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Form 1040ez Booklet

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Form 1040ez Booklet

Form 1040ez booklet 29. Form 1040ez booklet   Límite sobre Deducciones Detalladas Table of Contents Introduction Useful Items - You may want to see: ¿Está Usted Sujeto al Límite? ¿Qué Deducciones Detalladas Están Limitadas? ¿Qué Deducciones Detalladas no Están Limitadas? ¿Cómo se Calcula el Límite?Ejemplo Introduction Este capítulo trata del límite general sobre las deducciones detalladas en el Anexo A (Formulario 1040). Form 1040ez booklet Los temas abarcan: Quién está sujeto al límite. Form 1040ez booklet Qué deducciones detalladas están limitadas. Form 1040ez booklet Cómo calcular el límite. Form 1040ez booklet Useful Items - You may want to see: Formulario (e Instrucciones) Anexo A (Formulario 1040) Itemized Deductions (Deducciones detalladas), en inglés. Form 1040ez booklet ¿Está Usted Sujeto al Límite? Si tiene ingresos brutos ajustados (AGI, por sus siglas en inglés) de más de $300,000, si es casado que presenta la declaración conjunta o viudo calificado, $275,000, si es cabeza de familia, $250,000, si es soltero o $150,000, si es casado que presenta la declaración por separado, está sujeto al límite sobre determinadas deducciones detalladas. Form 1040ez booklet El ingreso bruto ajustado (AGI) es la cantidad de la línea 38 (Formulario 1040). Form 1040ez booklet ¿Qué Deducciones Detalladas Están Limitadas? Las siguientes deducciones del Anexo A (Formulario 1040) están sujetas al límite general sobre las deducciones detalladas: Impuestos pagados —línea 9. Form 1040ez booklet Intereses pagados —líneas 10,11,12 y 13. Form 1040ez booklet Donaciones a organizaciones caritativas —línea 19. Form 1040ez booklet Gastos laborales y determinadas deducciones misceláneas —línea 27. Form 1040ez booklet Otras deducciones misceláneas —línea 28, excluyendo pérdidas por apuestas y juegos de azar y por hecho fortuito o robo. Form 1040ez booklet ¿Qué Deducciones Detalladas no Están Limitadas? Las siguientes deducciones del Anexo A (Formulario 1040) no están sujetas al límite general sobre las deducciones detalladas. Form 1040ez booklet Sin embargo, igualmente están sujetas a otros límites aplicables. Form 1040ez booklet Gastos médicos y dentales —línea 4. Form 1040ez booklet Gastos de intereses de inversión —línea 14. Form 1040ez booklet Pérdidas por hecho fortuito y robo de bienes de uso personal —línea 20. Form 1040ez booklet Pérdidas por hecho fortuito y robo de bienes que generan ingresos —línea 28. Form 1040ez booklet Pérdidas por apuestas y juegos de azar —línea 28. Form 1040ez booklet ¿Cómo se Calcula el Límite? Si las deducciones detalladas están sujetas al límite, el total de todas sus deducciones detalladas es reducido por la cantidad menor de uno de: el 80% de las deducciones detalladas afectadas por el límite. Form 1040ez booklet Vea ¿Qué Deducciones Detalladas Están Limitadas? , anteriormente o el 3% de la cantidad por la cual los ingresos brutos ajustados sobrepasen $300,000, si es casado que presenta la declaración conjunta o viudo calificado, $275,000, si es cabeza de familia, $250,000, si es soltero o $150,000, si es casado que presenta la declaración por separado. Form 1040ez booklet Antes de calcular el límite general sobre las deducciones detalladas, primero tiene que llenar las líneas 1 a 28 del Anexo A (Formulario 1040), incluyendo todo formulario afín (tal como el Formulario 2106, el Formulario 4684, etc. Form 1040ez booklet ) El límite general sobre las deducciones detalladas se calcula después de haberse aplicado cualquier otro límite sobre la asignación de alguna deducción detallada. Form 1040ez booklet Estos límites adicionales abarcan los límites sobre donaciones caritativas (capítulo 24), el límite sobre determinados gastos de comida y entretenimiento (capítulo 26) y el límite del 2% de los ingresos brutos ajustados sobre determinadas deducciones misceláneas (capítulo 28). Form 1040ez booklet Hoja de trabajo de deducciones detalladas. Form 1040ez booklet   Después de completar hasta la línea 28, inclusive, del Anexo A (Formulario 1040), puede utilizar la Itemized Deductions Worksheet (Hoja de trabajo de las deducciones detalladas), en las Instrucciones del Anexo A (Formulario 1040) para calcular el límite. Form 1040ez booklet Anote el resultado en la línea 29 del Anexo A (Formulario 1040). Form 1040ez booklet Guarde la hoja de trabajo con su documentación. Form 1040ez booklet Debe comparar la cantidad de la deducción estándar con la cantidad de las deducciones detalladas después de aplicar el límite. Form 1040ez booklet Utilice la cantidad mayor cuando complete la línea 40 (Formulario 1040). Form 1040ez booklet Vea el capítulo 20 para información sobre cómo calcular la deducción estándar. Form 1040ez booklet Ejemplo Para el año tributario 2013, Guillermo y Teresa Valdez presentan la declaración conjunta en el Formulario 1040. Form 1040ez booklet Tienen ingresos brutos ajustados de $325,500 en la línea 38. Form 1040ez booklet Las deducciones detalladas de su Anexo A son las siguientes: Impuestos pagados —línea 9   $ 17,900 Intereses pagados —líneas 10,11,12 y 13   45,000 Gasto de intereses de inversión  —línea 14   41,000 Donaciones a organizaciones caritativas —línea 19   21,000 Gastos laborales —línea 27   17,240 Total   $142,140       La deducción por gastos de intereses de inversión de los Valdez ($41,000 de la línea 14 del Anexo A (Formulario 1040) no está sujeta al límite general de las deducciones detalladas. Form 1040ez booklet Los Valdez utilizan la Itemized Deductions Worksheet (Hoja de trabajo de las deducciones detalladas), en las Instrucciones del Anexo A (Formulario 1040) para calcular el límite general. Form 1040ez booklet Del total de las deducciones detalladas de $142,140, los Valdez pueden deducir sólo $141,375 ($142,140 - $765). Form 1040ez booklet Anotan $141,375 en la línea 29 del Anexo A (Formulario 1040). 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Understanding your CP10A Notice

We made a change(s) to your return because we believe there's a miscalculation involving your Earned Income Credit. This change(s) affected the estimated tax payment you wanted applied to your taxes for next year.

