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Free 1040ez online 6. Free 1040ez online   How To Get Tax Help Table of Contents Low Income Taxpayer Clinics (LITCs). Free 1040ez online Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Free 1040ez online Free help with your tax return. Free 1040ez online   You can get free help preparing your return nationwide from IRS-certified volunteers. Free 1040ez online The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Free 1040ez online The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free 1040ez online Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Free 1040ez online In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Free 1040ez online To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Free 1040ez online gov, download the IRS2Go app, or call 1-800-906-9887. Free 1040ez online   As part of the TCE program, AARP offers the Tax-Aide counseling program. Free 1040ez online To find the nearest AARP Tax-Aide site, visit AARP's website at www. Free 1040ez online aarp. Free 1040ez online org/money/taxaide or call 1-888-227-7669. Free 1040ez online For more information on these programs, go to IRS. Free 1040ez online gov and enter “VITA” in the search box. Free 1040ez online Internet. Free 1040ez online    IRS. Free 1040ez online gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Free 1040ez online Download the free IRS2Go app from the iTunes app store or from Google Play. Free 1040ez online Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Free 1040ez online Check the status of your 2013 refund with the Where's My Refund? application on IRS. Free 1040ez online gov or download the IRS2Go app and select the Refund Status option. Free 1040ez online The IRS issues more than 9 out of 10 refunds in less than 21 days. Free 1040ez online Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Free 1040ez online You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free 1040ez online The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free 1040ez online Use the Interactive Tax Assistant (ITA) to research your tax questions. Free 1040ez online No need to wait on the phone or stand in line. Free 1040ez online The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Free 1040ez online When you reach the response screen, you can print the entire interview and the final response for your records. Free 1040ez online New subject areas are added on a regular basis. Free 1040ez online  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Free 1040ez online gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Free 1040ez online You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Free 1040ez online The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Free 1040ez online When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Free 1040ez online Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Free 1040ez online You can also ask the IRS to mail a return or an account transcript to you. Free 1040ez online Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Free 1040ez online gov or by calling 1-800-908-9946. Free 1040ez online Tax return and tax account transcripts are generally available for the current year and the past three years. Free 1040ez online Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Free 1040ez online Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Free 1040ez online If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Free 1040ez online Check the status of your amended return using Where's My Amended Return? Go to IRS. Free 1040ez online gov and enter Where's My Amended Return? in the search box. Free 1040ez online You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free 1040ez online It can take up to 3 weeks from the date you mailed it to show up in our system. Free 1040ez online Make a payment using one of several safe and convenient electronic payment options available on IRS. Free 1040ez online gov. Free 1040ez online Select the Payment tab on the front page of IRS. Free 1040ez online gov for more information. Free 1040ez online Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Free 1040ez online Figure your income tax withholding with the IRS Withholding Calculator on IRS. Free 1040ez online gov. Free 1040ez online Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Free 1040ez online Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Free 1040ez online gov. Free 1040ez online Request an Electronic Filing PIN by going to IRS. Free 1040ez online gov and entering Electronic Filing PIN in the search box. Free 1040ez online Download forms, instructions and publications, including accessible versions for people with disabilities. Free 1040ez online Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Free 1040ez online gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Free 1040ez online An employee can answer questions about your tax account or help you set up a payment plan. Free 1040ez online Before you visit, check the Office Locator on IRS. Free 1040ez online gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Free 1040ez online If you have a special need, such as a disability, you can request an appointment. Free 1040ez online Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Free 1040ez online Apply for an Employer Identification Number (EIN). Free 1040ez online Go to IRS. Free 1040ez online gov and enter Apply for an EIN in the search box. Free 1040ez online Read the Internal Revenue Code, regulations, or other official guidance. Free 1040ez online Read Internal Revenue Bulletins. Free 1040ez online Sign up to receive local and national tax news and more by email. Free 1040ez online Just click on “subscriptions” above the search box on IRS. Free 1040ez online gov and choose from a variety of options. Free 1040ez online    Phone. Free 1040ez online You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Free 1040ez online Download the free IRS2Go app from the iTunes app store or from Google Play. Free 1040ez online Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Free 1040ez online gov, or download the IRS2Go app. Free 1040ez online Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Free 1040ez online The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free 1040ez online Most VITA and TCE sites offer free electronic filing. Free 1040ez online Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Free 1040ez online Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Free 1040ez online Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Free 1040ez online If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Free 1040ez online The IRS issues more than 9 out of 10 refunds in less than 21 days. Free 1040ez online Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free 1040ez online Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Free 1040ez