013 Schedule F (Form 1040). Federal tax forms 1040ez 2013   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. Federal tax forms 1040ez 2013 Prev  Up  Next   Home   More Online Publications
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Understanding Your CP297C Notice

We levied you for unpaid taxes. You have the right to a Collection Due
Process hearing.


What you need to do

  • Read your notice carefully — it explains our actions.
  • Pay what you owe.
  • Make a payment plan if you can’t pay the full amount you owe.

You may want to...


Answers to Common Questions

What should I do if I disagree with the notice?
Request a Collection Due Process hearing.

Why should I request a Collection Due Process hearing?
You can appeal the levy and other disagreements you have at a Collection Due Process hearing.

How can I request a Collection Due Process hearing?
Complete and send us a Form 12153, Request for a Collection Due Process or Equivalent Hearing.

Why didn't you tell me about my rights before you levied me?
Federal contractors do not have the right to a pre-levy hearing. We've already sent you several notices about the amount you owe.

What happens if I can't pay what I owe?
You can request a payment plan if you can't pay the full amount you owe.

How can I make a payment plan?
Call us at the toll free number on the top right corner of your notice to talk about payment plans or learn more about them here.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about how to file electronically.


Understanding your notice

Reading your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

Notice CP297C, Page 1

Notice CP297C, Page 2

Notice CP297C, Page 3

Notice CP297C, Page 4

Notice CP297C, Page 5

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 

Page Last Reviewed or Updated: 27-Jan-2014

The Federal Tax Forms 1040ez 2013

Federal tax forms 1040ez 2013 6. Federal tax forms 1040ez 2013   Tip Income Table of Contents Introduction Useful Items - You may want to see: Keeping a Daily Tip RecordElectronic tip record. Federal tax forms 1040ez 2013 Reporting Tips to Your EmployerElectronic tip statement. Federal tax forms 1040ez 2013 Final report. Federal tax forms 1040ez 2013 Reporting Tips on Your Tax Return Allocated Tips Introduction This chapter is for employees who receive tips. Federal tax forms 1040ez 2013 All tips you receive are income and are subject to federal income tax. Federal tax forms 1040ez 2013 You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. Federal tax forms 1040ez 2013 The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. Federal tax forms 1040ez 2013 Reporting your tip income correctly is not difficult. Federal tax forms 1040ez 2013 You must do three things. Federal tax forms 1040ez 2013 Keep a daily tip record. Federal tax forms 1040ez 2013 Report tips to your employer. Federal tax forms 1040ez 2013 Report all your tips on your income tax return. Federal tax forms 1040ez 2013  This chapter will explain these three things and show you what to do on your tax return if you have not done the first two. Federal tax forms 1040ez 2013 This chapter will also show you how to treat allocated tips. Federal tax forms 1040ez 2013 For information on special tip programs and agreements, see Publication 531. Federal tax forms 1040ez 2013 Useful Items - You may want to see: Publication 531 Reporting Tip Income 1244 Employee's Daily Record of Tips and Report to Employer Form (and Instructions) 4137 Social Security and Medicare Tax on Unreported Tip Income 4070 Employee's Report of Tips to Employer Keeping a Daily Tip Record Why keep a daily tip record. Federal tax forms 1040ez 2013   You must keep a daily tip record so you can: Report your tips accurately to your employer, Report your tips accurately on your tax return, and Prove your tip income if your return is ever questioned. Federal tax forms 1040ez 2013 How to keep a daily tip record. Federal tax forms 1040ez 2013   There are two ways to keep a daily tip record. Federal tax forms 1040ez 2013 You can either: Write information about your tips in a tip diary, or Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips. Federal tax forms 1040ez 2013 You should keep your daily tip record with your tax or other personal records. Federal tax forms 1040ez 2013 You must keep your records for as long as they are important for administration of the federal tax law. Federal tax forms 1040ez 2013 For information on how long to keep records, see How long to keep records in chapter 1. Federal tax forms 1040ez 2013    If you keep a tip diary, you can use Form 4070A, Employee's Daily Record of Tips. Federal tax forms 1040ez 2013 To get Form 4070A, ask the Internal Revenue Service (IRS) or your employer for Publication 1244. Federal tax forms 1040ez 2013 Also, Publication 1244 is available online at www. Federal tax forms 1040ez 2013 irs. Federal tax forms 1040ez 2013 gov/pub/irs-pdf/p1244. Federal tax forms 1040ez 2013 pdf. Federal tax forms 1040ez 2013 Publication 1244 includes a 1-year supply of Form 4070A. Federal tax forms 1040ez 2013 Each day, write in the information asked for on the form. Federal tax forms 1040ez 2013   In addition to the information asked for on Form 4070A, you also need to keep a record of the date and value of