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Form 1040x 2008

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Form 1040x 2008

Form 1040x 2008 11. Form 1040x 2008   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Form 1040x 2008 Nondeductible losses. Form 1040x 2008 Family pet. Form 1040x 2008 Progressive deterioration. Form 1040x 2008 Decline in market value of stock. Form 1040x 2008 Mislaid or lost property. Form 1040x 2008 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. Form 1040x 2008 Related persons. Form 1040x 2008 Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Form 1040x 2008 Covered disaster area. Form 1040x 2008 Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Form 1040x 2008 A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Form 1040x 2008 A theft occurs when property is stolen. Form 1040x 2008 A condemnation occurs when private property is legally taken for public use without the owner's consent. Form 1040x 2008 A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Form 1040x 2008 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. Form 1040x 2008 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. Form 1040x 2008 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. Form 1040x 2008 For more information, see Postponing Gain , later. Form 1040x 2008 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. Form 1040x 2008 Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Form 1040x 2008 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. Form 1040x 2008 Casualty. Form 1040x 2008   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Form 1040x 2008 A sudden event is one that is swift, not gradual or progressive. Form 1040x 2008 An unexpected event is one that is ordinarily unanticipated and unintended. Form 1040x 2008 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 1040x 2008 Deductible losses. Form 1040x 2008   Deductible casualty losses can result from a number of different causes, including the following. Form 1040x 2008 Airplane crashes. Form 1040x 2008 Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Form 1040x 2008 Earthquakes. Form 1040x 2008 Fires (but see Nondeductible losses next for exceptions). Form 1040x 2008 Floods. Form 1040x 2008 Freezing. Form 1040x 2008 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 1040x 2008 Lightning. Form 1040x 2008 Storms, including hurricanes and tornadoes. Form 1040x 2008 Terrorist attacks. Form 1040x 2008 Vandalism. Form 1040x 2008 Volcanic eruptions. Form 1040x 2008 Nondeductible losses. Form 1040x 2008   A casualty loss is not deductible if the damage or destruction is caused by the following. Form 1040x 2008 Accidentally breaking articles such as glassware or china under normal conditions. Form 1040x 2008 A family pet (explained below). Form 1040x 2008 A fire if you willfully set it, or pay someone else to set it. Form 1040x 2008 A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Form 1040x 2008 The same is true if the willful act or willful negligence of someone acting for you caused the accident. Form 1040x 2008 Progressive deterioration (explained below). Form 1040x 2008 Family pet. Form 1040x 2008   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. Form 1040x 2008 Example. Form 1040x 2008 You keep your horse in your yard. Form 1040x 2008 The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Form 1040x 2008 Some of the trees were completely girdled and died. Form 1040x 2008 Because the damage was not unexpected or unusual, the loss is not deductible. Form 1040x 2008 Progressive deterioration. Form 1040x 2008   Loss of property due to progressive deterioration is not deductible as a casualty loss. Form 1040x 2008 This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Form 1040x 2008 Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Form 1040x 2008 However, weather-related conditions or disease may cause another type of involuntary conversion. Form 1040x 2008 See Other Involuntary Conversions , later. Form 1040x 2008 Theft. Form 1040x 2008   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Form 1040x 2008 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. Form 1040x 2008 You do not need to show a conviction for theft. Form 1040x 2008   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Form 1040x 2008 The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Form 1040x 2008 Decline in market value of stock. Form 1040x 2008   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 1040x 2008 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 1040x 2008 You report a capital loss on Schedule D (Form 1040). Form 1040x 2008 For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Form 1040x 2008 Mislaid or lost property. Form 1040x 2008   The simple disappearance of money or property is not a theft. Form 1040x 2008 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 1040x 2008 Example. Form 1040x 2008 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Form 1040x 2008 The diamond falls from the ring and is never found. Form 1040x 2008 The loss of the diamond is a casualty. Form 1040x 2008 Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Form 1040x 2008 The following is a discussion of some losses you can deduct and some you cannot deduct. Form 1040x 2008 Livestock or produce bought for resale. Form 1040x 2008   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Form 1040x 2008 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. Form 1040x 2008 You cannot take a separate deduction. Form 1040x 2008 Livestock, plants, produce, and crops raised for sale. Form 1040x 2008   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Form 1040x 2008 You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Form 1040x 2008   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. Form 1040x 2008 You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Form 1040x 2008 The uniform capitalization rules are discussed in chapter 6. Form 1040x 2008   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. Form 1040x 2008 You get the deduction by omitting the item from your inventory at the close of your tax year. Form 1040x 2008 You cannot take a separate casualty or theft deduction. Form 1040x 2008 Income loss. Form 1040x 2008   A loss of future income is not deductible. Form 1040x 2008 Example. Form 1040x 2008 A severe flood destroyed your crops. Form 1040x 2008 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 . Form 1040x 2008 You estimate that the crop loss will reduce your farm income by $25,000. Form 1040x 2008 This loss of future income is also not deductible. Form 1040x 2008 Loss of timber. Form 1040x 2008   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Form 1040x 2008 If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Form 1040x 2008 See Postponing Gain , later. Form 1040x 2008 Property used in farming. Form 1040x 2008   Casualty and theft losses of property used in your farm business usually result in deductible losses. Form 1040x 2008 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. Form 1040x 2008 See How To Figure a Loss , later. Form 1040x 2008 Raised draft, breeding, dairy, or sporting animals. Form 1040x 2008   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. Form 1040x 2008 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. Form 1040x 2008 You use inventories to determine your income and you included the animals in your inventory. Form 1040x 2008 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. Form 1040x 2008 When you include livestock in inventory, its last inventory value is its basis. Form 1040x 2008 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. Form 1040x 2008 You cannot take a separate deduction. Form 1040x 2008 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. Form 1040x 2008 Farm property. Form 1040x 2008   Farm property is the property you use in your farming business. Form 1040x 2008 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. Form 1040x 2008   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Form 1040x 2008 However, the deduction limits, discussed later, do not apply to farm property. Form 1040x 2008 Personal-use property. Form 1040x 2008   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. Form 1040x 2008 The following items are examples of personal-use property: Your main home. Form 1040x 2008 Furniture and electronics used in your main home and not used in a home office or for business purposes. Form 1040x 2008 Clothing and jewelry. Form 1040x 2008 An automobile used for nonbusiness purposes. Form 1040x 2008 You figure the casualty or theft loss on this property by taking the following steps. Form 1040x 2008 Determine your adjusted basis in the property before the casualty or theft. Form 1040x 2008 Determine the decrease in fair market value of the property as a result of the casualty or theft. Form 1040x 2008 From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Form 1040x 2008 You must apply the deduction limits, discussed later, to determine your deductible loss. Form 1040x 2008    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Form 1040x 2008 It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Form 1040x 2008 Adjusted basis. Form 1040x 2008   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Form 1040x 2008 For more information about adjusted basis, see chapter 6. Form 1040x 2008 Decrease in fair market value (FMV). Form 1040x 2008   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Form 1040x 2008 FMV is defined in chapter 10 under Payments Received or Considered Received . Form 1040x 2008 Appraisal. Form 1040x 2008   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Form 1040x 2008 But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Form 1040x 2008   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 1040x 2008 The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Form 1040x 2008 This information is needed to limit any deduction to the actual loss resulting from damage to the property. Form 1040x 2008 Cost of cleaning up or making repairs. Form 1040x 2008   The cost of cleaning up after a casualty is not part of a casualty loss. Form 1040x 2008 Neither is the cost of repairing damaged property after a casualty. Form 1040x 2008 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 1040x 2008 The repairs are actually made. Form 1040x 2008 The repairs are necessary to bring the property back to its condition before the casualty. Form 1040x 2008 The amount spent for repairs is not excessive. Form 1040x 2008 The repairs fix the damage only. Form 1040x 2008 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 1040x 2008 Related expenses. Form 1040x 2008   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. Form 1040x 2008 However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Form 1040x 2008 Separate computations for more than one item of property. Form 1040x 2008   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. Form 1040x 2008 Then combine the losses to determine your total loss. Form 1040x 2008    There is an exception to this rule for personal-use real property. Form 1040x 2008 See Exception for personal-use real property, later. Form 1040x 2008 Example. Form 1040x 2008 A fire on your farm damaged a tractor and the barn in which it was stored. Form 1040x 2008 The tractor had an adjusted basis of $3,300. Form 1040x 2008 Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Form 1040x 2008 The barn had an adjusted basis of $28,000. Form 1040x 2008 Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Form 1040x 2008 You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Form 1040x 2008 Figure your deductible casualty loss separately for the two items of property. Form 1040x 2008     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. Form 1040x 2008   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. Form 1040x 2008 Figure the loss using the smaller of the following. Form 1040x 2008 The decrease in FMV of the entire property. Form 1040x 2008 The adjusted basis of the entire property. Form 1040x 2008 Example. Form 1040x 2008 You bought a farm in 1990 for $160,000. Form 1040x 2008 The adjusted basis of the residential part is now $128,000. Form 1040x 2008 In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Form 1040x 2008 The adjusted basis of the residential part includes the $7,500. Form 1040x 2008 The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Form 1040x 2008 The trees were not covered by insurance. Form 1040x 2008 