online The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free 1040ez online Note, the above information is for our automated hotline. Free 1040ez online Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Free 1040ez online Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Free 1040ez online You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free 1040ez online It can take up to 3 weeks from the date you mailed it to show up in our system. Free 1040ez online Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Free 1040ez online You should receive your order within 10 business days. Free 1040ez online Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Free 1040ez online If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Free 1040ez online Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Free 1040ez online The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Free 1040ez online These individuals can also contact the IRS through relay services such as the Federal Relay Service. Free 1040ez online    Walk-in. Free 1040ez online You can find a selection of forms, publications and services — in-person. Free 1040ez online Products. Free 1040ez online You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Free 1040ez online Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Free 1040ez online Services. Free 1040ez online You can walk in to your local TAC for face-to-face tax help. Free 1040ez online An employee can answer questions about your tax account or help you set up a payment plan. Free 1040ez online Before visiting, use the Office Locator tool on IRS. Free 1040ez online gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Free 1040ez online    Mail. Free 1040ez online You can send your order for forms, instructions, and publications to the address below. Free 1040ez online You should receive a response within 10 business days after your request is received. Free 1040ez online Internal Revenue Service 1201 N. Free 1040ez online Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Free 1040ez online The Taxpayer Advocate Service (TAS) is your voice at the IRS. Free 1040ez online Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Free 1040ez online   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Free 1040ez online We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Free 1040ez online You face (or your business is facing) an immediate threat of adverse action. Free 1040ez online You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Free 1040ez online   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Free 1040ez online Here's why we can help: TAS is an independent organization within the IRS. Free 1040ez online Our advocates know how to work with the IRS. Free 1040ez online Our services are free and tailored to meet your needs. Free 1040ez online We have offices in every state, the District of Columbia, and Puerto Rico. Free 1040ez online   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Free 1040ez online   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Free 1040ez online If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Free 1040ez online Low Income Taxpayer Clinics (LITCs). Free 1040ez online   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Free 1040ez online Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Free 1040ez online Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Free 1040ez online Prev  Up  Next   Home   More Online Publications
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Free 1040ez online 25. Free 1040ez online   Nonbusiness Casualty and Theft Losses Table of Contents What's New Introduction Useful Items - You may want to see: CasualtyFamily pet. Free 1040ez online Progressive deterioration. Free 1040ez online Damage from corrosive drywall. Free 1040ez online Theft Loss on Deposits Proof of Loss Figuring a LossDecrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Single Casualty on Multiple Properties Deduction Limits$100 Rule 10% Rule When To Report Gains and LossesDisaster Area Loss How To Report Gains and Losses What's New New Section C of Form 4684 for Ponzi-type investment schemes. Free 1040ez online  Section C of Form 4684 is new for 2013. Free 1040ez online You must complete Section C if you are claiming a theft loss deduction due to a Ponzi-type investment scheme and are using Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58. Free 1040ez online Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Free 1040ez online You do not need to complete Appendix A. Free 1040ez online For details, see Losses from Ponzi-type investment schemes , in this chapter. Free 1040ez online Introduction This chapter explains the tax treatment of personal (not business or investment related) casualty losses, theft losses, and losses on deposits. Free 1040ez online The chapter also explains the following  topics. Free 1040ez online How to figure the amount of your loss. Free 1040ez online How to treat insurance and other reimbursements you receive. Free 1040ez online The deduction limits. Free 1040ez online When and how to report a casualty or theft. Free 1040ez online Forms to file. Free 1040ez online    When you have a casualty or theft, you have to file Form 4684. Free 1040ez online You will also have to file one or more of the following forms. Free 1040ez online Schedule A (Form 1040), Itemized Deductions Schedule D (Form 1040), Capital Gains and Losses Condemnations. Free 1040ez online   For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544, Sales and Other Disposition of Assets. Free 1040ez online Workbook for casualties and thefts. Free 1040ez online    Publication 584 is available to help you make a list of your stolen or damaged personal-use property and figure your loss. Free 1040ez online It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Free 1040ez online Business or investment-related losses. Free 1040ez online   For information on a casualty or theft loss of business or income-producing property, see Publication 547, Casualties, Disasters, and Thefts. Free 1040ez online Useful Items - You may want to see: Publication 544 Sales and Other Dispositions  of Assets 547 Casualties, Disasters, and   Thefts 584 Casualty, Disaster, and Theft   Loss Workbook (Personal-Use  Property) Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule D (Form 1040) Capital Gains and Losses 4684 Casualties and Thefts Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Free 1040ez online A sudden event is one that is swift, not gradual or progressive. Free 1040ez online An unexpected event is one that is ordinarily unanticipated and unintended. Free 1040ez online 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. Free 1040ez online Deductible losses. Free 1040ez online   Deductible casualty losses can result from a number of different causes, including the following. Free 