Tax publications you may find useful

How to get help

Calling the toll free 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.
 


What you need to do

  • Read your notice carefully ― it will explain why we were unable to apply the amount you requested to next year’s taxes. It also will suggest additional steps for you to take, depending on your situation.
  • Correct the copy of your tax return that you kept for your records.
  • Adjust this year's estimated tax payments to avoid a possible underpayment of next year's taxes.

You may want to...


Answers to Common Questions

How do I adjust my estimated tax payments?
You can adjust your estimated tax payments with a Form 1040-ES, Estimated Tax for Individuals. For more information, see Publication 505, Tax Withholding and Estimated Tax.

How can I find out what caused my tax return to change?
Please contact us at the number listed on your notice for specific information concerning your tax return.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll free number listed on the top right corner of your notice.

If you contact us in writing within 60 days of the date of this notice, we'll reverse the change we made to your account. However, if you're unable to provide us additional information that justifies the reversal and we believe the reversal is in error, we'll forward your case for audit. This step gives you formal appeal rights, including the right to appeal our decision in court before you have to pay the additional tax. After we forward your case, the audit staff will contact you within five to six weeks to fully explain the audit process and your rights. If you don’t contact us within the 60-day period, you'll lose your right to appeal our decision before payment of tax.

If you don't contact us within 60 days, the change won’t be reversed and you must pay the additional tax. You may then file a claim for refund. You must submit the claim within three years of the date you filed the tax return, or within two years of the date of your last payment for this tax.

What's the difference between the "Child Tax Credit" and the "Additional Child Tax Credit?" Can I qualify for both?
The Child Tax Credit is for people who have a qualifying child. The maximum amount you can claim is $1000 for each qualifying child. The Additional Child Tax Credit is for individuals who receive less than the full amount of Child Tax Credit. You may qualify for both the Child Tax Credit and the Additional Child Tax Credit.

How do I claim an Additional Child Tax Credit?
You claim the credit by completing a Form 1040 Schedule 8812, Child Tax Credit and attaching it to your income tax return.

My child is turning 18 this year. Can I still get the Additional Child Tax Credit?
No. Your child must be under age 17 at the end of 2009 to qualify for both the Child Tax Credit and the Additional Child Tax Credit.


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 e-file.

If you have any dependent children, remember to claim the Additional Child Tax Credit the next time you file your income tax return. Complete and attach a Form 1040 Schedule 8812, Child Tax Credit to your return to claim this credit.

Use the EITC Assistant to help you complete your Schedule EIC, Earned Income Credit and claim your Earned Income Credit.