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. Form 1040x 2008   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Form 1040x 2008 You do not have a casualty or theft loss to the extent you are reimbursed. Form 1040x 2008   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 1040x 2008 You must reduce your loss even if you do not receive payment until a later tax year. Form 1040x 2008    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. Form 1040x 2008 You may have to include a portion of these payments in your income. Form 1040x 2008 See Insurance payments for living expenses in Publication 547 for details. Form 1040x 2008 Disaster relief. Form 1040x 2008   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 1040x 2008 Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Form 1040x 2008   Generally, disaster relief grants received under the Robert T. Form 1040x 2008 Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Form 1040x 2008 See Federal disaster relief grants , later, under Disaster Area Losses . Form 1040x 2008   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Form 1040x 2008 See Qualified disaster relief payments , later, under Disaster Area Losses . Form 1040x 2008 Reimbursement received after deducting loss. Form 1040x 2008   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. Form 1040x 2008 Actual reimbursement less than expected. Form 1040x 2008   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 1040x 2008 Actual reimbursement more than expected. Form 1040x 2008   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. Form 1040x 2008 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. Form 1040x 2008 Do not refigure your tax for the year you claimed the deduction. Form 1040x 2008 See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Form 1040x 2008 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 1040x 2008 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. Form 1040x 2008 Actual reimbursement same as expected. Form 1040x 2008   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 1040x 2008 Lump-sum reimbursement. Form 1040x 2008   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. Form 1040x 2008 Figure the gain or loss separately for each asset that has a separate basis. Form 1040x 2008 Adjustments to basis. Form 1040x 2008   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 1040x 2008 The result is your adjusted basis in the property. Form 1040x 2008 Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Form 1040x 2008 See Adjusted Basis in chapter 6 for more information. Form 1040x 2008 Example. Form 1040x 2008 You built a new silo for $25,000. Form 1040x 2008 This is the basis in your silo because that is the total cost you incurred to build it. Form 1040x 2008 During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Form 1040x 2008 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. Form 1040x 2008 Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Form 1040x 2008 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). Form 1040x 2008 There are two limits on the deduction for casualty or theft loss of personal-use property. Form 1040x 2008 You figure these limits on Form 4684. Form 1040x 2008 $100 rule. Form 1040x 2008   You must reduce each casualty or theft loss on personal-use property by $100. Form 1040x 2008 This rule applies after you have subtracted any reimbursement. Form 1040x 2008 10% rule. Form 1040x 2008   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Form 1040x 2008 Apply this rule after you reduce each loss by $100. Form 1040x 2008 Adjusted gross income is on line 38 of Form 1040. Form 1040x 2008 Example. Form 1040x 2008 In June, you discovered that your house had been burglarized. Form 1040x 2008 Your loss after insurance reimbursement was $2,000. Form 1040x 2008 Your adjusted gross income for the year you discovered the burglary is $57,000. Form 1040x 2008 Figure your theft loss deduction as follows: 1. Form 1040x 2008 Loss after insurance $2,000 2. Form 1040x 2008 Subtract $100 100 3. Form 1040x 2008 Loss after $100 rule $1,900 4. Form 1040x 2008 Subtract 10% (. Form 1040x 2008 10) × $57,000 AGI $5,700 5. Form 1040x 2008 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). Form 1040x 2008    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. Form 1040x 2008 See 10% Rule in Publication 547. Form 1040x 2008 When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Form 1040x 2008 You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Form 1040x 2008 However, losses in federally declared disaster areas are subject to different rules. Form 1040x 2008 See Disaster Area Losses , later, for an exception. Form 1040x 2008 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 1040x 2008 Leased property. Form 1040x 2008   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. Form 1040x 2008 This is true even if the loss occurred or the liability was paid in a different year. Form 1040x 2008 You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Form 1040x 2008 Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Form 1040x 2008 Example. Form 1040x 2008 Robert leased a tractor from First Implement, Inc. Form 1040x 2008 , for use in his farm business. Form 1040x 2008 The tractor was destroyed by a tornado in June 2012. Form 1040x 2008 The loss was not insured. Form 1040x 2008 First Implement billed Robert for the fair market value of the tractor on the date of the loss. Form 1040x 2008 Robert disagreed with the bill and refused to pay it. Form 1040x 2008 First Implement later filed suit in court against Robert. Form 1040x 2008 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. Form 1040x 2008 Robert paid $20,000 in June 2013. Form 1040x 2008 He can claim the $20,000 as a loss on his 2013 tax return. Form 1040x 2008 Net operating loss (NOL). Form 1040x 2008   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Form 1040x 2008 An NOL can be carried back or carried forward and deducted from income in other years. Form 1040x 2008 See Publication 536 for more information on NOLs. Form 1040x 2008 Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Form 1040x 2008 You must have records to support the amount you claim for the loss. Form 1040x 2008 Casualty loss proof. Form 1040x 2008   For a casualty loss, your records should show all the following information. Form 1040x 2008 The type of casualty (car accident, fire, storm, etc. Form 1040x 2008 ) and when it occurred. Form 1040x 2008 That the loss was a direct result of the casualty. Form 1040x 2008 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 1040x 2008 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Form 1040x 2008 Theft loss proof. Form 1040x 2008   For a theft loss, your records should show all the following information. Form 1040x 2008 When you discovered your property was missing. Form 1040x 2008 That your property was stolen. Form 1040x 2008 That you were the owner of the property. Form 1040x 2008 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Form 1040x 2008 Figuring a Gain A casualty or theft may result in a taxable gain. Form 1040x 2008 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. Form 1040x 2008 You generally report your gain as income in the year you receive the reimbursement. Form 1040x 2008 However, depending on the type of property you receive, you may not have to report your gain. Form 1040x 2008 See Postponing Gain , later. Form 1040x 2008 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. Form 1040x 2008 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. Form 1040x 2008 Amount you receive. Form 1040x 2008   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Form 1040x 2008 It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Form 1040x 2008 Example. Form 1040x 2008 A tornado severely damaged your barn. Form 1040x 2008 The adjusted basis of the barn was $25,000. Form 1040x 2008 Your insurance company reimbursed you $40,000 for the damaged barn. Form 1040x 2008 However, you had legal expenses of $2,000 to collect that insurance. Form 1040x 2008 Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Form 1040x 2008 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. Form 1040x 2008 Some of these are discussed in the following paragraphs. Form 1040x 2008 Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Form 1040x 2008 You report the gain or deduct the loss on your tax return for the year you realize it. Form 1040x 2008 However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Form 1040x 2008 See Postponing Gain , later. Form 1040x 2008 Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Form 1040x 2008 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. Form 1040x 2008 The owner receives a condemnation award (money or property) in exchange for the property taken. Form 1040x 2008 A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Form 1040x 2008 Threat of condemnation. Form 1040x 2008   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. Form 1040x 2008 Main home condemned. Form 1040x 2008   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. Form 1040x 2008 For information on this exclusion, see Publication 523. Form 1040x 2008 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. Form 1040x 2008 See Postponing Gain , later. Form 1040x 2008 (You cannot deduct a loss from the condemnation of your main home. Form 1040x 2008 ) More information. Form 1040x 2008   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Form 1040x 2008 Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Form 1040x 2008 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. Form 1040x 2008 Livestock Losses Diseased livestock. Form 1040x 2008   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. Form 1040x 2008 If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Form 1040x 2008 Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Form 1040x 2008 If you replace the livestock, you may be able to postpone reporting the gain. Form 1040x 2008 See Postponing Gain below. Form 1040x 2008 Reporting dispositions of diseased livestock. Form 1040x 2008   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. Form 1040x 2008 You must also include other information on this statement. Form 1040x 2008 See How To Postpone Gain , later, under Postponing Gain . Form 1040x 2008 Weather-related sales of livestock. Form 1040x 2008   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. Form 1040x 2008 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. Form 1040x 2008 Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Form 1040x 2008 If you replace the livestock, you may be able to postpone reporting the gain. Form 1040x 2008 See Postponing Gain below. Form 1040x 2008 Example. Form 1040x 2008 It is your usual business practice to sell five of your dairy animals during the year. Form 1040x 2008 This year you sold 20 dairy animals because of drought. Form 1040x 2008 The sale of 15 animals is treated as an involuntary conversion. Form 1040x 2008    If you do not replace the livestock, you may be able to report the gain in the following year's income. Form 1040x 2008 This rule also applies to other livestock (including poultry). Form 1040x 2008 See Sales Caused by Weather-Related Conditions in chapter 3. Form 1040x 2008 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. Form 1040x 2008 Treat the loss as a loss from an involuntary conversion. Form 1040x 2008 The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Form 1040x 2008 You deduct the loss on the return for the year the seedlings died. Form 1040x 2008 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. Form 1040x 2008 Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Form 1040x 2008 You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Form 1040x 2008 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. Form 1040x 2008 If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Form 1040x 2008 To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Form 1040x 2008 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. Form 1040x 2008 Example 1. Form 1040x 2008 In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Form 1040x 2008 In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Form 1040x 2008 In May of this year, the property was worth $100,000. Form 1040x 2008 In June the barn and silo were destroyed by a tornado. Form 1040x 2008 At the time of the tornado, you had an adjusted basis of $0 in the property. Form 1040x 2008 You received $85,000 