1040ez online Car accidents (but see Nondeductible losses , next, for exceptions). Free 1040ez online Earthquakes. Free 1040ez online Fires (but see Nondeductible losses , next, for exceptions). Free 1040ez online Floods. Free 1040ez online 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. Free 1040ez online Mine cave-ins. Free 1040ez online Shipwrecks. Free 1040ez online Sonic booms. Free 1040ez online Storms, including hurricanes and tornadoes. Free 1040ez online Terrorist attacks. Free 1040ez online Vandalism. Free 1040ez online Volcanic eruptions. Free 1040ez online Nondeductible losses. Free 1040ez online   A casualty loss is not deductible if the damage or destruction is caused by the following. Free 1040ez online Accidentally breaking articles such as glassware or china under normal conditions. Free 1040ez online A family pet (explained below). Free 1040ez online A fire if you willfully set it or pay someone else to set it. Free 1040ez online A car accident if your willful negligence or willful act caused it. Free 1040ez online The same is true if the willful act or willful negligence of someone acting for you caused the accident. Free 1040ez online Progressive deterioration (explained later). Free 1040ez online Family pet. Free 1040ez online   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. Free 1040ez online Example. Free 1040ez online Your antique oriental rug was damaged by your new puppy before it was housebroken. Free 1040ez online Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. Free 1040ez online Progressive deterioration. Free 1040ez online    Loss of property due to progressive deterioration is not deductible as a casualty loss. Free 1040ez online This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Free 1040ez online The following are examples of damage due to progressive deterioration. Free 1040ez online The steady weakening of a building due to normal wind and weather conditions. Free 1040ez online The deterioration and damage to a water heater that bursts. Free 1040ez online However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. Free 1040ez online Most losses of property caused by droughts. Free 1040ez online To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. Free 1040ez online Termite or moth damage. Free 1040ez online The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. Free 1040ez online However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. Free 1040ez online Damage from corrosive drywall. Free 1040ez online   Under a special procedure, you may be able to claim a casualty loss deduction for amounts you paid to repair damage to your home and household appliances that resulted from corrosive drywall. Free 1040ez online For details, see Publication 547. Free 1040ez online Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. Free 1040ez online The taking of property must be illegal under the laws of the state where it occurred and it must have been done with criminal intent. Free 1040ez online You do not need to show a conviction for theft. Free 1040ez online Theft includes the taking of money or property by the following means. Free 1040ez online Blackmail. Free 1040ez online Burglary. Free 1040ez online Embezzlement. Free 1040ez online Extortion. Free 1040ez online Kidnapping for ransom. Free 1040ez online Larceny. Free 1040ez online Robbery. Free 1040ez online The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Free 1040ez online Decline in market value of stock. Free 1040ez online   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. Free 1040ez online 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. Free 1040ez online You report a capital loss on Schedule D (Form 1040). Free 1040ez online For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Free 1040ez online Mislaid or lost property. Free 1040ez online   The simple disappearance of money or property is not a theft. Free 1040ez online 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. Free 1040ez online Sudden, unexpected, and unusual events are defined earlier. Free 1040ez online Example. Free 1040ez online A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Free 1040ez online The diamond falls from the ring and is never found. Free 1040ez online The loss of the diamond is a casualty. Free 1040ez online Losses from Ponzi-type investment schemes. Free 1040ez online   If you had a loss from a Ponzi-type investment scheme, see: Revenue Ruling 2009-9, 2009-14 I. Free 1040ez online R. Free 1040ez online B. Free 1040ez online 735 (available at www. Free 1040ez online irs. Free 1040ez online gov/irb/2009-14_IRB/ar07. Free 1040ez online html). Free 1040ez online Revenue Procedure 2009-20, 2009-14 I. Free 1040ez online R. Free 1040ez online B. Free 1040ez online 749 (available at www. Free 1040ez online irs. Free 1040ez online gov/irb/2009-14_IRB/ar11. Free 1040ez online html). Free 1040ez online Revenue Procedure 2011-58, 2011-50 I. Free 1040ez online R. Free 1040ez online B. Free 1040ez online 849 (available at www. Free 1040ez online irs. Free 1040ez online gov/irb/2011-50_IRB/ar11. Free 1040ez online html). Free 1040ez online If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. Free 1040ez online Skip lines 19 to 27. Free 1040ez online Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Free 1040ez online You do not need to complete Appendix A. Free 1040ez online For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. Free 1040ez online   If you choose not to use the procedures in Revenue Procedure 2009-20, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. Free 1040ez online Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. Free 1040ez online If you incurred this type of loss, you can choose one of the following ways to deduct the loss. Free 1040ez online As a casualty loss. Free 1040ez online As an ordinary loss. Free 1040ez online As a nonbusiness bad debt. Free 1040ez online Casualty loss or ordinary loss. Free 1040ez online   You can choose to deduct a loss on deposits as a casualty loss or as an ordinary loss for any year in which you can reasonably estimate how much of your deposits you have lost in an insolvent or bankrupt financial institution. Free 1040ez online The choice is generally made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. Free 1040ez online If you treat the loss as a casualty or ordinary loss, you cannot treat the same amount of the loss as a nonbusiness bad debt when it actually becomes worthless. Free 1040ez online However, you can take a nonbusiness bad debt deduction for any amount of loss that is more than the estimated amount you deducted as a casualty or ordinary loss. Free 1040ez online Once you make this choice, you cannot change it without permission from the Internal Revenue Service. Free 1040ez online   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Free 