Page Last Reviewed or Updated: 28-Mar-2014

The Form 1040ez Booklet

Form 1040ez booklet 25. Form 1040ez booklet   Nonbusiness Casualty and Theft Losses Table of Contents What's New Introduction Useful Items - You may want to see: CasualtyFamily pet. Form 1040ez booklet Progressive deterioration. Form 1040ez booklet Damage from corrosive drywall. Form 1040ez booklet Theft Loss on Deposits Proof of Loss Figuring a LossDecrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Single Casualty on Multiple Properties Deduction Limits$100 Rule 10% Rule When To Report Gains and LossesDisaster Area Loss How To Report Gains and Losses What's New New Section C of Form 4684 for Ponzi-type investment schemes. Form 1040ez booklet  Section C of Form 4684 is new for 2013. Form 1040ez booklet You must complete Section C if you are claiming a theft loss deduction due to a Ponzi-type investment scheme and are using Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58. Form 1040ez booklet Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Form 1040ez booklet You do not need to complete Appendix A. Form 1040ez booklet For details, see Losses from Ponzi-type investment schemes , in this chapter. Form 1040ez booklet Introduction This chapter explains the tax treatment of personal (not business or investment related) casualty losses, theft losses, and losses on deposits. Form 1040ez booklet The chapter also explains the following  topics. Form 1040ez booklet How to figure the amount of your loss. Form 1040ez booklet How to treat insurance and other reimbursements you receive. Form 1040ez booklet The deduction limits. Form 1040ez booklet When and how to report a casualty or theft. Form 1040ez booklet Forms to file. Form 1040ez booklet    When you have a casualty or theft, you have to file Form 4684. Form 1040ez booklet You will also have to file one or more of the following forms. Form 1040ez booklet Schedule A (Form 1040), Itemized Deductions Schedule D (Form 1040), Capital Gains and Losses Condemnations. Form 1040ez booklet   For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544, Sales and Other Disposition of Assets. Form 1040ez booklet Workbook for casualties and thefts. Form 1040ez booklet    Publication 584 is available to help you make a list of your stolen or damaged personal-use property and figure your loss. Form 1040ez booklet It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Form 1040ez booklet Business or investment-related losses. Form 1040ez booklet   For information on a casualty or theft loss of business or income-producing property, see Publication 547, Casualties, Disasters, and Thefts. Form 1040ez booklet Useful Items - You may want to see: Publication 544 Sales and Other Dispositions  of Assets 547 Casualties, Disasters, and   Thefts 584 Casualty, Disaster, and Theft   Loss Workbook (Personal-Use  Property) Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule D (Form 1040) Capital Gains and Losses 4684 Casualties and Thefts Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Form 1040ez booklet A sudden event is one that is swift, not gradual or progressive. Form 1040ez booklet An unexpected event is one that is ordinarily unanticipated and unintended. Form 1040ez booklet 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. Form 1040ez booklet Deductible losses. Form 1040ez booklet   Deductible casualty losses can result from a number of different causes, including the following. Form 1040ez booklet Car accidents (but see Nondeductible losses , next, for exceptions). Form 1040ez booklet Earthquakes. Form 1040ez booklet Fires (but see Nondeductible losses , next, for exceptions). Form 1040ez booklet Floods. Form 1040ez booklet 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. Form 1040ez booklet Mine cave-ins. Form 1040ez booklet Shipwrecks. Form 1040ez booklet Sonic booms. Form 1040ez booklet Storms, including hurricanes and tornadoes. Form 1040ez booklet Terrorist attacks. Form 1040ez booklet Vandalism. Form 1040ez booklet Volcanic eruptions. Form 1040ez booklet Nondeductible losses. Form 1040ez booklet   A casualty loss is not deductible if the damage or destruction is caused by the following. Form 1040ez booklet Accidentally breaking articles such as glassware or china under normal conditions. Form 1040ez booklet A family pet (explained below). Form 1040ez booklet A fire if you willfully set it or pay someone else to set it. Form 1040ez booklet A car accident if your willful negligence or willful act caused it. Form 1040ez booklet The same is true if the willful act or willful negligence of someone acting for you caused the accident. Form 1040ez booklet Progressive deterioration (explained later). Form 1040ez booklet Family pet. Form 1040ez booklet   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. Form 1040ez booklet Example. Form 1040ez booklet Your antique oriental rug was damaged by your new puppy before it was housebroken. Form 1040ez booklet Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. Form 1040ez booklet Progressive deterioration. Form 1040ez booklet    Loss of property due to progressive deterioration is not deductible as a casualty loss. Form 1040ez booklet This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Form 1040ez booklet The following are examples of damage due to progressive deterioration. Form 1040ez booklet The steady weakening of a building due to normal wind and weather conditions. Form 1040ez booklet The deterioration and damage to a water heater that bursts. Form 1040ez booklet However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. Form 1040ez booklet Most losses of property caused by droughts. Form 1040ez booklet To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. Form 1040ez booklet Termite or moth damage. Form 1040ez booklet The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. Form 1040ez booklet However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. Form 1040ez booklet Damage from corrosive drywall. Form 1040ez booklet   Under a special procedure, you may be able to claim a casualty loss deduction for amounts you paid to repair damage to your home and household appliances that resulted from corrosive drywall. Form 1040ez booklet For details, see Publication 547. Form 1040ez booklet Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. Form 1040ez booklet The taking of property must be illegal under the laws of the state where it occurred and it must have been done with criminal intent. Form 1040ez booklet You do not need to show a conviction for theft. Form 1040ez booklet Theft includes the taking of money or property by the following means. Form 1040ez booklet Blackmail. Form 1040ez booklet Burglary. Form 1040ez booklet Embezzlement. Form 1040ez booklet Extortion. Form 1040ez booklet Kidnapping for ransom. Form 1040ez booklet Larceny. Form 1040ez booklet Robbery. Form 1040ez booklet The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Form 1040ez booklet Decline in market value of stock. Form 1040ez booklet   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. Form 1040ez booklet 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. Form 1040ez booklet You report a capital loss on Schedule D (Form 1040). Form 1040ez booklet For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Form 1040ez booklet Mislaid or lost property. Form 1040ez booklet   The simple disappearance of money or property is not a theft. Form 1040ez booklet 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. Form 1040ez booklet Sudden, unexpected, and unusual events are defined earlier. Form 1040ez booklet Example. Form 1040ez booklet A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Form 1040ez booklet The diamond falls from the ring and is never found. Form 1040ez booklet The loss of the diamond is a casualty. Form 1040ez booklet Losses from Ponzi-type investment schemes. Form 