from the insurance company. Form 1040x 2008 You had a gain of $85,000 ($85,000 – $0). Form 1040x 2008 You spent $80,000 to rebuild the barn and silo. Form 1040x 2008 Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Form 1040x 2008 Example 2. Form 1040x 2008 In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Form 1040x 2008 You made no further improvements or additions to it. Form 1040x 2008 When a storm destroyed the cabin this January, the cabin was worth $250,000. Form 1040x 2008 You received $146,000 from the insurance company in March. Form 1040x 2008 You had a gain of $128,000 ($146,000 − $18,000). Form 1040x 2008 You spent $144,000 to rebuild the cabin. Form 1040x 2008 Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Form 1040x 2008 Buying replacement property from a related person. Form 1040x 2008   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). Form 1040x 2008 This rule applies to the following taxpayers. Form 1040x 2008 C corporations. Form 1040x 2008 Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Form 1040x 2008 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. Form 1040x 2008 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. Form 1040x 2008 If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Form 1040x 2008 If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Form 1040x 2008 Exception. Form 1040x 2008   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. Form 1040x 2008 Related persons. Form 1040x 2008   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. Form 1040x 2008 For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Form 1040x 2008 Death of a taxpayer. Form 1040x 2008   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. Form 1040x 2008 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. Form 1040x 2008 Replacement Property You must buy replacement property for the specific purpose of replacing your property. Form 1040x 2008 Your replacement property must be similar or related in service or use to the property it replaces. Form 1040x 2008 You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Form 1040x 2008 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. Form 1040x 2008 Property you acquire by gift or inheritance does not qualify as replacement property. Form 1040x 2008 Owner-user. Form 1040x 2008   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. Form 1040x 2008 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. Form 1040x 2008 A grinding mill that replaces a tractor does not qualify. Form 1040x 2008 Neither does a breeding or draft animal that replaces a dairy cow. Form 1040x 2008 Soil or other environmental contamination. Form 1040x 2008   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. Form 1040x 2008 Weather-related conditions. Form 1040x 2008   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. Form 1040x 2008 Example. Form 1040x 2008 Each year you normally sell 25 cows from your beef herd. Form 1040x 2008 However, this year you had to sell 50 cows. Form 1040x 2008 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. Form 1040x 2008 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. Form 1040x 2008 Standing crop destroyed by casualty. Form 1040x 2008   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. Form 1040x 2008 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). Form 1040x 2008 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. Form 1040x 2008 Timber loss. Form 1040x 2008   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. Form 1040x 2008 If you bought the standing timber within the replacement period, you can postpone reporting the gain. Form 1040x 2008 Business or income-producing property located in a federally declared disaster area. Form 1040x 2008   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. Form 1040x 2008 For more information, see Disaster Area Losses in Publication 547. Form 1040x 2008 Substituting replacement property. Form 1040x 2008   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. Form 1040x 2008 This is true even if you acquire the other property within the replacement period. Form 1040x 2008 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. Form 1040x 2008 Basis of replacement property. Form 1040x 2008   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Form 1040x 2008 In this way, tax on the gain is postponed until you dispose of the replacement property. Form 1040x 2008 Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Form 1040x 2008 This is the replacement period. Form 1040x 2008 The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Form 1040x 2008 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. Form 1040x 2008 Example. Form 1040x 2008 You are a calendar year taxpayer. Form 1040x 2008 While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Form 1040x 2008 You discovered the theft when you returned to your farm on November 11, 2012. Form 1040x 2008 Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Form 1040x 2008 You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Form 1040x 2008 Main home in disaster area. Form 1040x 2008   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. Form 1040x 2008 See Disaster Area Losses , later. Form 1040x 2008 Property in the Midwestern disaster areas. Form 1040x 2008   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. Form 1040x 2008 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Form 1040x 2008 Property in the Kansas disaster area. Form 1040x 2008   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. Form 1040x 2008 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Form 1040x 2008 Property in the Hurricane Katrina disaster area. Form 1040x 2008   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. Form 1040x 2008 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Form 1040x 2008 Weather-related sales of livestock in an area eligible for federal assistance. Form 1040x 2008   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. Form 1040x 2008 The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Form 1040x 2008   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Form 1040x 2008 R. Form 1040x 2008 B. Form 1040x 2008 529, available at  www. Form 1040x 2008 irs. Form 1040x 2008 gov/irb/2006-39_IRB/ar11. Form 1040x 2008 html. Form 1040x 2008 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. Form 1040x 2008 gov. Form 1040x 2008 Condemnation. Form 1040x 2008   The replacement period for a condemnation begins on the earlier of the following dates. Form 1040x 2008 The date on which you disposed of the condemned property. Form 1040x 2008 The date on which the threat of condemnation began. Form 1040x 2008 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. Form 1040x 2008 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. Form 1040x 2008 Business or investment real property. Form 1040x 2008   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. Form 1040x 2008 Extension. Form 1040x 2008   You can apply for an extension of the replacement period. Form 1040x 2008 Send your written application to the Internal Revenue Service Center where you file your tax return. Form 1040x 2008 See your tax return instructions for the address. Form 1040x 2008 Include all the details about your need for an extension. Form 1040x 2008 Make your application before the end of the replacement period. Form 1040x 2008 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. Form 1040x 2008 You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Form 1040x 2008 How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Form 1040x 2008 You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Form 1040x 2008 Required statement. Form 1040x 2008   You should attach a statement to your return for the year you have the gain. Form 1040x 2008 This statement should include all the following information. Form 1040x 2008 The date and details of the casualty, theft, or other involuntary conversion. Form 1040x 2008 The insurance or other reimbursement you received. Form 1040x 2008 How you figured the gain. Form 1040x 2008 Replacement property acquired before return filed. Form 1040x 2008   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. Form 1040x 2008 The replacement property. Form 1040x 2008 The postponed gain. Form 1040x 2008 The basis adjustment that reflects the postponed gain. Form 1040x 2008 Any gain you are reporting as income. Form 1040x 2008 Replacement property acquired after return filed. Form 1040x 2008   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. Form 1040x 2008   You should then attach another statement to your return for the year in which you buy the replacement property. Form 1040x 2008 This statement should contain detailed information on the replacement property. Form 1040x 2008 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. Form 1040x 2008 Include in the statement detailed information on the replacement property bought in that year. Form 1040x 2008 Reporting weather-related sales of livestock. Form 1040x 2008   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. Form 1040x 2008 Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Form 1040x 2008 The gain realized on the sale or exchange. Form 1040x 2008 The number and kind of livestock sold or exchanged. Form 1040x 2008 The number of livestock of each kind you would have sold or exchanged under your usual business practice. Form 1040x 2008   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Form 1040x 2008 The dates you bought the replacement property. Form 1040x 2008 The cost of the replacement property. Form 1040x 2008 Description of the replacement property (for example, the number and kind of the replacement livestock). Form 1040x 2008 Amended return. Form 1040x 2008   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Form 1040x 2008 You do not acquire replacement property within the replacement period, plus extensions. Form 1040x 2008 On this amended return, you must report the gain and pay any additional tax due. Form 1040x 2008 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. Form 1040x 2008 On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Form 1040x 2008 Disaster Area Losses Special rules apply to federally declared disaster area losses. Form 1040x 2008 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. Form 1040x 2008 Stafford Disaster Relief and Emergency Assistance Act. Form 1040x 2008 It includes a major disaster or emergency declaration under the act. Form 1040x 2008 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. Form 1040x 2008 fema. Form 1040x 2008 gov. Form 1040x 2008 This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Form 1040x 2008 For other special rules, see Disaster Area Losses in Publication 547. Form 1040x 2008 When to deduct the loss. Form 1040x 2008   You generally must deduct a casualty loss in the year it occurred. Form 1040x 2008 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. Form 1040x 2008 If you make this choice, the loss is treated as having occurred in the preceding year. Form 1040x 2008    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. Form 1040x 2008   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Form 1040x 2008 The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Form 1040x 2008 The due date (with extensions) for the return for the preceding tax year. Form 1040x 2008 Federal disaster relief grants. Form 1040x 2008   Do not include post-disaster relief grants received under the Robert T. Form 1040x 2008 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. Form 1040x 2008 Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Form 1040x 2008 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. Form 1040x 2008 Unemployment assistance payments under the Act are taxable unemployment compensation. Form 1040x 2008 Qualified disaster relief payments. Form 1040x 2008   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. Form 1040x 2008 These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Form 1040x 2008 No withholding applies to these payments. Form 1040x 2008   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Form 1040x 2008 Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Form 1040x 2008 Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Form 1040x 2008 (A personal residence can be a rented residence or one you own. Form 1040x 2008 ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Form 1040x 2008   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. Form 1040x 2008    