1040ez online The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. Free 1040ez online Your loss is subject to the 2%-of-adjusted-gross-income limit. Free 1040ez online You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. Free 1040ez online Nonbusiness bad debt. Free 1040ez online   If you do not choose to deduct the loss as a casualty loss or as an ordinary loss, you must wait until the year the actual loss is determined and deduct the loss as a nonbusiness bad debt in that year. Free 1040ez online How to report. Free 1040ez online   The kind of deduction you choose for your loss on deposits determines how you report your loss. Free 1040ez online If you choose: Casualty loss — report it on Form 4684 first and then on Schedule A (Form 1040). Free 1040ez online Ordinary loss — report it on Schedule A (Form 1040) as a miscellaneous itemized deduction. Free 1040ez online Nonbusiness bad debt — report it on Form 8949 first and then on Schedule D (Form 1040). Free 1040ez online More information. Free 1040ez online   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684 or Deposit in Insolvent or Bankrupt Financial Institution in Publication 550. Free 1040ez online Proof of Loss To deduct a casualty or theft loss, you must be able to prove that you had a casualty or theft. Free 1040ez online You also must be able to support the amount you take as a deduction. Free 1040ez online Casualty loss proof. Free 1040ez online   For a casualty loss, your records should show all the following. Free 1040ez online The type of casualty (car accident, fire, storm, etc. Free 1040ez online ) and when it occurred. Free 1040ez online That the loss was a direct result of the casualty. Free 1040ez online 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. Free 1040ez online Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Free 1040ez online Theft loss proof. Free 1040ez online   For a theft loss, your records should show all the following. Free 1040ez online When you discovered that your property was missing. Free 1040ez online That your property was stolen. Free 1040ez online That you were the owner of the property. Free 1040ez online Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Free 1040ez online It is important that you have records that will prove your deduction. Free 1040ez online If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. Free 1040ez online Figuring a Loss Figure the amount of your loss using the following steps. Free 1040ez online Determine your adjusted basis in the property before the casualty or theft. Free 1040ez online Determine the decrease in fair market value of the property as a result of the casualty or theft. Free 1040ez online From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. Free 1040ez online For personal-use property and property used in performing services as an employee, apply the deduction limits, discussed later, to determine the amount of your deductible loss. Free 1040ez online Gain from reimbursement. Free 1040ez online   If your reimbursement is more than your adjusted basis in the property, you have a gain. Free 1040ez online This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. Free 1040ez online If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. Free 1040ez online See Publication 547 for more information on how to treat a gain from a reimbursement for a casualty or theft. Free 1040ez online Leased property. Free 1040ez online   If you are liable for casualty damage to property you lease, your loss is the amount you must pay to repair the property minus any insurance or other reimbursement you receive or expect to receive. Free 1040ez online Decrease in Fair Market Value Fair market value (FMV) is the price for which you could sell your property to a willing buyer when neither of you has to sell or buy and both of you know all the relevant facts. Free 1040ez online The decrease in FMV used to figure the amount of a casualty or theft loss is the difference between the property's fair market value immediately before and immediately after the casualty or theft. Free 1040ez online FMV of stolen property. Free 1040ez online   The FMV of property immediately after a theft is considered to be zero, since you no longer have the property. Free 1040ez online Example. Free 1040ez online Several years ago, you purchased silver dollars at face value for $150. Free 1040ez online This is your adjusted basis in the property. Free 1040ez online Your silver dollars were stolen this year. Free 1040ez online The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. Free 1040ez online Your theft loss is $150. Free 1040ez online Recovered stolen property. Free 1040ez online   Recovered stolen property is your property that was stolen and later returned to you. Free 1040ez online If you recovered property after you had already taken a theft loss deduction, you must refigure your loss using the smaller of the property's adjusted basis (explained later) or the decrease in FMV from the time just before it was stolen until the time it was recovered. Free 1040ez online Use this amount to refigure your total loss for the year in which the loss was deducted. Free 1040ez online   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. Free 1040ez online But report the difference only up to the amount of the loss that reduced your tax. Free 1040ez online For more information on the amount to report, see Recoveries in chapter 12. Free 1040ez online Figuring Decrease in FMV— Items To Consider To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Free 1040ez online However, other measures can also be used to establish certain decreases. Free 1040ez online Appraisal. Free 1040ez online   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. Free 1040ez online The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Free 1040ez online This information is needed to limit any deduction to the actual loss resulting from damage to the property. Free 1040ez online   Several factors are important in evaluating the accuracy of an appraisal, including the following. Free 1040ez online The appraiser's familiarity with your property before and after the casualty or theft. Free 1040ez online The appraiser's knowledge of sales of comparable property in the area. Free 1040ez online The appraiser's knowledge of conditions in the area of the casualty. Free 1040ez online The appraiser's method of appraisal. Free 1040ez online    You may be able to use an appraisal that you used to get a federal loan (or a federal loan guarantee) as the result of a federally declared disaster to establish the amount of your disaster loss. Free 1040ez online For more information on disasters, see Disaster Area Losses, in Pub. Free 1040ez online 547. Free 1040ez online Cost of cleaning up or making repairs. Free 1040ez online   The cost of repairing damaged