1040ez booklet   If you had a loss from a Ponzi-type investment scheme, see: Revenue Ruling 2009-9, 2009-14 I. Form 1040ez booklet R. Form 1040ez booklet B. Form 1040ez booklet 735 (available at www. Form 1040ez booklet irs. Form 1040ez booklet gov/irb/2009-14_IRB/ar07. Form 1040ez booklet html). Form 1040ez booklet Revenue Procedure 2009-20, 2009-14 I. Form 1040ez booklet R. Form 1040ez booklet B. Form 1040ez booklet 749 (available at www. Form 1040ez booklet irs. Form 1040ez booklet gov/irb/2009-14_IRB/ar11. Form 1040ez booklet html). Form 1040ez booklet Revenue Procedure 2011-58, 2011-50 I. Form 1040ez booklet R. Form 1040ez booklet B. Form 1040ez booklet 849 (available at www. Form 1040ez booklet irs. Form 1040ez booklet gov/irb/2011-50_IRB/ar11. Form 1040ez booklet html). Form 1040ez booklet If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. Form 1040ez booklet Skip lines 19 to 27. Form 1040ez booklet Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Form 1040ez booklet You do not need to complete Appendix A. Form 1040ez booklet For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. Form 1040ez booklet   If you choose not to use the procedures in Revenue Procedure 2009-20, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. Form 1040ez booklet Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. Form 1040ez booklet If you incurred this type of loss, you can choose one of the following ways to deduct the loss. Form 1040ez booklet As a casualty loss. Form 1040ez booklet As an ordinary loss. Form 1040ez booklet As a nonbusiness bad debt. Form 1040ez booklet Casualty loss or ordinary loss. Form 1040ez booklet   You can choose to deduct a loss on deposits as a casualty loss or as an ordinary loss for any year in which you can reasonably estimate how much of your deposits you have lost in an insolvent or bankrupt financial institution. Form 1040ez booklet The choice is generally made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. Form 1040ez booklet If you treat the loss as a casualty or ordinary loss, you cannot treat the same amount of the loss as a nonbusiness bad debt when it actually becomes worthless. Form 1040ez booklet However, you can take a nonbusiness bad debt deduction for any amount of loss that is more than the estimated amount you deducted as a casualty or ordinary loss. Form 1040ez booklet Once you make this choice, you cannot change it without permission from the Internal Revenue Service. Form 1040ez booklet   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Form 1040ez booklet The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. Form 1040ez booklet Your loss is subject to the 2%-of-adjusted-gross-income limit. Form 1040ez booklet You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. Form 1040ez booklet Nonbusiness bad debt. Form 1040ez booklet   If you do not choose to deduct the loss as a casualty loss or as an ordinary loss, you must wait until the year the actual loss is determined and deduct the loss as a nonbusiness bad debt in that year. Form 1040ez booklet How to report. Form 1040ez booklet   The kind of deduction you choose for your loss on deposits determines how you report your loss. Form 1040ez booklet If you choose: Casualty loss — report it on Form 4684 first and then on Schedule A (Form 1040). Form 1040ez booklet Ordinary loss — report it on Schedule A (Form 1040) as a miscellaneous itemized deduction. Form 1040ez booklet Nonbusiness bad debt — report it on Form 8949 first and then on Schedule D (Form 1040). Form 1040ez booklet More information. Form 1040ez booklet   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684 or Deposit in Insolvent or Bankrupt Financial Institution in Publication 550. Form 1040ez booklet Proof of Loss To deduct a casualty or theft loss, you must be able to prove that you had a casualty or theft. Form 1040ez booklet You also must be able to support the amount you take as a deduction. Form 1040ez booklet Casualty loss proof. Form 1040ez booklet   For a casualty loss, your records should show all the following. Form 1040ez booklet The type of casualty (car accident, fire, storm, etc. Form 1040ez booklet ) and when it occurred. Form 1040ez booklet That the loss was a direct result of the casualty. Form 1040ez booklet 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. Form 1040ez booklet Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Form 1040ez booklet Theft loss proof. Form 1040ez booklet   For a theft loss, your records should show all the following. Form 1040ez booklet When you discovered that your property was missing. Form 1040ez booklet That your property was stolen. Form 1040ez booklet That you were the owner of the property. Form 1040ez booklet Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Form 1040ez booklet It is important that you have records that will prove your deduction. Form 1040ez booklet If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. Form 1040ez booklet Figuring a Loss Figure the amount of your loss using the following steps. Form 1040ez booklet Determine your adjusted basis in the property before the casualty or theft. Form 1040ez booklet Determine the decrease in fair market value of the property as a result of the casualty or theft. Form 1040ez booklet From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. Form 1040ez booklet For personal-use property and property used in performing services as an employee, apply the deduction limits, discussed later, to determine the amount of your deductible loss. Form 1040ez booklet Gain from reimbursement. Form 1040ez booklet   If your reimbursement is more than your adjusted basis in the property, you have a gain. Form 1040ez booklet This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. Form 1040ez booklet If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. Form 1040ez booklet See Publication 547 for more information on how to treat a gain from a reimbursement for a casualty or theft. Form 1040ez booklet Leased property. Form 1040ez booklet   If you are liable for casualty damage to property you lease, your loss is the amount you must pay to repair the property minus any insurance or other reimbursement you receive or expect to receive. Form 1040ez booklet Decrease in Fair Market Value Fair market value (FMV) is the price for which you could sell your property to a willing buyer when neither of you has to sell or buy and both of you know all the relevant facts. Form 1040ez booklet The decrease in FMV used to figure the amount of a casualty or theft loss is the difference between the property's fair market value immediately before and immediately after the casualty or theft. Form 1040ez booklet FMV of stolen property. Form 1040ez booklet   The FMV of property immediately after a theft is considered to be zero, since you no longer have the property. Form 1040ez booklet Example. Form 1040ez booklet Several years ago, you purchased silver dollars at face value for $150. Form 1040ez booklet This is your adjusted basis in the property. Form 1040ez booklet Your silver dollars were stolen this year. Form 1040ez booklet The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. Form 1040ez booklet Your theft loss is $150. Form 1040ez booklet Recovered stolen property. Form 1040ez booklet   Recovered stolen property is your property that was stolen and later returned to you. Form 1040ez booklet If you recovered property after you had already taken a theft loss deduction, you must refigure your loss using the smaller of the property's adjusted basis (explained later) or the decrease in FMV from the time just before it was stolen until the time it was recovered. Form 1040ez booklet Use this amount to refigure your total loss for the year in which the loss was deducted. Form 1040ez booklet   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. Form 1040ez booklet But report