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. Form 1040x 2008 Qualified disaster mitigation payments. Form 1040x 2008   Qualified disaster mitigation payments made under the Robert T. Form 1040x 2008 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. Form 1040x 2008 These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Form 1040x 2008 You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Form 1040x 2008 Sale of property under hazard mitigation program. Form 1040x 2008   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. Form 1040x 2008 You report the gain or deduct the loss on your tax return for the year you realize it. Form 1040x 2008 (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Form 1040x 2008 ) 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. Form 1040x 2008 See Postponing Gain , earlier, for the rules that apply. Form 1040x 2008 Other federal assistance programs. Form 1040x 2008    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Form 1040x 2008 Postponed tax deadlines. Form 1040x 2008   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Form 1040x 2008 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. Form 1040x 2008   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). Form 1040x 2008 Go to http://www. Form 1040x 2008 irs. Form 1040x 2008 gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Form 1040x 2008 Who is eligible. Form 1040x 2008   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Form 1040x 2008 Any individual whose main home is located in a covered disaster area (defined next). Form 1040x 2008 Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Form 1040x 2008 Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Form 1040x 2008 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 1040x 2008 The main home or principal place of business does not have to be located in the covered disaster area. Form 1040x 2008 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 1040x 2008 The spouse on a joint return with a taxpayer who is eligible for postponements. Form 1040x 2008 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. Form 1040x 2008 Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Form 1040x 2008 Any other person determined by the IRS to be affected by a federally declared disaster. Form 1040x 2008 Covered disaster area. Form 1040x 2008   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. Form 1040x 2008 Abatement of interest and penalties. Form 1040x 2008   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Form 1040x 2008 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. Form 1040x 2008 Form 4684. Form 1040x 2008   Use this form to report your gains and losses from casualties and thefts. Form 1040x 2008 Form 4797. Form 1040x 2008   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. Form 1040x 2008 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. Form 1040x 2008 Form 8949. Form 1040x 2008   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Form 1040x 2008 Schedule A (Form 1040). Form 1040x 2008   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. Form 1040x 2008 Schedule D (Form 1040). Form 1040x 2008   Use this form to carry over the following gains. Form 1040x 2008 Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Form 1040x 2008 Net gain shown on Form 4684 from the casualty or theft of personal-use property. Form 1040x 2008    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Form 1040x 2008 Schedule F (Form 1040). Form 1040x 2008   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. Form 1040x 2008 Prev  Up  Next   Home   More Online Publications
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The Form 1040x 2008

Form 1040x 2008 Publication 502 - Main Content Table of Contents What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Form 1040x 2008 How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Spouse Dependent Decedent What Medical Expenses Are Includible?Abortion Acupuncture Alcoholism Ambulance Annual Physical Examination Artificial Limb Artificial Teeth Bandages Birth Control Pills Body Scan Braille Books and Magazines Breast Pumps and Supplies Breast Reconstruction Surgery Capital Expenses Car Chiropractor Christian Science Practitioner Contact Lenses Crutches Dental Treatment Diagnostic Devices Disabled Dependent Care Expenses Drug Addiction Drugs Eye Exam Eyeglasses Eye Surgery Fertility Enhancement Founder's Fee Guide Dog or Other Service Animal Health Institute Health Maintenance Organization (HMO) Hearing Aids Home Care Home Improvements Hospital Services Insurance Premiums Intellectually and Developmentally Disabled, Special Home for Laboratory Fees Lactation Expenses Lead-Based Paint Removal Learning Disability Legal Fees Lifetime Care—Advance Payments Lodging Long-Term Care Meals Medical Conferences Medical Information Plan Medicines Nursing Home Nursing Services Operations Optometrist Organ Donors Osteopath Oxygen Physical Examination Pregnancy Test Kit Prosthesis Psychiatric Care Psychoanalysis Psychologist Special Education Sterilization Stop-Smoking Programs Surgery Telephone Television Therapy Transplants Transportation Trips Tuition Vasectomy Vision Correction Surgery Weight-Loss Program Wheelchair Wig X-ray What Expenses Are Not Includible?Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Controlled Substances Cosmetic Surgery Dancing Lessons Diaper Service Electrolysis or Hair Removal Flexible Spending Account Funeral Expenses Future Medical Care Hair Transplant Health Club Dues Health Coverage Tax Credit Health Savings Accounts Household Help Illegal Operations and Treatments Insurance Premiums Maternity Clothes Medical Savings Account (MSA) Medicines and Drugs From Other Countries Nonprescription Drugs and Medicines Nutritional Supplements Personal Use Items Swimming Lessons Teeth Whitening Veterinary Fees Weight-Loss Program How Do You Treat Reimbursements?Insurance Reimbursement How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Sale of Medical Equipment or Property Damages for Personal Injuries Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons COBRA Premium Assistance Health Coverage Tax CreditWho Can Take This Credit? Qualifying Family Member Qualified Health Insurance Nonqualified Health Insurance Eligible Coverage Month How To Take the Credit How To Get Tax HelpLow Income Taxpayer Clinics What Are Medical Expenses? Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Form 1040x 2008 These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. Form 1040x 2008 They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Form 1040x 2008 Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Form 1040x 2008 They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Form 1040x 2008 Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Form 1040x 2008 Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. Form 1040x 2008 What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. Form 1040x 2008 (But see Decedent under Whose Medical Expenses Can You Include, for an exception. Form 1040x 2008 ) If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Form 1040x 2008 If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. Form 1040x 2008 If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. Form 1040x 2008 If you did not claim a medical or dental expense that would have been deductible in an earlier year, you can file Form 1040X, Amended U. Form 1040x 2008 S. Form 1040x 2008 Individual Income Tax Return, for the year in which you overlooked the expense. Form 1040x 2008 Do not claim the expense on this year's return. Form 1040x 2008 Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Form 1040x 2008 You cannot include medical expenses that were paid by insurance companies or other sources. Form 1040x 2008 This is true whether the payments were made directly to you, to the patient, or to the provider of the medical services. Form 1040x 2008 Separate returns. Form 1040x 2008   If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Form 1040x 2008 Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise. Form 1040x 2008 Community property states. Form 1040x 2008   If you and your spouse live in a community property state and file separate returns or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Form 1040x 2008 Generally, each of you should include half the expenses. Form 1040x 2008 If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. Form 1040x 2008 If you live in a community property state and are not filing a joint return, see Publication 555, Community Property. Form 1040x 2008 How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI. Form 1040x 2008 But if either you or your spouse was born before January 2, 1949, you can deduct the amount of your medical and dental expenses that is more than 7. Form 1040x 2008 5% of your AGI. Form 1040x 2008 Example. Form 1040x 2008 You are unmarried and were born after January 2, 1949, and your AGI is $40,000, 10% of which is $4,000. Form 1040x 2008 You paid medical expenses of $2,500. Form 1040x 2008 You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. Form 1040x 2008 Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. Form 1040x 2008 There are different rules for decedents and for individuals who are the subject of multiple support agreements. Form 1040x 2008 See Support claimed under a multiple support agreement , later under Qualifying Relative. Form 1040x 2008 Spouse You can include medical expenses you paid for your spouse. Form 1040x 2008 To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses. Form 1040x 2008 Example 1. Form 1040x 2008 Mary received medical treatment before she married Bill. Form 1040x 2008 Bill paid for the treatment after they married. Form 1040x 2008 Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. Form 1040x 2008 If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. Form 1040x 2008 Mary would include the amounts she paid during the year in her separate return. Form 1040x 2008 If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. Form 1040x 2008 Example 2. Form 1040x 2008 This year, John paid medical expenses for his wife Louise, who died last year. Form 1040x 2008 John married Belle this year and they file a joint return. Form 1040x 2008 Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. Form 1040x 2008 Dependent You can include medical expenses you paid for your dependent. Form 1040x 2008 For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. Form 1040x 2008 A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. Form 1040x 2008 The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. Form 1040x 2008 S. Form 1040x 2008 citizen or national or a resident of the United States, Canada, or Mexico. Form 1040x 2008 If your qualifying child was adopted, see Exception for adopted child , later. Form 1040x 2008 You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Form 1040x 2008 Exception for adopted child. Form 1040x 2008   If you are a U. Form 1040x 2008 S. Form 1040x 2008 citizen or national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. Form 1040x 2008 S. Form 1040x 2008 citizen or national, or a resident of the United States, Canada, or Mexico. Form 1040x 2008 Qualifying Child A qualifying child is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, other than to claim a refund. Form 1040x 2008 Adopted child. Form 1040x 2008   A legally adopted child is treated as your own child. Form 1040x 2008 This child includes a child lawfully placed with you for legal adoption. Form 1040x 2008   You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid. Form 1040x 2008   If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. Form 1040x 2008   But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses. Form 1040x 2008    You may be able to take a credit for other expenses related to an adoption. Form 1040x 2008 See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Form 1040x 2008 Child of divorced or separated parents. Form 1040x 2008   For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. Form 1040x 2008 Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child's dependency exemption, if: The child is in the custody of one or both parents for more than half the year, The child receives over half of his or her support during the year from his or her parents, and The child's parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Live apart at all times during the last 6 months of the year. Form 1040x 2008 