any noncash tips you get, such as tickets, passes, or other items of value. Federal tax forms 1040ez 2013 Although you do not report these tips to your employer, you must report them on your tax return. Federal tax forms 1040ez 2013   If you do not use Form 4070A, start your records by writing your name, your employer's name, and the name of the business (if it is different from your employer's name). Federal tax forms 1040ez 2013 Then, each workday, write the date and the following information. Federal tax forms 1040ez 2013 Cash tips you get directly from customers or from other employees. Federal tax forms 1040ez 2013 Tips from credit and debit card charge customers that your employer pays you. Federal tax forms 1040ez 2013 The value of any noncash tips you get, such as tickets, passes, or other items of value. Federal tax forms 1040ez 2013 The amount of tips you paid out to other employees through tip pools or tip splitting, or other arrangements, and the names of the employees to whom you paid the tips. Federal tax forms 1040ez 2013 Electronic tip record. Federal tax forms 1040ez 2013   You can use an electronic system provided by your employer to record your daily tips. Federal tax forms 1040ez 2013 If you do, you must receive and keep a paper copy of this record. Federal tax forms 1040ez 2013 Service charges. Federal tax forms 1040ez 2013    Do not write in your tip diary the amount of any service charge that your employer adds to a customer's bill and then pays to you and treats as wages. Federal tax forms 1040ez 2013 This is part of your wages, not a tip. Federal tax forms 1040ez 2013 See examples below. Federal tax forms 1040ez 2013 Example 1. Federal tax forms 1040ez 2013 Good Food Restaurant adds an 18% charge to the bill for parties of 6 or more customers. Federal tax forms 1040ez 2013 Jane’s bill for food and beverages for her party of 8 includes an amount on the tip line equal to 18% of the charges for food and beverages, and the total includes this amount. Federal tax forms 1040ez 2013 Because Jane did not have an unrestricted right to determine the amount on the “tip line,” the 18% charge is considered a service charge. Federal tax forms 1040ez 2013 Do not include the 18% charge in your tip diary. Federal tax forms 1040ez 2013 Service charges that are paid to you are considered wages, not tips. Federal tax forms 1040ez 2013 Example 2. Federal tax forms 1040ez 2013 Good Food Restaurant also includes sample calculations of tip amounts at the bottom of its bills for food and beverages provided to customers. Federal tax forms 1040ez 2013 David’s bill includes a blank “tip line,” with sample tip calculations of 15%, 18%, and 20% of his charges for food and beverages at the bottom of the bill beneath the signature line. Federal tax forms 1040ez 2013 Because David is free to enter any amount on the “tip line” or leave it blank, any amount he includes is considered a tip. Federal tax forms 1040ez 2013 Be sure to include this amount in your tip diary. Federal tax forms 1040ez 2013 Reporting Tips to Your Employer Why report tips to your employer. Federal tax forms 1040ez 2013   You must report tips to your employer so that: Your employer can withhold federal income tax and social security, Medicare, Additional Medicare, or railroad retirement taxes, Your employer can report the correct amount of your earnings to the Social Security Administration or Railroad Retirement Board (which affects your benefits when you retire or if you become disabled, or your family's benefits if you die), and You can avoid the penalty for not reporting tips to your employer (explained later). Federal tax forms 1040ez 2013 What tips to report. Federal tax forms 1040ez 2013   Report to your employer only cash, check, and debit and credit card tips you receive. Federal tax forms 1040ez 2013   If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer. Federal tax forms 1040ez 2013   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Federal tax forms 1040ez 2013 Do not report to your employer any portion of the tips you receive that you pass on to other employees. Federal tax forms 1040ez 2013 However, you must report tips you receive from other employees. Federal tax forms 1040ez 2013    Do not report the value of any noncash tips, such as tickets or passes, to your employer. Federal tax forms 1040ez 2013 You do not pay social security, Medicare, Additional Medicare or railroad retirement taxes on these tips. Federal tax forms 1040ez 2013 How to report. Federal tax forms 1040ez 2013    If your employer does not give you any other way to report tips, you can use Form 4070. Federal tax forms 1040ez 2013 Fill in the information asked for on the form, sign and date the form, and give it to your employer. Federal tax forms 1040ez 2013 To get a 1-year supply of the form, ask the IRS or your employer for Publication 1244. Federal tax forms 1040ez 2013   If you do not use Form 4070, give your employer a statement with the following information. Federal tax forms 1040ez 2013 Your name, address, and social security number. Federal tax forms 1040ez 2013 Your employer's name, address, and business name (if it is different from your employer's name). Federal tax forms 1040ez 2013 The month (or the dates of any shorter period) in which