the difference only up to the amount of the loss that reduced your tax. Form 1040ez booklet For more information on the amount to report, see Recoveries in chapter 12. Form 1040ez booklet Figuring Decrease in FMV— Items To Consider To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Form 1040ez booklet However, other measures can also be used to establish certain decreases. Form 1040ez booklet Appraisal. Form 1040ez booklet   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. Form 1040ez booklet The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Form 1040ez booklet This information is needed to limit any deduction to the actual loss resulting from damage to the property. Form 1040ez booklet   Several factors are important in evaluating the accuracy of an appraisal, including the following. Form 1040ez booklet The appraiser's familiarity with your property before and after the casualty or theft. Form 1040ez booklet The appraiser's knowledge of sales of comparable property in the area. Form 1040ez booklet The appraiser's knowledge of conditions in the area of the casualty. Form 1040ez booklet The appraiser's method of appraisal. Form 1040ez booklet    You may be able to use an appraisal that you used to get a federal loan (or a federal loan guarantee) as the result of a federally declared disaster to establish the amount of your disaster loss. Form 1040ez booklet For more information on disasters, see Disaster Area Losses, in Pub. Form 1040ez booklet 547. Form 1040ez booklet Cost of cleaning up or making repairs. Form 1040ez booklet   The cost of repairing damaged property is not part of a casualty loss. Form 1040ez booklet Neither is the cost of cleaning up after a casualty. Form 1040ez booklet 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. Form 1040ez booklet The repairs are actually made. Form 1040ez booklet The repairs are necessary to bring the property back to its condition before the casualty. Form 1040ez booklet The amount spent for repairs is not excessive. Form 1040ez booklet The repairs take care of the damage only. Form 1040ez booklet The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Form 1040ez booklet Landscaping. Form 1040ez booklet   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. Form 1040ez booklet You may be able to measure your loss by what you spend on the following. Form 1040ez booklet Removing destroyed or damaged trees and shrubs minus any salvage you receive. Form 1040ez booklet Pruning and other measures taken to preserve damaged trees and shrubs. Form 1040ez booklet Replanting necessary to restore the property to its approximate value before the casualty. Form 1040ez booklet Car value. Form 1040ez booklet    Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. Form 1040ez booklet You can use the book's retail values and modify them by such factors as mileage and the condition of your car to figure its value. Form 1040ez booklet The prices are not official, but they may be useful in determining value and suggesting relative prices for comparison with current sales and offerings in your area. Form 1040ez booklet If your car is not listed in the books, determine its value from other sources. Form 1040ez booklet A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. Form 1040ez booklet Figuring Decrease in FMV— Items Not To Consider You generally should not consider the following items when attempting to establish the decrease in FMV of your property. Form 1040ez booklet Cost of protection. Form 1040ez booklet   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. Form 1040ez booklet The amount you spend on insurance or to board up your house against a storm is not part of your loss. Form 1040ez booklet   If you make permanent improvements to your property to protect it against a casualty or theft, add the cost of these improvements to your basis in the property. Form 1040ez booklet An example would be the cost of a dike to prevent flooding. Form 1040ez booklet Exception. Form 1040ez booklet   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments. Form 1040ez booklet See Disaster Area Losses in Publication 547. Form 1040ez booklet Incidental expenses. Form 1040ez booklet   Any incidental expenses you have due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. Form 1040ez booklet Replacement cost. Form 1040ez booklet   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. Form 1040ez booklet Sentimental value. Form 1040ez booklet   Do not consider sentimental value when determining your loss. Form 1040ez booklet If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV, as limited by your adjusted basis in the property. Form 1040ez booklet Decline in market value of property in or near casualty area. Form 1040ez booklet   A decrease in the value of your property because it is in or near an area that suffered a casualty, or that might again suffer a casualty, is not to be taken into consideration. Form 1040ez booklet You have a loss only for actual casualty damage to your property. Form 1040ez booklet However, if your home is in a federally declared disaster area, see Disaster Area Losses in Publication 547. Form 1040ez booklet Costs of photographs and appraisals. Form 1040ez booklet    Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. Form 1040ez booklet Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. Form 1040ez booklet    Appraisals are used to figure the decrease in FMV because of a casualty or theft. Form 1040ez booklet See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. Form 1040ez booklet   The costs of photographs and appraisals used as evidence of the value and condition of property damaged as a result of a casualty are not a part of the loss. Form 1040ez booklet You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). Form 1040ez booklet For information about miscellaneous deductions, see chapter 28. Form 1040ez booklet Adjusted Basis Adjusted basis is your basis in the property (usually cost) increased or decreased by various events, such as improvements and casualty losses. Form 1040ez booklet For more information, see chapter 13. Form 1040ez booklet Insurance and Other Reimbursements If you receive an insurance payment or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Form 1040ez booklet You do not have a casualty or theft loss to the extent you are reimbursed. Form 1040ez booklet If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Form 1040ez booklet You must reduce your loss even if you do not receive payment until a later tax year. Form 1040ez booklet See Reimbursement Received After Deducting Loss , later. Form 1040ez booklet Failure to file a claim for reimbursement. Form 1040ez booklet   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. Form 1040ez booklet Otherwise, you cannot deduct this loss as a casualty or theft loss. Form 1040ez booklet However, this rule does not apply to the portion of the loss not covered by insurance (for example, a deductible). Form 1040ez booklet Example. Form 1040ez booklet You have a car insurance policy with a $1,000 deductible. Form 1040ez booklet Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the deduction limits discussed later). Form 1040ez booklet This is true even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. Form 1040ez booklet Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. Form 1040ez booklet Other types of reimbursements are discussed next. Form 1040ez booklet Also see the Instructions for Form 4684. Form 1040ez booklet Employer's emergency disaster fund. Form 1040ez booklet   If you receive money from your employer's emergency disaster fund and you must use that money to rehabilitate or replace property on which you are claiming a casualty loss deduction, you must take that money into consideration in computing the casualty loss deduction. Form 1040ez booklet Take into consideration