property is not part of a casualty loss. Free 1040ez online Neither is the cost of cleaning up after a casualty. Free 1040ez online 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. Free 1040ez online The repairs are actually made. Free 1040ez online The repairs are necessary to bring the property back to its condition before the casualty. Free 1040ez online The amount spent for repairs is not excessive. Free 1040ez online The repairs take care of the damage only. Free 1040ez online The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Free 1040ez online Landscaping. Free 1040ez online   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. Free 1040ez online You may be able to measure your loss by what you spend on the following. Free 1040ez online Removing destroyed or damaged trees and shrubs minus any salvage you receive. Free 1040ez online Pruning and other measures taken to preserve damaged trees and shrubs. Free 1040ez online Replanting necessary to restore the property to its approximate value before the casualty. Free 1040ez online Car value. Free 1040ez online    Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. Free 1040ez online You can use the book's retail values and modify them by such factors as mileage and the condition of your car to figure its value. Free 1040ez online The prices are not official, but they may be useful in determining value and suggesting relative prices for comparison with current sales and offerings in your area. Free 1040ez online If your car is not listed in the books, determine its value from other sources. Free 1040ez online A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. Free 1040ez online Figuring Decrease in FMV— Items Not To Consider You generally should not consider the following items when attempting to establish the decrease in FMV of your property. Free 1040ez online Cost of protection. Free 1040ez online   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. Free 1040ez online The amount you spend on insurance or to board up your house against a storm is not part of your loss. Free 1040ez online   If you make permanent improvements to your property to protect it against a casualty or theft, add the cost of these improvements to your basis in the property. Free 1040ez online An example would be the cost of a dike to prevent flooding. Free 1040ez online Exception. Free 1040ez online   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments. Free 1040ez online See Disaster Area Losses in Publication 547. Free 1040ez online Incidental expenses. Free 1040ez online   Any incidental expenses you have due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. Free 1040ez online Replacement cost. Free 1040ez online   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. Free 1040ez online Sentimental value. Free 1040ez online   Do not consider sentimental value when determining your loss. Free 1040ez online If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV, as limited by your adjusted basis in the property. Free 1040ez online Decline in market value of property in or near casualty area. Free 1040ez online   A decrease in the value of your property because it is in or near an area that suffered a casualty, or that might again suffer a casualty, is not to be taken into consideration. Free 1040ez online You have a loss only for actual casualty damage to your property. Free 1040ez online However, if your home is in a federally declared disaster area, see Disaster Area Losses in Publication 547. Free 1040ez online Costs of photographs and appraisals. Free 1040ez online    Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. Free 1040ez online Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. Free 1040ez online    Appraisals are used to figure the decrease in FMV because of a casualty or theft. Free 1040ez online See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. Free 1040ez online   The costs of photographs and appraisals used as evidence of the value and condition of property damaged as a result of a casualty are not a part of the loss. Free 1040ez online You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). Free 1040ez online For information about miscellaneous deductions, see chapter 28. Free 1040ez online Adjusted Basis Adjusted basis is your basis in the property (usually cost) increased or decreased by various events, such as improvements and casualty losses. Free 1040ez online For more information, see chapter 13. Free 1040ez online Insurance and Other Reimbursements If you receive an insurance payment or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Free 1040ez online You do not have a casualty or theft loss to the extent you are reimbursed. Free 1040ez online If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Free 1040ez online You must reduce your loss even if you do not receive payment until a later tax year. Free 1040ez online See Reimbursement Received After Deducting Loss , later. Free 1040ez online Failure to file a claim for reimbursement. Free 1040ez online   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. Free 1040ez online Otherwise, you cannot deduct this loss as a casualty or theft loss. Free 1040ez online However, this rule does not apply to the portion of the loss not covered by insurance (for example, a deductible). Free 1040ez online Example. Free 1040ez online You have a car insurance policy with a $1,000 deductible. Free 1040ez online Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the deduction limits discussed later). Free 1040ez online This is true even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. Free 1040ez online Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. Free 1040ez online Other types of reimbursements are discussed next. Free 1040ez online Also see the Instructions for Form 4684. Free 1040ez online Employer's emergency disaster fund. Free 1040ez online   If you receive money from your employer's emergency disaster fund and you must use that money to rehabilitate or replace property on which you are claiming a casualty loss deduction, you must take that money into consideration in computing the casualty loss deduction. Free 1040ez online Take into consideration only the amount you used to replace your destroyed or damaged property. Free 1040ez online Example. Free 1040ez online Your home was extensively damaged by a tornado. Free 1040ez online Your loss after reimbursement from your insurance company was $10,000. Free 1040ez online Your employer set up a disaster relief fund for its employees. Free 1040ez online Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. Free 1040ez online You received $4,000 from the fund and spent the entire amount on repairs to your home. Free 1040ez online In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. Free 1040ez online Your casualty loss before