This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). Form 1040x 2008 Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, or foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of any of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child, earlier) of any taxpayer for 2013, and For whom you provided over half of the support in 2013. Form 1040x 2008 But see Child of divorced or separated parents , earlier, Support claimed under a multiple support agreement, next, and Kidnapped child under Qualifying Relative in Publication 501. Form 1040x 2008 Support claimed under a multiple support agreement. Form 1040x 2008   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. Form 1040x 2008 A multiple support agreement is used when two or more people provide more than half of a person's support, but no one alone provides more than half. Form 1040x 2008   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. Form 1040x 2008 However, you can include the entire unreimbursed amount you paid for medical expenses. Form 1040x 2008 Example. Form 1040x 2008 You and your three brothers each provide one-fourth of your mother's total support. Form 1040x 2008 Under a multiple support agreement, you treat your mother as your dependent. Form 1040x 2008 You paid all of her medical expenses. Form 1040x 2008 Your brothers repaid you for three-fourths of these expenses. Form 1040x 2008 In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. Form 1040x 2008 Your brothers cannot include any part of the expenses. Form 1040x 2008 However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses. Form 1040x 2008 Decedent Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. Form 1040x 2008 This includes expenses for the decedent's spouse and dependents as well as for the decedent. Form 1040x 2008 The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. Form 1040x 2008 The expenses must be paid within the 1-year period beginning with the day after the date of death. Form 1040x 2008 If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return. Form 1040x 2008 Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. Form 1040x 2008 What if the decedent's return had been filed and the medical expenses were not included?   Form 1040X can be filed for the year or years the expenses are treated as paid, unless the period for filing an amended return for that year has passed. Form 1040x 2008 Generally, an amended return must be filed within 3 years of the date the original return was filed, or within 2 years from the time the tax was paid, whichever date is later. Form 1040x 2008 Example. Form 1040x 2008 John properly filed his 2012 income tax return. Form 1040x 2008 He died in 2013 with unpaid medical expenses of $1,500 from 2012 and $1,800 in 2013. Form 1040x 2008 If the expenses are paid within the 1-year period, his survivor or personal representative can file an amended return for 2012 claiming a deduction based on the $1,500 medical expenses. Form 1040x 2008 The $1,800 of medical expenses from 2013 can be included on the decedent's final return for 2013. Form 1040x 2008 What if you pay medical expenses of a deceased spouse or dependent?   If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Form 1040 in the year paid, whether they are paid before or after the decedent's death. Form 1040x 2008 The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses. Form 1040x 2008 What Medical Expenses Are Includible? Following is a list of items that you can include in figuring your medical expense deduction. Form 1040x 2008 The items are listed in alphabetical order. Form 1040x 2008 This list does not include all possible medical expenses. Form 1040x 2008 To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. Form 1040x 2008 Abortion You can include in medical expenses the amount you pay for a legal abortion. Form 1040x 2008 Acupuncture You can include in medical expenses the amount you pay for acupuncture. Form 1040x 2008 Alcoholism You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for alcohol addiction. Form 1040x 2008 This includes meals and lodging provided by the center during treatment. Form 1040x 2008 You can also include in medical expenses amounts you pay for transportation to and from Alcoholics Anonymous meetings in your community if the attendance is pursuant to medical advice that membership in Alcoholics Anonymous is necessary for the treatment of a disease involving the excessive use of alcoholic liquors. Form 1040x 2008 Ambulance You can include in medical expenses amounts you pay for ambulance service. Form 1040x 2008 Annual Physical Examination See Physical Examination , later. Form 1040x 2008 Artificial Limb You can include in medical expenses the amount you pay for an artificial limb. Form 1040x 2008 Artificial Teeth You can include in medical expenses the amount you pay for artificial teeth. Form 1040x 2008 Bandages You can include in medical expenses the cost of medical supplies such as bandages. Form 1040x 2008 Birth Control Pills You can include in medical expenses the amount you pay for birth control pills prescribed by a doctor. Form 1040x 2008 Body Scan You can include in medical expenses the cost of an electronic body scan. Form 1040x 2008 Braille Books and Magazines You can include in medical expenses the part of the cost of Braille books and magazines for use by a visually impaired person that is more than the cost of regular printed editions. Form 1040x 2008 Breast Pumps and Supplies You can include in medical expenses the cost of breast pumps and supplies that assist lactation. Form 1040x 2008 Breast Reconstruction Surgery You can include in medical expenses the amounts you pay for breast reconstruction surgery, as well as breast prosthesis, following a mastectomy for cancer. Form 1040x 2008 See Cosmetic Surgery , later. Form 1040x 2008 Capital Expenses You can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements, if their main purpose is medical care for you, your spouse, or your dependent. Form 1040x 2008 The cost of permanent improvements that increase the value of your property may be partly included as a medical expense. Form 1040x 2008 The cost of the improvement is reduced by the increase in the value of your property. Form 1040x 2008 The difference is a medical expense. Form 1040x 2008 If the value of your property is not increased by the improvement, the entire cost is included as a medical expense. Form 1040x 2008 Certain improvements made to accommodate a home to your disabled condition, or that of your spouse or your dependents who live with you, do not usually increase the value of the home and the cost can be included in full as medical expenses. Form 1040x 2008 These improvements include, but are not limited to, the following items. Form 1040x 2008 Constructing entrance or exit ramps for your home. Form 1040x 2008 Widening doorways at entrances or exits to your home. Form 1040x 2008 Widening or otherwise modifying hallways and interior doorways. Form 1040x 2008 Installing railings, support bars, or other modifications to bathrooms. Form 1040x 2008 Lowering or modifying kitchen cabinets and equipment. Form 1040x 2008 Moving or modifying electrical outlets and fixtures. Form 1040x 2008 Installing porch lifts and other forms of lifts (but elevators generally add value to the house). Form 1040x 2008 Modifying fire alarms, smoke detectors, and other warning systems. Form 1040x 2008 Modifying stairways. Form 1040x 2008 Adding handrails or grab bars anywhere (whether or not in bathrooms). Form 1040x 2008 Modifying hardware on doors. Form 1040x 2008 Modifying areas in front of entrance and exit doorways. Form 1040x 2008 Grading the ground to provide access to the residence. Form 1040x 2008 Only reasonable costs to accommodate a home to a disabled condition are considered medical care. Form 1040x 2008 Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses. Form 1040x 2008 Capital expense worksheet. Form 1040x 2008   Use Worksheet A to figure the amount of your capital expense to include in your medical expenses. Form 1040x 2008 Worksheet A. Form 1040x 2008 Capital Expense Worksheet Instructions: Use this worksheet to figure the amount, if any, of your medical expenses due to a home improvement. Form 1040x 2008 1. Form 1040x 2008 Enter the amount you paid for the home improvement 1. Form 1040x 2008   2. Form 1040x 2008 Enter the value of your home immediately after the improvement 2. Form 1040x 2008       3. Form 1040x 2008 Enter the value of your home immediately before the improvement 3. Form 1040x 2008       4. Form 1040x 2008 Subtract line 3 from line 2. Form 1040x 2008 This is the increase in the value of your home due to the improvement 4. Form 1040x 2008     • If line 4 is more than or equal to line 1, you have no medical expenses due to the home improvement; stop here. Form 1040x 2008       • If line 4 is less than line 1, go to line 5. Form 1040x 2008     5. Form 1040x 2008 Subtract line 4 from line 1. Form 1040x 2008 These are your medical expenses due to the home improvement 5. Form 1040x 2008   Operation and upkeep. Form 1040x 2008   Amounts you pay for operation and upkeep of a capital asset qualify as medical expenses, as long as the main reason for them is medical care. Form 1040x 2008 This rule applies even if none or only part of the original cost of the capital asset qualified as a medical care expense. Form 1040x 2008 Improvements to property rented by a person with a disability. Form 1040x 2008   Amounts paid to buy and install special plumbing fixtures for a person with a disability, mainly for medical reasons, in a rented house are medical expenses. Form 1040x 2008 Example. Form 1040x 2008 John has arthritis and a heart condition. Form 1040x 2008 He cannot climb stairs or get into a bathtub. Form 1040x 2008 On his doctor's advice, he installs a bathroom with a shower stall on the first floor of his two-story rented house. Form 1040x 2008 The landlord did not pay any of the cost of buying and installing the special plumbing and did not lower the rent. Form 1040x 2008 John can include in medical expenses the entire amount he paid. Form 1040x 2008 Car You can include in medical expenses the cost of special hand controls and other special equipment installed in a car for the use of a person with a disability. Form 1040x 2008 Special design. Form 1040x 2008   You can include in medical expenses the difference between the cost of a regular car and a car specially designed to hold a wheelchair. Form 1040x 2008 Cost of operation. Form 1040x 2008   The includible costs of using a car for medical reasons are explained under Transportation , later. Form 1040x 2008 Chiropractor You can include in medical expenses fees you pay to a chiropractor for medical care. Form 1040x 2008 Christian Science Practitioner You can include in medical expenses fees you pay to Christian Science practitioners for medical care. Form 1040x 2008 Contact Lenses You can include in medical expenses amounts you pay for contact lenses needed for medical reasons. Form 1040x 2008 You can also include the cost of equipment and materials required for using contact lenses, such as saline solution and enzyme cleaner. Form 1040x 2008 See Eyeglasses and Eye Surgery , later. Form 1040x 2008 Crutches You can include in medical expenses the amount you pay to buy or rent crutches. Form 1040x 2008 Dental Treatment You can include in medical expenses the amounts you pay for the prevention and alleviation of dental disease. Form 1040x 2008 Preventive treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, the application of sealants, and fluoride treatments to prevent tooth decay. Form 1040x 2008 Treatment to alleviate dental disease include services of a dentist for procedures such as X-rays, fillings, braces, extractions, dentures, and other dental ailments. Form 1040x 2008 But see Teeth Whitening under What Expenses Are Not Includible, later. Form 1040x 2008 Diagnostic Devices You can include in medical expenses the cost of devices used in diagnosing and treating illness and disease. Form 1040x 2008 Example. Form 1040x 2008 You have diabetes and use a blood sugar test kit to monitor your blood sugar level. Form 1040x 2008 You can include the cost of the blood sugar test kit in your medical expenses. Form 1040x 2008 Disabled Dependent Care Expenses Some disabled dependent care expenses may qualify as either: Medical expenses, or Work-related expenses for purposes of taking a credit for dependent care. Form 1040x 2008 (See Publication 