only the amount you used to replace your destroyed or damaged property. Form 1040ez booklet Example. Form 1040ez booklet Your home was extensively damaged by a tornado. Form 1040ez booklet Your loss after reimbursement from your insurance company was $10,000. Form 1040ez booklet Your employer set up a disaster relief fund for its employees. Form 1040ez booklet Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. Form 1040ez booklet You received $4,000 from the fund and spent the entire amount on repairs to your home. Form 1040ez booklet In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. Form 1040ez booklet Your casualty loss before applying the deduction limits discussed later is $6,000. Form 1040ez booklet Cash gifts. Form 1040ez booklet   If you receive excludable cash gifts as a disaster victim and there are no limits on how you can use the money, you do not reduce your casualty loss by these excludable cash gifts. Form 1040ez booklet This applies even if you use the money to pay for repairs to property damaged in the disaster. Form 1040ez booklet Example. Form 1040ez booklet Your home was damaged by a hurricane. Form 1040ez booklet Relatives and neighbors made cash gifts to you that were excludable from your income. Form 1040ez booklet You used part of the cash gifts to pay for repairs to your home. Form 1040ez booklet There were no limits or restrictions on how you could use the cash gifts. Form 1040ez booklet Because it was an excludable gift, the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. Form 1040ez booklet Insurance payments for living expenses. Form 1040ez booklet   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. Form 1040ez booklet You lose the use of your main home because of a casualty. Form 1040ez booklet Government authorities do not allow you access to your main home because of a casualty or threat of one. Form 1040ez booklet Inclusion in income. Form 1040ez booklet   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. Form 1040ez booklet Report this amount on Form 1040, line 21. Form 1040ez booklet However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. Form 1040ez booklet See Qualified disaster relief payments, under Disaster Area Losses in Publication 547. Form 1040ez booklet   A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. Form 1040ez booklet Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. Form 1040ez booklet Generally, these expenses include the amounts you pay for the following. Form 1040ez booklet Rent for suitable housing. Form 1040ez booklet Transportation. Form 1040ez booklet Food. Form 1040ez booklet Utilities. Form 1040ez booklet Miscellaneous services. Form 1040ez booklet Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one. Form 1040ez booklet Example. Form 1040ez booklet As a result of a fire, you vacated your apartment for a month and moved to a motel. Form 1040ez booklet You normally pay $525 a month for rent. Form 1040ez booklet None was charged for the month the apartment was vacated. Form 1040ez booklet Your motel rent for this month was $1,200. Form 1040ez booklet You normally pay $200 a month for food. Form 1040ez booklet Your food expenses for the month you lived in the motel were $400. Form 1040ez booklet You received $1,100 from your insurance company to cover your living expenses. Form 1040ez booklet You determine the payment you must include in income as follows. Form 1040ez booklet 1) Insurance payment for living expenses $1,100 2) Actual expenses during the month you are unable to use your home because of fire 1,600   3) Normal living expenses 725   4) Temporary increase in living  expenses: Subtract line 3 from line 2 875 5) Amount of payment includible  in income: Subtract line 4  from line 1 $ 225 Tax year of inclusion. Form 1040ez booklet   You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment. Form 1040ez booklet Example. Form 1040ez booklet Your main home was destroyed by a tornado in August 2011. Form 1040ez booklet You regained use of your home in November 2012. Form 1040ez booklet The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. Form 1040ez booklet You include this amount in income on your 2012 Form 1040. Form 1040ez booklet If, in 2013, you receive further payments to cover the living expenses you had in 2011 and 2012, you must include those payments in income on your 2013 Form 1040. Form 1040ez booklet Disaster relief. Form 1040ez booklet   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. Form 1040ez booklet Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Form 1040ez booklet For more information, see Disaster Area Losses in Publication 547. Form 1040ez booklet Disaster unemployment assistance payments are unemployment benefits that are taxable. Form 1040ez booklet Generally, disaster relief grants and qualified disaster mitigation payments made under the Robert T. Form 1040ez booklet Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not includible in your income. Form 1040ez booklet See Disaster Area Losses in Publication 547. Form 1040ez booklet Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you receive your actual reimbursement. Form 1040ez booklet This section explains the adjustment you may have to make. Form 1040ez booklet Actual reimbursement less than expected. Form 1040ez booklet   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. Form 1040ez booklet Example. Form 1040ez booklet Your personal car had an FMV of $2,000 when it was destroyed in a collision with another car in 2012. Form 1040ez booklet The accident was due to the negligence of the other driver. Form 1040ez booklet At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. Form 1040ez booklet You did not have a deductible loss in 2012. Form 1040ez booklet In January 2013, the court awarded you a judgment of $2,000. Form 1040ez booklet However, in July it became apparent that you will be unable to collect any amount from the other driver. Form 1040ez booklet You can deduct the loss in 2013 subject to the limits discussed later. Form 1040ez booklet Actual reimbursement more than expected. Form 1040ez booklet   If you later receive more reimbursement than you expected after you claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Form 1040ez booklet However, if any part of the original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Form 1040ez booklet You do not refigure your tax for the year you claimed the deduction. Form 1040ez booklet For more information, see Recoveries in chapter 12. Form 1040ez booklet 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. Form 1040ez booklet If you have already taken a deduction for a loss and you receive the reimbursement in a later year, you may have to include the gain in your income for the later year. Form 1040ez booklet Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. Form 1040ez booklet See Figuring a Gain in Publication 547 for more information on how to treat a gain from the reimbursement of a casualty or theft. Form 1040ez booklet Actual reimbursement same as expected. Form 1040ez booklet   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. Form 1040ez booklet Example. Form 1040ez booklet In December 2013, you had a collision while driving your personal car. Form 1040ez booklet Repairs to the car cost $950. Form 1040ez booklet You had $100 deductible collision insurance. Form 1040ez booklet Your insurance company agreed to reimburse you for the rest of the damage. Form 1040ez booklet Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. Form 1040ez booklet Due to the $100 rule (discussed later under Deduction Limits ), you cannot deduct the $100 you paid as the deductible. Form 1040ez booklet When you receive the $850 from the insurance company in 2014, do not report it as income. Form 1040ez booklet Single Casualty on Multiple Properties Personal property. Form 1040ez