applying the deduction limits discussed later is $6,000. Free 1040ez online Cash gifts. Free 1040ez online   If you receive excludable cash gifts as a disaster victim and there are no limits on how you can use the money, you do not reduce your casualty loss by these excludable cash gifts. Free 1040ez online This applies even if you use the money to pay for repairs to property damaged in the disaster. Free 1040ez online Example. Free 1040ez online Your home was damaged by a hurricane. Free 1040ez online Relatives and neighbors made cash gifts to you that were excludable from your income. Free 1040ez online You used part of the cash gifts to pay for repairs to your home. Free 1040ez online There were no limits or restrictions on how you could use the cash gifts. Free 1040ez online Because it was an excludable gift, the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. Free 1040ez online Insurance payments for living expenses. Free 1040ez online   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. Free 1040ez online You lose the use of your main home because of a casualty. Free 1040ez online Government authorities do not allow you access to your main home because of a casualty or threat of one. Free 1040ez online Inclusion in income. Free 1040ez online   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. Free 1040ez online Report this amount on Form 1040, line 21. Free 1040ez online However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. Free 1040ez online See Qualified disaster relief payments, under Disaster Area Losses in Publication 547. Free 1040ez online   A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. Free 1040ez online Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. Free 1040ez online Generally, these expenses include the amounts you pay for the following. Free 1040ez online Rent for suitable housing. Free 1040ez online Transportation. Free 1040ez online Food. Free 1040ez online Utilities. Free 1040ez online Miscellaneous services. Free 1040ez online Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one. Free 1040ez online Example. Free 1040ez online As a result of a fire, you vacated your apartment for a month and moved to a motel. Free 1040ez online You normally pay $525 a month for rent. Free 1040ez online None was charged for the month the apartment was vacated. Free 1040ez online Your motel rent for this month was $1,200. Free 1040ez online You normally pay $200 a month for food. Free 1040ez online Your food expenses for the month you lived in the motel were $400. Free 1040ez online You received $1,100 from your insurance company to cover your living expenses. Free 1040ez online You determine the payment you must include in income as follows. Free 1040ez online 1) Insurance payment for living expenses $1,100 2) Actual expenses during the month you are unable to use your home because of fire 1,600   3) Normal living expenses 725   4) Temporary increase in living  expenses: Subtract line 3 from line 2 875 5) Amount of payment includible  in income: Subtract line 4  from line 1 $ 225 Tax year of inclusion. Free 1040ez online   You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment. Free 1040ez online Example. Free 1040ez online Your main home was destroyed by a tornado in August 2011. Free 1040ez online You regained use of your home in November 2012. Free 1040ez online The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. Free 1040ez online You include this amount in income on your 2012 Form 1040. Free 1040ez online If, in 2013, you receive further payments to cover the living expenses you had in 2011 and 2012, you must include those payments in income on your 2013 Form 1040. Free 1040ez online Disaster relief. Free 1040ez online   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. Free 1040ez online Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Free 1040ez online For more information, see Disaster Area Losses in Publication 547. Free 1040ez online Disaster unemployment assistance payments are unemployment benefits that are taxable. Free 1040ez online Generally, disaster relief grants and qualified disaster mitigation payments made under the Robert T. Free 1040ez online Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not includible in your income. Free 1040ez online See Disaster Area Losses in Publication 547. Free 1040ez online Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you receive your actual reimbursement. Free 1040ez online This section explains the adjustment you may have to make. Free 1040ez online Actual reimbursement less than expected. Free 1040ez online   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. Free 1040ez online Example. Free 1040ez online Your personal car had an FMV of $2,000 when it was destroyed in a collision with another car in 2012. Free 1040ez online The accident was due to the negligence of the other driver. Free 1040ez online At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. Free 1040ez online You did not have a deductible loss in 2012. Free 1040ez online In January 2013, the court awarded you a judgment of $2,000. Free 1040ez online However, in July it became apparent that you will be unable to collect any amount from the other driver. Free 1040ez online You can deduct the loss in 2013 subject to the limits discussed later. Free 1040ez online Actual reimbursement more than expected. Free 1040ez online   If you later receive more reimbursement than you expected after you claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Free 1040ez online However, if any part of the original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Free 1040ez online You do not refigure your tax for the year you claimed the deduction. Free 1040ez online For more information, see Recoveries in chapter 12. Free 1040ez online 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. Free 1040ez online If you have already taken a deduction for a loss and you receive the reimbursement in a later year, you may have to include the gain in your income for the later year. Free 1040ez online Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. Free 1040ez online See Figuring a Gain in Publication 547 for more information on how to treat a gain from the reimbursement of a casualty or theft. Free 1040ez online Actual reimbursement same as expected. Free 1040ez online   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. Free 1040ez online Example. Free 1040ez online In December 2013, you had a collision while driving your personal car. Free 1040ez online Repairs to the car cost $950. Free 1040ez online You had $100 deductible collision insurance. Free 1040ez online Your insurance company agreed to reimburse you for the rest of the damage. Free 1040ez online Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. Free 1040ez online Due to the $100 rule (discussed later under