503, Child and Dependent Care Expenses. Form 1040x 2008 ) You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction. Form 1040x 2008 Drug Addiction You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for drug addiction. Form 1040x 2008 This includes meals and lodging at the center during treatment. Form 1040x 2008 Drugs See Medicines , later. Form 1040x 2008 Eye Exam You can include in medical expenses the amount you pay for eye examinations. Form 1040x 2008 Eyeglasses You can include in medical expenses amounts you pay for eyeglasses and contact lenses needed for medical reasons. Form 1040x 2008 See Contact Lenses , earlier, for more information. Form 1040x 2008 Eye Surgery You can include in medical expenses the amount you pay for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy. Form 1040x 2008 Fertility Enhancement You can include in medical expenses the cost of the following procedures to overcome an inability to have children. Form 1040x 2008 Procedures such as in vitro fertilization (including temporary storage of eggs or sperm). Form 1040x 2008 Surgery, including an operation to reverse prior surgery that prevented the person operated on from having children. Form 1040x 2008 Founder's Fee See Lifetime Care—Advance Payments , later. Form 1040x 2008 Guide Dog or Other Service Animal You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities. Form 1040x 2008 In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the health and vitality of the service animal so that it may perform its duties. Form 1040x 2008 Health Institute You can include in medical expenses fees you pay for treatment at a health institute only if the treatment is prescribed by a physician and the physician issues a statement that the treatment is necessary to alleviate a physical or mental defect or illness of the individual receiving the treatment. Form 1040x 2008 Health Maintenance Organization (HMO) You can include in medical expenses amounts you pay to entitle you, your spouse, or a dependent to receive medical care from an HMO. Form 1040x 2008 These amounts are treated as medical insurance premiums. Form 1040x 2008 See Insurance Premiums , later. Form 1040x 2008 Hearing Aids You can include in medical expenses the cost of a hearing aid and batteries, repairs, and maintenance needed to operate it. Form 1040x 2008 Home Care See Nursing Services , later. Form 1040x 2008 Home Improvements See Capital Expenses , earlier. Form 1040x 2008 Hospital Services You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. Form 1040x 2008 This includes amounts paid for meals and lodging. Form 1040x 2008 Also see Lodging , later. Form 1040x 2008 Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Form 1040x 2008 Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). Form 1040x 2008 See Qualified Long-Term Care Insurance Contracts under Long-Term Care, later. Form 1040x 2008 If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. Form 1040x 2008 The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. Form 1040x 2008 Health coverage tax credit. Form 1040x 2008   If, during 2013, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient, you must complete Form 8885 before completing Schedule A. Form 1040x 2008 When figuring the amount of insurance premiums you can deduct on Schedule A, do not include: Any amounts you included on Form 8885, Any qualified health insurance premiums you paid to “U. Form 1040x 2008 S. Form 1040x 2008 Treasury–HCTC,” or Any health coverage tax credit advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Form 1040x 2008 Employer-Sponsored Health Insurance Plan Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included on your Form W-2, Wage and Tax Statement. Form 1040x 2008 Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included on your Form W-2. Form 1040x 2008 Example. Form 1040x 2008 You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Form 1040x 2008 Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Form 1040x 2008 Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money. Form 1040x 2008 Long-term care services. Form 1040x 2008   Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. Form 1040x 2008 This amount will be reported as wages on your Form W-2. Form 1040x 2008 Retired public safety officers. Form 1040x 2008   If you are a retired public safety officer, do not include as medical expenses any health or long-term care insurance premiums that you elected to have paid with tax-free distributions from a retirement plan. Form 1040x 2008 This applies only to distributions that would otherwise be included in income. Form 1040x 2008 Health reimbursement arrangement (HRA). Form 1040x 2008   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. Form 1040x 2008 This is because an HRA is funded solely by the employer. Form 1040x 2008 Medicare A If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. Form 1040x 2008 The payroll tax paid for Medicare A is not a medical expense. Form 1040x 2008 If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. Form 1040x 2008 In this situation you can include the premiums you paid for Medicare A as a medical expense. Form 1040x 2008 Medicare B Medicare B is a supplemental medical insurance. Form 1040x 2008 Premiums you pay for Medicare B are a medical expense. Form 1040x 2008 Check the information you received from the Social Security Administration to find out your premium. Form 1040x 2008 Medicare D Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. Form 1040x 2008 You can include as a medical expense premiums you pay for Medicare D. Form 1040x 2008 Prepaid Insurance Premiums Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). Form 1040x 2008 Unused Sick Leave Used To Pay Premiums You must include in gross income cash payments you receive at the time of retirement for unused sick leave. Form 1040x 2008 You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer's health plan after you retire. Form 1040x 2008 You can include this cost of continuing participation in the health plan as a medical expense. Form 1040x 2008 If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. Form 1040x 2008 You cannot include this cost of continuing participation in that health plan as a medical expense. Form 1040x 2008 Insurance Premiums You Cannot Include You cannot include premiums you pay for: Life insurance policies, Policies providing payment for loss of earnings, Policies for loss of life, limb, sight, etc. Form 1040x 2008 , Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury, The part of your car insurance that provides medical insurance coverage for all persons injured in or by your car because the part of the premium providing insurance for you, your spouse, and your dependents is not stated separately from the part of the premium providing insurance for medical care for others, or Health or long-term care insurance if you elected to pay these premiums with tax-free distributions from a retirement plan made directly to the insurance provider and these distributions would otherwise have been included in income. Form 1040x 2008 Taxes imposed by any governmental unit, such as Medicare taxes, are not insurance premiums. Form 1040x 2008 Coverage for nondependents. Form 1040x 2008   Generally, you cannot deduct any additional premium you pay as the result of including on your policy someone who is not your spouse or dependent, even if that person is your child under age 27. Form 1040x 2008 However, you can deduct the additional premium if that person is: Your child whom you do not claim as a dependent because of the rules for children of divorced or separated parents, Any person you could have claimed as a dependent on your return except that person received $3,900 or more of gross income or filed a joint return, or Any person you could have claimed as a dependent except that you, or your spouse if filing jointly, can be claimed as a dependent on someone else's 2013 return. Form 1040x 2008  Also, if you had family coverage when you added this individual to your policy and your premiums did not increase, you can enter on Schedule A (Form 1040) the full amount of your medical and dental insurance premiums. Form 1040x 2008 Intellectually and Developmentally Disabled, Special Home for You can include in medical expenses the cost of keeping a person who is intellectually and developmentally disabled in a special home, not the home of a relative, on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living. Form 1040x 2008 Laboratory Fees You can include in medical expenses the amounts you pay for laboratory fees that are part of medical care. Form 1040x 2008 Lactation Expenses See Breast Pumps and Supplies , earlier. Form 1040x 2008 Lead-Based Paint Removal You can include in medical expenses the cost of removing lead-based paints from surfaces in your home to prevent a child who has or had lead poisoning from eating the paint. Form 1040x 2008 These surfaces must be in poor repair (peeling or cracking) or within the child's reach. Form 1040x 2008 The cost of repainting the scraped area is not a medical expense. Form 1040x 2008 If, instead of removing the paint, you cover the area with wallboard or paneling, treat these items as capital expenses. Form 1040x 2008 See Capital Expenses , earlier. Form 1040x 2008 Do not include the cost of painting the wallboard as a medical expense. Form 1040x 2008 Learning Disability See Special Education , later. Form 1040x 2008 Legal Fees You can include in medical expenses legal fees you paid that are necessary to authorize treatment for mental illness. Form 1040x 2008 However, you cannot include in medical expenses fees for the management of a guardianship estate, fees for conducting the affairs of the person being treated, or other fees that are not necessary for medical care. Form 1040x 2008 Lifetime Care—Advance Payments You can include in medical expenses a part of a life-care fee or “founder's fee” you pay either monthly or as a lump sum under an agreement with a retirement home. Form 1040x 2008 The part of the payment you include is the amount properly allocable to medical care. Form 1040x 2008 The agreement must require that you pay a specific fee as a condition for the home's promise to provide lifetime care that includes medical care. Form 1040x 2008 You can use a statement from the retirement home to prove the amount properly allocable to medical care. Form 1040x 2008 The statement must be based either on the home's prior experience or on information from a comparable home. Form 1040x 2008 Dependents with disabilities. Form 1040x 2008   You can include in medical expenses advance payments to a private institution for lifetime care, treatment, and training of your physically or mentally impaired child upon your death or when you become unable to provide care. Form 1040x 2008 The payments must be a condition for the institution's future acceptance of your child and must not be refundable. Form 1040x 2008 Payments for future medical care. Form 1040x 2008   Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. Form 1040x 2008 This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care of the type described earlier. Form 1040x 2008 Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. Form 1040x 2008 See Nursing Home , later. Form 1040x 2008 You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. Form 1040x 2008 You can include the cost of such lodging while away from home if all of the following requirements are met. Form 1040x 2008 The lodging is primarily for and essential to medical care. Form 1040x 2008 The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. Form 1040x 2008 The lodging is not lavish or extravagant under the circumstances. Form 1040x 2008 There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Form 1040x 2008 The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. Form 1040x 2008 You can include lodging for a person traveling with the person receiving the medical care. Form 1040x 2008 For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Form 1040x 2008 Meals are not included. Form 1040x 2008 Do not include the cost of lodging while away from home for medical treatment if that treatment is not received from a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital or if that lodging is not primarily for or essential to the medical care received. Form 1040x 2008 Long-Term Care You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts. Form 1040x 2008 Qualified Long-Term Care