booklet   Personal property is any property that is not real property. Form 1040ez booklet If your personal property is stolen or is damaged or destroyed by a casualty, you must figure your loss separately for each item of property. Form 1040ez booklet Then combine these separate losses to figure the total loss from that casualty or theft. Form 1040ez booklet Example. Form 1040ez booklet A fire in your home destroyed an upholstered chair, an oriental rug, and an antique table. Form 1040ez booklet You did not have fire insurance to cover your loss. Form 1040ez booklet (This was the only casualty or theft you had during the year. Form 1040ez booklet ) You paid $750 for the chair and you established that it had an FMV of $500 just before the fire. Form 1040ez booklet The rug cost $3,000 and had an FMV of $2,500 just before the fire. Form 1040ez booklet You bought the table at an auction for $100 before discovering it was an antique. Form 1040ez booklet It had been appraised at $900 before the fire. Form 1040ez booklet You figure your loss on each of these items as follows:     Chair Rug Table 1) Basis (cost) $750 $3,000 $100 2) FMV before fire $500 $2,500 $900 3) FMV after fire –0– –0– –0– 4) Decrease in FMV $500 $2,500 $900 5) Loss (smaller of (1) or  (4)) $500 $2,500 $100           6) Total loss     $3,100 Real property. Form 1040ez booklet   In figuring a casualty loss on personal-use real property, treat the entire property (including any improvements, such as buildings, trees, and shrubs) as one item. Form 1040ez booklet Figure the loss using the smaller of the adjusted basis or the decrease in FMV of the entire property. Form 1040ez booklet Example. Form 1040ez booklet You bought your home a few years ago. Form 1040ez booklet You paid $160,000 ($20,000 for the land and $140,000 for the house). Form 1040ez booklet You also spent $2,000 for landscaping. Form 1040ez booklet This year a fire destroyed your home. Form 1040ez booklet The fire also damaged the shrubbery and trees in your yard. Form 1040ez booklet The fire was your only casualty or theft loss this year. Form 1040ez booklet Competent appraisers valued the property as a whole at $200,000 before the fire, but only $30,000 after the fire. Form 1040ez booklet (The loss to your household furnishings is not shown in this example. Form 1040ez booklet It would be figured separately on each item, as explained earlier under Personal property . Form 1040ez booklet ) Shortly after the fire, the insurance company paid you $155,000 for the loss. Form 1040ez booklet You figure your casualty loss as follows: 1) Adjusted basis of the entire property (land, building, and landscaping) $162,000 2) FMV of entire property before fire $200,000 3) FMV of entire property after fire 30,000 4) Decrease in FMV of entire  property $170,000 5) Loss (smaller of (1) or (4)) $162,000 6) Subtract insurance 155,000 7) Amount of loss after reimbursement $7,000 Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. Form 1040ez booklet If the loss was to property for your personal use or your family's use, there are two limits on the amount you can deduct for your casualty or theft loss. Form 1040ez booklet You must reduce each casualty or theft loss by $100 ($100 rule). Form 1040ez booklet You must further reduce the total of all your casualty or theft losses by 10% of your adjusted gross income (10% rule). Form 1040ez booklet You make these reductions on Form 4684. Form 1040ez booklet These rules are explained next and Table 25-1 summarizes how to apply the $100 rule and the 10% rule in various situations. Form 1040ez booklet For more detailed explanations and examples, see Publication 547. Form 1040ez booklet Table 25-1. Form 1040ez booklet How To Apply the Deduction Limits for Personal-Use Property   $100 Rule 10% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. Form 1040ez booklet Apply this rule after you have figured the amount of your loss. Form 1040ez booklet You must reduce your total casualty or theft loss by 10% of your adjusted gross income. Form 1040ez booklet Apply this rule after you reduce each loss by $100 (the $100 rule). Form 1040ez booklet Single Event Apply this rule only once, even if many pieces of property are affected. Form 1040ez booklet Apply this rule only once, even if many pieces of property are affected. Form 1040ez booklet More Than One Event Apply to the loss from each event. Form 1040ez booklet Apply to the total of all your losses from all events. Form 1040ez booklet More Than One Person— With Loss From the Same Event (other than a married couple filing jointly) Apply separately to each person. Form 1040ez booklet Apply separately to each person. Form 1040ez booklet Married Couple—With Loss From the Same Event Filing Jointly Apply as if you were one person. Form 1040ez booklet Apply as if you were one person. Form 1040ez booklet Filing Separately Apply separately to each spouse. Form 1040ez booklet Apply separately to each spouse. Form 1040ez booklet More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. Form 1040ez booklet Apply separately to each owner of jointly owned property. Form 1040ez booklet Property used partly for business and partly for personal purposes. Form 1040ez booklet   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use part and for the business or income-producing part. Form 1040ez booklet You must figure each loss separately because the $100 rule and the 10% rule apply only to the loss on the personal-use part of the property. Form 1040ez booklet $100 Rule After you have figured your casualty or theft loss on personal-use property, you must reduce that loss by $100. Form 1040ez booklet This reduction applies to each total casualty or theft loss. Form 1040ez booklet It does not matter how many pieces of property are involved in an event. Form 1040ez booklet Only a single $100 reduction applies. Form 1040ez booklet Example. Form 1040ez booklet A hailstorm damages your home and your car. Form 1040ez booklet Determine the amount of loss, as discussed earlier, for each of these items. Form 1040ez booklet Since the losses are due to a single event, you combine the losses and reduce the combined amount by $100. Form 1040ez booklet Single event. Form 1040ez booklet   Generally, events closely related in origin cause a single casualty. Form 1040ez booklet It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. Form 1040ez booklet 10% Rule You must reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Form 1040ez booklet Apply this rule after you reduce each loss by $100. Form 1040ez booklet For more information, see the Form 4684 instructions. Form 1040ez booklet If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. Form 1040ez booklet Example 1. Form 1040ez booklet In June, you discovered that your house had been burglarized. Form 1040ez booklet Your loss after insurance reimbursement was $2,000. Form 1040ez booklet Your adjusted gross income for the year you discovered the theft is $29,500. Form 1040ez booklet You first apply the $100 rule and then the 10% rule. Form 1040ez booklet Figure your theft loss deduction as follows. Form 1040ez booklet 1) Loss after insurance $2,000 2) Subtract $100 100 3) Loss after $100 rule $1,900 4) Subtract 10% × $29,500 AGI 2,950 5) Theft loss deduction –0– You do not have a theft loss deduction because your loss after you apply the $100 rule ($1,900) is less than 10% of your adjusted gross income ($2,950). Form 1040ez booklet Example 2. Form 1040ez booklet In March, you had a car accident that totally destroyed your car. Form 1040ez booklet You did not have collision insurance on your car, so you did not receive any insurance reimbursement. Form 1040ez booklet Your loss on the car was $1,800. Form 1040ez booklet In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items stored there. Form 1040ez booklet Your loss on the basement