you received tips. Federal tax forms 1040ez 2013 The total tips required to be reported for that period. Federal tax forms 1040ez 2013 You must sign and date the statement. Federal tax forms 1040ez 2013 Be sure to keep a copy with your tax or other personal records. Federal tax forms 1040ez 2013   Your employer may require you to report your tips more than once a month. Federal tax forms 1040ez 2013 However, the statement cannot cover a period of more than 1 calendar month. Federal tax forms 1040ez 2013 Electronic tip statement. Federal tax forms 1040ez 2013   Your employer can have you furnish your tip statements electronically. Federal tax forms 1040ez 2013 When to report. Federal tax forms 1040ez 2013   Give your report for each month to your employer by the 10th of the next month. Federal tax forms 1040ez 2013 If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 You must report your tips received in September 2014 by October 10, 2014. Federal tax forms 1040ez 2013 Final report. Federal tax forms 1040ez 2013   If your employment ends during the month, you can report your tips when your employment ends. Federal tax forms 1040ez 2013 Penalty for not reporting tips. Federal tax forms 1040ez 2013   If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security, Medicare, and Additional Medicare taxes or railroad retirement tax you owe on the unreported tips. Federal tax forms 1040ez 2013 (For information about these taxes, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, later. Federal tax forms 1040ez 2013 ) The penalty amount is in addition to the taxes you owe. Federal tax forms 1040ez 2013   You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer. Federal tax forms 1040ez 2013 To do so, attach a statement to your return explaining why you did not report them. Federal tax forms 1040ez 2013 Giving your employer money for taxes. Federal tax forms 1040ez 2013   Your regular pay may not be enough for your employer to withhold all the taxes you owe on your regular pay plus your reported tips. Federal tax forms 1040ez 2013 If this happens, you can give your employer money until the close of the calendar year to pay the rest of the taxes. Federal tax forms 1040ez 2013   If you do not give your employer enough money, your employer will apply your regular pay and any money you give in the following order. Federal tax forms 1040ez 2013 All taxes on your regular pay. Federal tax forms 1040ez 2013 Social security, Medicare, and Additional Medicare taxes or railroad retirement taxes on your reported tips. Federal tax forms 1040ez 2013 Federal, state, and local income taxes on your reported tips. Federal tax forms 1040ez 2013    Any taxes that remain unpaid can be collected by your employer from your next paycheck. Federal tax forms 1040ez 2013 If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. Federal tax forms 1040ez 2013 See Publication 505, Tax Withholding and Estimated Tax, for more information. Federal tax forms 1040ez 2013    Uncollected taxes. Federal tax forms 1040ez 2013 You must report on your tax return any social security and Medicare taxes or railroad retirement tax that remained uncollected at the end of 2013. Federal tax forms 1040ez 2013 These uncollected taxes will be shown on your 2013 Form W-2. Federal tax forms 1040ez 2013 See Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer under Reporting Tips on Your Tax Return, later. Federal tax forms 1040ez 2013 Reporting Tips on Your Tax Return How to report tips. Federal tax forms 1040ez 2013    Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; or Form 1040EZ, line 1. Federal tax forms 1040ez 2013 What tips to report. Federal tax forms 1040ez 2013   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. Federal tax forms 1040ez 2013 Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. Federal tax forms 1040ez 2013 Add to the amount in box 1 only the tips you did not report to your employer. Federal tax forms 1040ez 2013    If you received $20 or more in cash and charge tips in a month and did not report all of those tips to your employer, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer, later. Federal tax forms 1040ez 2013    If you did not keep a daily tip record as required and an amount is shown in box 8 of your Form W-2, see Allocated Tips, later. Federal tax forms 1040ez 2013   If you kept a daily tip record and reported tips to your employer as required under the rules explained earlier, add the following tips to the amount in box 1 of your Form W-2. Federal tax forms 1040ez 2013 Cash and charge tips you received that totaled less than $20 for any month. Federal tax forms 1040ez 2013 The value of noncash tips, such as tickets, passes, or other items of value. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 Ben Smith began working at the Blue Ocean Restaurant (his only employer in 2013) on June 30 and received $10,000 in wages during the year. Federal tax forms 1040ez 2013 Ben kept a daily tip record showing that his tips for June were $18 and his tips for the rest of the year totaled $7,000. Federal tax forms 1040ez 2013 He was not required to report his June tips to his employer, but he reported all of the rest of his tips to his employer as required. Federal tax forms 1040ez 2013 Ben's Form W-2 from Blue Ocean Restaurant shows $17,000 ($10,000 wages plus $7,000 reported tips) in box 1. Federal tax forms 1040ez 2013 He adds the $18 unreported tips to that amount and reports $17,018 as wages on his tax return. Federal tax forms 1040ez 2013 Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Federal tax forms 1040ez 2013    If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to your employer, you must report the social security, Medicare, and Additional Medicare taxes on the unreported tips as additional tax on your return. Federal tax forms 1040ez 2013 To report these taxes, you must file a return even if you would not otherwise have to file. Federal tax forms 1040ez 2013 You must use Form 1040. Federal tax forms 1040ez 2013 (You cannot file Form 1040EZ or Form 1040A. Federal tax forms 1040ez 2013 )    Use Form 4137 to figure social security and Medicare taxes. Federal tax forms 1040ez 2013 Enter the tax on your return as instructed, and attach the completed Form 4137 to your return. Federal tax forms 1040ez 2013 Use Form 8959 to figure Additional Medicare Tax. Federal tax forms 1040ez 2013    If you are subject to the Railroad Retirement Tax Act, you cannot use Form 4137 to pay railroad retirement tax on unreported tips. Federal tax forms 1040ez 2013 To get railroad retirement credit, you must report tips to your employer. Federal tax forms 1040ez 2013 Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer. Federal tax forms 1040ez 2013   You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes. Federal tax forms 1040ez 2013 For more information, see Giving your employer money for taxes , under Reporting Tips to Your Employer, earlier. Federal tax forms 1040ez 2013   If your employer could not collect all the social security and Medicare taxes or railroad retirement tax you owe on tips reported for 2013, the uncollected taxes will be shown in box 12 of your Form W-2 (codes A and B). Federal tax forms 1040ez 2013 You must report these amounts as additional tax on your return. Federal tax forms 1040ez 2013 Unlike the uncollected portion of the regular (1. Federal tax forms 1040ez 2013 45%) Medicare tax, the uncollected Additional Medicare Tax is not reported in box 12 of Form W-2 with code B. Federal tax forms 1040ez 2013    To report these uncollected taxes, you must file a return even if you would not otherwise have to file. Federal tax forms 1040ez 2013 You must report these taxes on Form 1040, line 60. Federal tax forms 1040ez 2013 See the instructions for Form 1040, line 60. Federal tax forms 1040ez 2013 (You cannot file Form 1040EZ or Form 1040A. Federal tax forms 1040ez 2013 ) Allocated Tips If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. Federal tax forms 1040ez 2013 They are not included in box 1 with your wages and reported tips. Federal tax forms 1040ez 2013 If box 8 is blank, this discussion does not apply to you. Federal tax forms 1040ez 2013 What are allocated tips. Federal tax forms 1040ez 2013   These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. Federal tax forms 1040ez 2013 Your employer will have done this only if: You worked in an establishment (restaurant, cocktail lounge, or similar business) that must allocate tips to employees, and The tips you reported to your employer were less than your share of 8% of food and drink sales. Federal tax forms 1040ez 2013 No income, social security, Medicare, Additional Medicare or railroad retirement taxes are withheld on allocated tips. Federal tax forms 1040ez 2013 How were your allocated tips figured. Federal tax forms 1040ez 2013   The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). Federal tax forms 1040ez 2013 Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. Federal tax forms 1040ez 2013 For information about the exact allocation method used, ask your employer. Federal tax forms 1040ez 2013 Must you report your allocated tips on your tax return. Federal tax forms 1040ez 2013   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. Federal tax forms 1040ez 2013 Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. Federal tax forms 1040ez 2013 Add to the amount in box 1 only the tips you did not report to your employer. Federal tax forms 1040ez 2013 This should include any allocated tips shown in box 8 on your Form(s) W-2, unless you have adequate records to show that you received less tips in the year than the allocated figures. Federal tax forms 1040ez 2013   See What tips to report under Reporting Tips on Your Tax Return, and Keeping a Daily Tip Record , earlier. Federal tax forms 1040ez 2013 How to report allocated tips. Federal tax forms 1040ez 2013   Report the amount in box 1 and the allocated tips in box 8 of your Form(s) W-2 as wages on Form 1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. Federal tax forms 1040ez 2013 (You cannot file Form 1040A or Form 1040EZ when you have allocated tips. Federal tax forms 1040ez 2013 )    Because social security, Medicare, and Additional Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. Federal tax forms 1040ez 2013 Complete Form 4137, and include the allocated tips on line 1 of the form. Federal tax forms 1040ez 2013 See Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier. Federal tax forms 1040ez 2013 Prev  Up  Next   Home   More Online Publications