Services Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are: Required by a chronically ill individual, and Provided pursuant to a plan of care prescribed by a licensed health care practitioner. Form 1040x 2008 Chronically ill individual. Form 1040x 2008   An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions. Form 1040x 2008 He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Form 1040x 2008 Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Form 1040x 2008 He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Form 1040x 2008 Maintenance and personal care services. Form 1040x 2008    Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment). Form 1040x 2008 Qualified Long-Term Care Insurance Contracts A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. Form 1040x 2008 The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses. Form 1040x 2008 The amount of qualified long-term care premiums you can include is limited. Form 1040x 2008 You can include the following as medical expenses on Schedule A (Form 1040). Form 1040x 2008 Qualified long-term care premiums up to the following amounts. Form 1040x 2008 Age 40 or under – $360. Form 1040x 2008 Age 41 to 50 – $680. Form 1040x 2008 Age 51 to 60 – $1,360. Form 1040x 2008 Age 61 to 70 – $3,640. Form 1040x 2008 Age 71 or over – $4,550. Form 1040x 2008 Unreimbursed expenses for qualified long-term care services. Form 1040x 2008 Note. Form 1040x 2008 The limit on premiums is for each person. Form 1040x 2008 Also, if you are an eligible retired public safety officer, you cannot include premiums for long-term care insurance if you elected to pay these premiums with tax-free distributions from a qualified retirement plan made directly to the insurance provider and these distributions would otherwise have been included in your income. Form 1040x 2008 Meals You can include in medical expenses the cost of meals at a hospital or similar institution if a principal reason for being there is to get medical care. Form 1040x 2008 You cannot include in medical expenses the cost of meals that are not part of inpatient care. Form 1040x 2008 Also see Weight-Loss Program and Nutritional Supplements , later. Form 1040x 2008 Medical Conferences You can include in medical expenses amounts paid for admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent. Form 1040x 2008 The costs of the medical conference must be primarily for and necessary to the medical care of you, your spouse, or your dependent. Form 1040x 2008 The majority of the time spent at the conference must be spent attending sessions on medical information. Form 1040x 2008 The cost of meals and lodging while attending the conference is not deductible as a medical expense. Form 1040x 2008 Medical Information Plan You can include in medical expenses amounts paid to a plan that keeps medical information in a computer data bank and retrieves and furnishes the information upon request to an attending physician. Form 1040x 2008 Medicines You can include in medical expenses amounts you pay for prescribed medicines and drugs. Form 1040x 2008 A prescribed drug is one that requires a prescription by a doctor for its use by an individual. Form 1040x 2008 You can also include amounts you pay for insulin. Form 1040x 2008 Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Form 1040x 2008 Imported medicines and drugs. Form 1040x 2008   If you imported medicines or drugs from other countries, see Medicines and Drugs From Other Countries , under What Expenses Are Not Includible, later. Form 1040x 2008 Nursing Home You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. Form 1040x 2008 This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Form 1040x 2008 Do not include the cost of meals and lodging if the reason for being in the home is personal. Form 1040x 2008 You can, however, include in medical expenses the part of the cost that is for medical or nursing care. Form 1040x 2008 Nursing Services You can include in medical expenses wages and other amounts you pay for nursing services. Form 1040x 2008 The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. Form 1040x 2008 This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. Form 1040x 2008 These services can be provided in your home or another care facility. Form 1040x 2008 Generally, only the amount spent for nursing services is a medical expense. Form 1040x 2008 If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services. Form 1040x 2008 For example, because of your medical condition you pay a visiting nurse $300 per week for medical and household services. Form 1040x 2008 She spends 10% of her time doing household services such as washing dishes and laundry. Form 1040x 2008 You can include only $270 per week as medical expenses. Form 1040x 2008 The $30 (10% × $300) allocated to household services cannot be included. Form 1040x 2008 However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Form 1040x 2008 See Maintenance and personal care services under Long-Term Care, earlier. Form 1040x 2008 Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. Form 1040x 2008 See Publication 503. Form 1040x 2008 You can also include in medical expenses part of the amount you pay for that attendant's meals. Form 1040x 2008 Divide the food expense among the household members to find the cost of the attendant's food. Form 1040x 2008 Then divide that cost in the same manner as in the preceding paragraph. Form 1040x 2008 If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. Form 1040x 2008 This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant. Form 1040x 2008 Employment taxes. Form 1040x 2008   You can include as a medical expense social security tax, FUTA, Medicare tax, and state employment taxes you pay for an attendant who provides medical care. Form 1040x 2008 If the attendant also provides personal and household services, you can include as a medical expense only the amount of employment taxes paid for medical services as explained earlier. Form 1040x 2008 For information on employment tax responsibilities of household employers, see Publication 926, Household Employer's Tax Guide. Form 1040x 2008 Operations You can include in medical expenses amounts you pay for legal operations that are not for unnecessary cosmetic surgery. Form 1040x 2008 See Cosmetic Surgery under What Expenses Are Not Includible, later. Form 1040x 2008 Optometrist See Eyeglasses , earlier. Form 1040x 2008 Organ Donors See Transplants , later. Form 1040x 2008 Osteopath You can include in medical expenses amounts you pay to an osteopath for medical care. Form 1040x 2008 Oxygen You can include in medical expenses amounts you pay for oxygen and oxygen equipment to relieve breathing problems caused by a medical condition. Form 1040x 2008 Physical Examination You can include in medical expenses the amount you pay for an annual physical examination and diagnostic tests by a physician. Form 1040x 2008 You do not have to be ill at the time of the examination. Form 1040x 2008 Pregnancy Test Kit You can include in medical expenses the amount you pay to purchase a pregnancy test kit to determine if you are pregnant. Form 1040x 2008 Prosthesis See Artificial Limb and Breast Reconstruction Surgery , earlier. Form 1040x 2008 Psychiatric Care You can include in medical expenses amounts you pay for psychiatric care. Form 1040x 2008 This includes the cost of supporting a mentally ill dependent at a specially equipped medical center where the dependent receives medical care. Form 1040x 2008 See Psychoanalysis, next, and Transportation , later. Form 1040x 2008 Psychoanalysis You can include in medical expenses payments for psychoanalysis. Form 1040x 2008 However, you cannot include payments for psychoanalysis that is part of required training to be a psychoanalyst. Form 1040x 2008 Psychologist You can include in medical expenses amounts you pay to a psychologist for medical care. Form 1040x 2008 Special Education You can include in medical expenses fees you pay on a doctor's recommendation for a child's tutoring by a teacher who is specially trained and qualified to work with children who have learning disabilities caused by mental or physical impairments, including nervous system disorders. Form 1040x 2008 You can include in medical expenses the cost (tuition, meals, and lodging) of attending a school that furnishes special education to help a child to overcome learning disabilities. Form 1040x 2008 A doctor must recommend that the child attend the school. Form 1040x 2008 Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided. Form 1040x 2008 Special education includes: Teaching Braille to a visually impaired person, Teaching lip reading to a hearing disabled person, or Giving remedial language training to correct a condition caused by a birth defect. Form 1040x 2008 Sterilization You can include in medical expenses the cost of a legal sterilization (a legally performed operation to make a person unable to have children). Form 1040x 2008 Also see Vasectomy , later. Form 1040x 2008 Stop-Smoking Programs You can include in medical expenses amounts you pay for a program to stop smoking. Form 1040x 2008 However, you cannot include in medical expenses amounts you pay for drugs that do not require a prescription, such as nicotine gum or patches, that are designed to help stop smoking. Form 1040x 2008 Surgery See Operations , earlier. Form 1040x 2008 Telephone You can include in medical expenses the cost of special telephone equipment that lets a person who is deaf, hard of hearing or has a speech disability communicate over a regular telephone. Form 1040x 2008 This includes teletypewriter (TTY) and telecommunications device for the deaf (TDD) equipment. Form 1040x 2008 You can also include the cost of repairing the equipment. Form 1040x 2008 Television You can include in medical expenses the cost of equipment that displays the audio part of television programs as subtitles for persons with a hearing disability. Form 1040x 2008 This may be the cost of an adapter that attaches to a regular set. Form 1040x 2008 It also may be the part of the cost of a specially equipped television that exceeds the cost of the same model regular television set. Form 1040x 2008 Therapy You can include in medical expenses amounts you pay for therapy received as medical treatment. Form 1040x 2008 Transplants You can include in medical expenses amounts paid for medical care you receive because you are a donor or a possible donor of a kidney or other organ. Form 1040x 2008 This includes transportation. Form 1040x 2008 You can include any expenses you pay for the medical care of a donor in connection with the donating of an organ. Form 1040x 2008 This includes transportation. Form 1040x 2008 Transportation You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Form 1040x 2008 You can include:    Bus, taxi, train, or plane fares or ambulance service, Transportation expenses of a parent who must go with a child who needs medical care, Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment. Form 1040x 2008 Car expenses. Form 1040x 2008   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use a car for medical reasons. Form 1040x 2008 You cannot include depreciation, insurance, general repair, or maintenance expenses. Form 1040x 2008   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents a mile. Form 1040x 2008    You can also include parking fees and tolls. Form 1040x 2008 You can add these fees and tolls to your medical expenses whether you use actual expenses or the standard mileage rate. Form 1040x 2008 Example. Form 1040x 2008 In 2013, Bill Jones drove 2,800 miles for medical reasons. Form 1040x 2008 He spent $500 for gas, $30 for oil, and $100 for tolls and parking. Form 1040x 2008 He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. Form 1040x 2008 He figures the actual expenses first. Form 1040x 2008 He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. Form 1040x 2008 He then figures the standard mileage amount. Form 1040x 2008 He multiplies 2,800 miles by 24 cents a mile for a total of $672. Form 1040x 2008 He then adds the $100 tolls and parking for a total of $772. Form 1040x 2008 Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. Form 1040x 2008 Transportation expenses you cannot include. Form 1040x 2008    You cannot include in medical expenses the cost of transportation in the following situations. Form 1040x 2008 Going to and from work, even if your condition requires an unusual means of