items after reimbursement was $2,100. Form 1040ez booklet Your adjusted gross income for the year that the accident and fire occurred is $25,000. Form 1040ez booklet You figure your casualty loss deduction as follows. Form 1040ez booklet       Base-     Car ment 1) Loss $1,800 $2,100 2) Subtract $100 per incident 100 100 3) Loss after $100 rule $1,700 $2,000 4) Total loss $3,700 5) Subtract 10% × $25,000 AGI 2,500 6) Casualty loss deduction $1,200 Gains and losses. Form 1040ez booklet   If you had both gains and losses from casualties or thefts to personal-use property, you must compare your total gains to your total losses. Form 1040ez booklet Do this after you have reduced each loss by any reimbursements and by $100, but before you have reduced the losses by 10% of your adjusted gross income. Form 1040ez booklet Casualty or theft gains do not include gains you choose to postpone. Form 1040ez booklet See Publication 547 for information on the postponement of gain. Form 1040ez booklet Losses more than gains. Form 1040ez booklet   If your losses are more than your recognized gains, subtract your gains from your losses and reduce the result by 10% of your adjusted gross income. Form 1040ez booklet The rest, if any, is your deductible loss from personal-use property. Form 1040ez booklet Gains more than losses. Form 1040ez booklet   If your recognized gains are more than your losses, subtract your losses from your gains. Form 1040ez booklet The difference is treated as capital gain and must be reported on Schedule D (Form 1040). Form 1040ez booklet The 10% rule does not apply to your gains. Form 1040ez booklet When To Report Gains and Losses Gains. Form 1040ez booklet   If you receive an insurance or other reimbursement that is more than your adjusted basis in the destroyed or stolen property, you have a gain from the casualty or theft. Form 1040ez booklet You must include this gain in your income in the year you receive the reimbursement, unless you choose to postpone reporting the gain as explained in Publication 547. Form 1040ez booklet If you have a loss, see Table 25-2 . Form 1040ez booklet Table 25-2. Form 1040ez booklet When To Deduct a Loss IF you have a loss. Form 1040ez booklet . Form 1040ez booklet . Form 1040ez booklet THEN deduct it in the year. Form 1040ez booklet . Form 1040ez booklet . Form 1040ez booklet from a casualty, the loss occurred. Form 1040ez booklet in a federally declared disaster area, the disaster occurred or the year immediately before the disaster. Form 1040ez booklet from a theft, the theft was discovered. Form 1040ez booklet on a deposit treated as a:   • casualty or any ordinary loss, a reasonable estimate can be made. Form 1040ez booklet • bad debt, deposits are totally worthless. Form 1040ez booklet Losses. Form 1040ez booklet   Generally, you can deduct a casualty loss that is not reimbursable only in the tax year in which the casualty occurred. Form 1040ez booklet This is true even if you do not repair or replace the damaged property until a later year. Form 1040ez booklet   You can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Form 1040ez booklet   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. Form 1040ez booklet Loss on deposits. Form 1040ez booklet   If your loss is a loss on deposits in an insolvent or bankrupt financial institution, see Loss on Deposits , earlier. Form 1040ez booklet Disaster Area Loss You generally must deduct a casualty loss in the year it occurred. Form 1040ez booklet However, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct the loss on your tax return or amended return for either of the following years. Form 1040ez booklet The year the disaster occurred. Form 1040ez booklet The year immediately preceding the year the disaster occurred. Form 1040ez booklet Gains. Form 1040ez booklet    Special rules apply if you choose to postpone reporting gain on property damaged or destroyed in a federally declared disaster area. Form 1040ez booklet For those special rules, see Publication 547. Form 1040ez booklet Postponed tax deadlines. Form 1040ez booklet   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Form 1040ez booklet The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. Form 1040ez booklet   If any tax deadline is postponed, the IRS will publicize the postponement in your area by publishing a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Form 1040ez booklet Go to www. Form 1040ez booklet irs. Form 1040ez booklet gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Form 1040ez booklet Who is eligible. Form 1040ez booklet   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Form 1040ez booklet Any individual whose main home is located in a covered disaster area (defined next). Form 1040ez booklet Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Form 1040ez booklet Any individual who is a relief worker affiliated with a recognized government or philanthropic organization who is assisting in a covered disaster area. Form 1040ez booklet 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. Form 1040ez booklet The main home or principal place of business does not have to be located in the covered disaster area. Form 1040ez booklet 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. Form 1040ez booklet The spouse on a joint return with a taxpayer who is eligible for postponements. Form 1040ez booklet Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose records necessary to meet a postponed tax deadline are located in the covered disaster area. Form 1040ez booklet Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Form 1040ez booklet Any other person determined by the IRS to be affected by a federally declared disaster. Form 1040ez booklet Covered disaster area. Form 1040ez booklet   This is an area of a federally declared disaster in which the IRS has decided to postpone tax deadlines for up to 1 year. Form 1040ez booklet Abatement of interest and penalties. Form 1040ez booklet   The IRS may abate the interest and penalties on underpaid income tax for the length of any postponement of tax deadlines. Form 1040ez booklet More information. Form 1040ez booklet   For more information, see Disaster Area Losses in Publication 547. Form 1040ez booklet How To Report Gains and Losses Use Form 4684 to report a gain or a deductible loss from a casualty or theft. Form 1040ez booklet If you have more than one casualty or theft, use a separate Form 4684 to determine your gain or loss for each event. Form 1040ez booklet Combine the gains and losses on one Form 4684. Form 1040ez booklet Follow the form instructions as to which lines to fill out. Form 1040ez booklet In addition, you must use the appropriate schedule to report a gain or loss. Form 1040ez booklet The schedule you use depends on whether you have a gain or loss. Form 1040ez booklet If you have a: Report it on: Gain Schedule D (Form 1040) Loss Schedule A (Form 1040) Adjustments to basis. Form 1040ez booklet   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. Form 1040ez booklet Amounts you spend to restore your property after a casualty increase your adjusted basis. Form 1040ez booklet See Adjusted Basis in chapter 13 for more information. Form 1040ez booklet Net operating loss (NOL). Form 1040ez booklet    If your casualty or theft loss deduction causes your deductions for the year to be more than your income for the year, you may have an NOL. Form 1040ez booklet You can use an NOL to lower your tax in an earlier year, allowing you to get a refund for tax you have already paid. Form 1040ez booklet Or, you can use it to lower your tax in a later year. Form 1040ez booklet You do not have to be in business to have an NOL from a casualty or theft loss. Form 1040ez booklet For more information, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Form 1040ez booklet Prev  Up  Next   Home   More Online Publications