Deduction Limits ), you cannot deduct the $100 you paid as the deductible. Free 1040ez online When you receive the $850 from the insurance company in 2014, do not report it as income. Free 1040ez online Single Casualty on Multiple Properties Personal property. Free 1040ez online   Personal property is any property that is not real property. Free 1040ez online If your personal property is stolen or is damaged or destroyed by a casualty, you must figure your loss separately for each item of property. Free 1040ez online Then combine these separate losses to figure the total loss from that casualty or theft. Free 1040ez online Example. Free 1040ez online A fire in your home destroyed an upholstered chair, an oriental rug, and an antique table. Free 1040ez online You did not have fire insurance to cover your loss. Free 1040ez online (This was the only casualty or theft you had during the year. Free 1040ez online ) You paid $750 for the chair and you established that it had an FMV of $500 just before the fire. Free 1040ez online The rug cost $3,000 and had an FMV of $2,500 just before the fire. Free 1040ez online You bought the table at an auction for $100 before discovering it was an antique. Free 1040ez online It had been appraised at $900 before the fire. Free 1040ez online You figure your loss on each of these items as follows:     Chair Rug Table 1) Basis (cost) $750 $3,000 $100 2) FMV before fire $500 $2,500 $900 3) FMV after fire –0– –0– –0– 4) Decrease in FMV $500 $2,500 $900 5) Loss (smaller of (1) or  (4)) $500 $2,500 $100           6) Total loss     $3,100 Real property. Free 1040ez online   In figuring a casualty loss on personal-use real property, treat the entire property (including any improvements, such as buildings, trees, and shrubs) as one item. Free 1040ez online Figure the loss using the smaller of the adjusted basis or the decrease in FMV of the entire property. Free 1040ez online Example. Free 1040ez online You bought your home a few years ago. Free 1040ez online You paid $160,000 ($20,000 for the land and $140,000 for the house). Free 1040ez online You also spent $2,000 for landscaping. Free 1040ez online This year a fire destroyed your home. Free 1040ez online The fire also damaged the shrubbery and trees in your yard. Free 1040ez online The fire was your only casualty or theft loss this year. Free 1040ez online Competent appraisers valued the property as a whole at $200,000 before the fire, but only $30,000 after the fire. Free 1040ez online (The loss to your household furnishings is not shown in this example. Free 1040ez online It would be figured separately on each item, as explained earlier under Personal property . Free 1040ez online ) Shortly after the fire, the insurance company paid you $155,000 for the loss. Free 1040ez online You figure your casualty loss as follows: 1) Adjusted basis of the entire property (land, building, and landscaping) $162,000 2) FMV of entire property before fire $200,000 3) FMV of entire property after fire 30,000 4) Decrease in FMV of entire  property $170,000 5) Loss (smaller of (1) or (4)) $162,000 6) Subtract insurance 155,000 7) Amount of loss after reimbursement $7,000 Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. Free 1040ez online If the loss was to property for your personal use or your family's use, there are two limits on the amount you can deduct for your casualty or theft loss. Free 1040ez online You must reduce each casualty or theft loss by $100 ($100 rule). Free 1040ez online You must further reduce the total of all your casualty or theft losses by 10% of your adjusted gross income (10% rule). Free 1040ez online You make these reductions on Form 4684. Free 1040ez online These rules are explained next and Table 25-1 summarizes how to apply the $100 rule and the 10% rule in various situations. Free 1040ez online For more detailed explanations and examples, see Publication 547. Free 1040ez online Table 25-1. Free 1040ez online How To Apply the Deduction Limits for Personal-Use Property   $100 Rule 10% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. Free 1040ez online Apply this rule after you have figured the amount of your loss. Free 1040ez online You must reduce your total casualty or theft loss by 10% of your adjusted gross income. Free 1040ez online Apply this rule after you reduce each loss by $100 (the $100 rule). Free 1040ez online Single Event Apply this rule only once, even if many pieces of property are affected. Free 1040ez online Apply this rule only once, even if many pieces of property are affected. Free 1040ez online More Than One Event Apply to the loss from each event. Free 1040ez online Apply to the total of all your losses from all events. Free 1040ez online More Than One Person— With Loss From the Same Event (other than a married couple filing jointly) Apply separately to each person. Free 1040ez online Apply separately to each person. Free 1040ez online Married Couple—With Loss From the Same Event Filing Jointly Apply as if you were one person. Free 1040ez online Apply as if you were one person. Free 1040ez online Filing Separately Apply separately to each spouse. Free 1040ez online Apply separately to each spouse. Free 1040ez online More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. Free 1040ez online Apply separately to each owner of jointly owned property. Free 1040ez online Property used partly for business and partly for personal purposes. Free 1040ez online   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use part and for the business or income-producing part. Free 1040ez online You must figure each loss separately because the $100 rule and the 10% rule apply only to the loss on the personal-use part of the property. Free 1040ez online $100 Rule After you have figured your casualty or theft loss on personal-use property, you must reduce that loss by $100. Free 1040ez online This reduction applies to each total casualty or theft loss. Free 1040ez online It does not matter how many pieces of property are involved in an event. Free 1040ez online Only a single $100 reduction applies. Free 1040ez online Example. Free 1040ez online A hailstorm damages your home and your car. Free 1040ez online Determine the amount of loss, as discussed earlier, for each of these items. Free 1040ez online Since the losses are due to a single event, you combine the losses and reduce the combined amount by $100. Free 1040ez online Single event. Free 1040ez online   Generally, events closely related in origin cause a single casualty. Free 1040ez online It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. Free 1040ez online 10% Rule You must reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Free 1040ez online Apply this rule after you reduce each loss by $100. Free 1040ez online For more information, see the Form 4684 instructions. Free 1040ez online