transportation. Form 1040x 2008 Travel for purely personal reasons to another city for an operation or other medical care. Form 1040x 2008 Travel that is merely for the general improvement of one's health. Form 1040x 2008 The costs of operating a specially equipped car for other than medical reasons. Form 1040x 2008 Trips You can include in medical expenses amounts you pay for transportation to another city if the trip is primarily for, and essential to, receiving medical services. Form 1040x 2008 You may be able to include up to $50 for each night for each person. Form 1040x 2008 You can include lodging for a person traveling with the person receiving the medical care. Form 1040x 2008 For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Form 1040x 2008 Meals are not included. Form 1040x 2008 See Lodging , earlier. Form 1040x 2008 You cannot include in medical expenses a trip or vacation taken merely for a change in environment, improvement of morale, or general improvement of health, even if the trip is made on the advice of a doctor. Form 1040x 2008 However, see Medical Conferences , earlier. Form 1040x 2008 Tuition Under special circumstances, you can include charges for tuition in medical expenses. Form 1040x 2008 See Special Education , earlier. Form 1040x 2008 You can include charges for a health plan included in a lump-sum tuition fee if the charges are separately stated or can easily be obtained from the school. Form 1040x 2008 Vasectomy You can include in medical expenses the amount you pay for a vasectomy. Form 1040x 2008 Vision Correction Surgery See Eye Surgery , earlier. Form 1040x 2008 Weight-Loss Program You can include in medical expenses amounts you pay to lose weight if it is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). Form 1040x 2008 This includes fees you pay for membership in a weight reduction group as well as fees for attendance at periodic meetings. Form 1040x 2008 You cannot include membership dues in a gym, health club, or spa as medical expenses, but you can include separate fees charged there for weight loss activities. Form 1040x 2008 You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. Form 1040x 2008 You can include the cost of special food in medical expenses only if: The food does not satisfy normal nutritional needs, The food alleviates or treats an illness, and The need for the food is substantiated by a physician. Form 1040x 2008 The amount you can include in medical expenses is limited to the amount by which the cost of the special food exceeds the cost of a normal diet. Form 1040x 2008 See also Weight-Loss Program under What Expenses Are Not Includible, later. Form 1040x 2008 Wheelchair You can include in medical expenses amounts you pay for a wheelchair used mainly for the relief of sickness or disability, and not just to provide transportation to and from work. Form 1040x 2008 The cost of operating and maintaining the wheelchair is also a medical expense. Form 1040x 2008 Wig You can include in medical expenses the cost of a wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease. Form 1040x 2008 X-ray You can include in medical expenses amounts you pay for X-rays for medical reasons. Form 1040x 2008 What Expenses Are Not Includible? Following is a list of some items that you cannot include in figuring your medical expense deduction. Form 1040x 2008 The items are listed in alphabetical order. Form 1040x 2008 Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby You cannot include in medical expenses amounts you pay for the care of children, even if the expenses enable you, your spouse, or your dependent to get medical or dental treatment. Form 1040x 2008 Also, any expense allowed as a childcare credit cannot be treated as an expense paid for medical care. Form 1040x 2008 Controlled Substances You cannot include in medical expenses amounts you pay for controlled substances (such as marijuana, laetrile, etc. Form 1040x 2008 ), even if such substances are legalized by state law. Form 1040x 2008 Such substances are not legal under federal law and cannot be included in medical expenses. Form 1040x 2008 Cosmetic Surgery Generally, you cannot include in medical expenses the amount you pay for unnecessary cosmetic surgery. Form 1040x 2008 This includes any procedure that is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. Form 1040x 2008 You generally cannot include in medical expenses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuction. Form 1040x 2008 You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. Form 1040x 2008 Example. Form 1040x 2008 An individual undergoes surgery that removes a breast as part of treatment for cancer. Form 1040x 2008 She pays a surgeon to reconstruct the breast. Form 1040x 2008 The surgery to reconstruct the breast corrects a deformity directly related to the disease. Form 1040x 2008 The cost of the surgery is includible in her medical expenses. Form 1040x 2008 Dancing Lessons You cannot include in medical expenses the cost of dancing lessons, swimming lessons, etc. Form 1040x 2008 , even if they are recommended by a doctor, if they are only for the improvement of general health. Form 1040x 2008 Diaper Service You cannot include in medical expenses the amount you pay for diapers or diaper services, unless they are needed to relieve the effects of a particular disease. Form 1040x 2008 Electrolysis or Hair Removal See Cosmetic Surgery , earlier. Form 1040x 2008 Flexible Spending Account You cannot include in medical expenses amounts for which you are fully reimbursed by your flexible spending account if you contribute a part of your income on a pre-tax basis to pay for the qualified benefit. Form 1040x 2008 Funeral Expenses You cannot include in medical expenses amounts you pay for funerals. Form 1040x 2008 Future Medical Care Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. Form 1040x 2008 This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care or long-term care of the type described at Lifetime Care—Advance Payments or Long-Term Care, earlier under What Medical Expenses Are Includible. Form 1040x 2008 Hair Transplant See Cosmetic Surgery , earlier. Form 1040x 2008 Health Club Dues You cannot include in medical expenses health club dues or amounts paid to improve one's general health or to relieve physical or mental discomfort not related to a particular medical condition. Form 1040x 2008 You cannot include in medical expenses the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Form 1040x 2008 Health Coverage Tax Credit You cannot include in medical expenses amounts you pay for health insurance that you use in figuring your health coverage tax credit. Form 1040x 2008 For more information, see Health Coverage Tax Credit , later. Form 1040x 2008 Health Savings Accounts You cannot include in medical expenses any payment or distribution for medical expenses out of a health savings account. Form 1040x 2008 Contributions to health savings accounts are deducted separately. Form 1040x 2008 See Publication 969. Form 1040x 2008 Household Help You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. Form 1040x 2008 This is a personal expense that is not deductible. Form 1040x 2008 However, you may be able to include certain expenses paid to a person providing nursing-type services. Form 1040x 2008 For more information, see Nursing Services , earlier under What Medical Expenses Are Includible. Form 1040x 2008 Also, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Form 1040x 2008 For more information, see Long-Term Care , earlier under What Medical Expenses Are Includible. Form 1040x 2008 Illegal Operations and Treatments You cannot include in medical expenses amounts you pay for illegal operations, treatments, or controlled substances whether rendered or prescribed by licensed or unlicensed practitioners. Form 1040x 2008 Insurance Premiums See Insurance Premiums under What Medical Expenses Are Includible, earlier. Form 1040x 2008 Maternity Clothes You cannot include in medical expenses amounts you pay for maternity clothes. Form 1040x 2008 Medical Savings Account (MSA) You cannot include in medical expenses amounts you contribute to an Archer MSA. Form 1040x 2008 You cannot include expenses you pay for with a tax-free distribution from your Archer MSA. Form 1040x 2008 You also cannot use other funds equal to the amount of the distribution and include the expenses. Form 1040x 2008 For more information on Archer MSAs, see Publication 969. Form 1040x 2008 Medicines and Drugs From Other Countries In general, you cannot include in your medical expenses the cost of a prescribed drug brought in (or ordered shipped) from another country. Form 1040x 2008 You can only include the cost of a drug that was imported legally. Form 1040x 2008 For example, you can include the cost of a prescribed drug the Food and Drug Administration announces can be legally imported by individuals. Form 1040x 2008 You can include the cost of a prescribed drug you purchase and consume in another country if the drug is legal in both the other country and the United States. Form 1040x 2008 Nonprescription Drugs and Medicines Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Form 1040x 2008 Example. Form 1040x 2008 Your doctor recommends that you take aspirin. Form 1040x 2008 Because aspirin is a drug that does not require a physician's prescription, you cannot include its cost in your medical expenses. Form 1040x 2008 Nutritional Supplements You cannot include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. Form 1040x 2008 unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. Form 1040x 2008 Otherwise, these items are taken to maintain your ordinary good health, and are not for medical care. Form 1040x 2008 Personal Use Items You cannot include in medical expenses the cost of an item ordinarily used for personal, living, or family purposes unless it is used primarily to prevent or alleviate a physical or mental defect or illness. Form 1040x 2008 For example, the cost of a toothbrush and toothpaste is a nondeductible personal expense. Form 1040x 2008 In order to accommodate an individual with a physical defect, you may have to purchase an item ordinarily used as a personal, living, or family item in a special form. Form 1040x 2008 You can include the excess of the cost of the item in a special form over the cost of the item in normal form as a medical expense. Form 1040x 2008 (See Braille Books and Magazines under What Medical Expenses Are Includible, earlier. Form 1040x 2008 ) Swimming Lessons See Dancing Lessons , earlier. Form 1040x 2008 Teeth Whitening You cannot include in medical expenses amounts paid to whiten teeth. Form 1040x 2008 See Cosmetic Surgery , earlier. Form 1040x 2008 Veterinary Fees You generally cannot include veterinary fees in your medical expenses, but see Guide Dog or Other Service Animal under What Medical Expenses Are Includible, earlier. Form 1040x 2008 Weight-Loss Program You cannot include in medical expenses the cost of a weight-loss program if the purpose of the weight loss is the improvement of appearance, general health, or sense of well-being. Form 1040x 2008 You cannot include amounts you pay to lose weight unless the weight loss is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). Form 1040x 2008 If the weight-loss treatment is not for a specific disease diagnosed by a physician, you cannot include either the fees you pay for membership in a weight reduction group or fees for attendance at periodic meetings. Form 1040x 2008 Also, you cannot include membership dues in a gym, health club, or spa. Form 1040x 2008 You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. Form 1040x 2008 See Weight-Loss Program under What Medical Expenses Are Includible, earlier. Form 1040x 2008 How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the tax year for which you received no insurance or other reimbursement. Form 1040x 2008 Insurance Reimbursement You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. Form 1040x 2008 This includes payments from Medicare. Form 1040x 2008 Even if a policy provides reimbursement only for certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse. Form 1040x 2008 Example. Form 1040x 2008 You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. Form 1040x 2008 The insurance you receive for the hospital and doctors' bills is more than their charges. Form 1040x 2008 In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses. Form 1040x 2008 Health reimbursement arrange