If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. Free 1040ez online Example 1. Free 1040ez online In June, you discovered that your house had been burglarized. Free 1040ez online Your loss after insurance reimbursement was $2,000. Free 1040ez online Your adjusted gross income for the year you discovered the theft is $29,500. Free 1040ez online You first apply the $100 rule and then the 10% rule. Free 1040ez online Figure your theft loss deduction as follows. Free 1040ez online 1) Loss after insurance $2,000 2) Subtract $100 100 3) Loss after $100 rule $1,900 4) Subtract 10% × $29,500 AGI 2,950 5) Theft loss deduction –0– You do not have a theft loss deduction because your loss after you apply the $100 rule ($1,900) is less than 10% of your adjusted gross income ($2,950). Free 1040ez online Example 2. Free 1040ez online In March, you had a car accident that totally destroyed your car. Free 1040ez online You did not have collision insurance on your car, so you did not receive any insurance reimbursement. Free 1040ez online Your loss on the car was $1,800. Free 1040ez online In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items stored there. Free 1040ez online Your loss on the basement items after reimbursement was $2,100. Free 1040ez online Your adjusted gross income for the year that the accident and fire occurred is $25,000. Free 1040ez online You figure your casualty loss deduction as follows. Free 1040ez online       Base-     Car ment 1) Loss $1,800 $2,100 2) Subtract $100 per incident 100 100 3) Loss after $100 rule $1,700 $2,000 4) Total loss $3,700 5) Subtract 10% × $25,000 AGI 2,500 6) Casualty loss deduction $1,200 Gains and losses. Free 1040ez online   If you had both gains and losses from casualties or thefts to personal-use property, you must compare your total gains to your total losses. Free 1040ez online Do this after you have reduced each loss by any reimbursements and by $100, but before you have reduced the losses by 10% of your adjusted gross income. Free 1040ez online Casualty or theft gains do not include gains you choose to postpone. Free 1040ez online See Publication 547 for information on the postponement of gain. Free 1040ez online Losses more than gains. Free 1040ez online   If your losses are more than your recognized gains, subtract your gains from your losses and reduce the result by 10% of your adjusted gross income. Free 1040ez online The rest, if any, is your deductible loss from personal-use property. Free 1040ez online Gains more than losses. Free 1040ez online   If your recognized gains are more than your losses, subtract your losses from your gains. Free 1040ez online The difference is treated as capital gain and must be reported on Schedule D (Form 1040). Free 1040ez online The 10% rule does not apply to your gains. Free 1040ez online When To Report Gains and Losses Gains. Free 1040ez online   If you receive an insurance or other reimbursement that is more than your adjusted basis in the destroyed or stolen property, you have a gain from the casualty or theft. Free 1040ez online You must include this gain in your income in the year you receive the reimbursement, unless you choose to postpone reporting the gain as explained in Publication 547. Free 1040ez online If you have a loss, see Table 25-2 . Free 1040ez online Table 25-2. Free 1040ez online When To Deduct a Loss IF you have a loss. Free 1040ez online . Free 1040ez online . Free 1040ez online THEN deduct it in the year. Free 1040ez online . Free 1040ez online . Free 1040ez online from a casualty, the loss occurred. Free 1040ez online in a federally declared disaster area, the disaster occurred or the year immediately before the disaster. Free 1040ez online from a theft, the theft was discovered. Free 1040ez online on a deposit treated as a:   • casualty or any ordinary loss, a reasonable estimate can be made. Free 1040ez online • bad debt, deposits are totally worthless. Free 1040ez online Losses. Free 1040ez online   Generally, you can deduct a casualty loss that is not reimbursable only in the tax year in which the casualty occurred. Free 1040ez online This is true even if you do not repair or replace the damaged property until a later year. Free 1040ez online   You can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Free 1040ez online   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. Free 1040ez online Loss on deposits. Free 1040ez online   If your loss is a loss on deposits in an insolvent or bankrupt financial institution, see Loss on Deposits , earlier. Free 1040ez online Disaster Area Loss You generally must deduct a casualty loss in the year it occurred. Free 1040ez online However, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct the loss on your tax return or amended return for either of the following years. Free 1040ez online The year the disaster occurred. Free 1040ez online The year immediately preceding the year the disaster occurred. Free 1040ez online Gains. Free 1040ez online    Special rules apply if you choose to postpone reporting gain on property damaged or destroyed in a federally declared disaster area. Free 1040ez online For those special rules, see Publication 547. Free 1040ez online Postponed tax deadlines. Free 1040ez online   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Free 1040ez online The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. Free 1040ez online   If any tax deadline is postponed, the IRS will publicize the postponement in your area by publishing a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Free 1040ez online Go to www. Free 1040ez online irs. Free 1040ez online gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Free 1040ez online Who is eligible. Free 1040ez online   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Free 1040ez online Any individual whose main home is located in a covered disaster area (defined next). Free 1040ez online Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Free 1040ez online Any individual who is a relief worker affiliated with a recognized government or philanthropic organization who is assisting in a covered disaster area. Free 1040ez online 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. Free 1040ez online The main home or principal place of business does not have to be located in the covered disaster area. Free 1040ez online 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. Free 1040ez online The spouse on a joint return with a taxpayer who is eligible for postponements. Free 1040ez online Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose records necessary to meet a postponed tax deadline are located in the covered disaster area. Free 1040ez online Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Free 1040ez online Any other person determined by the IRS to be affected by a federally declared disaster. Free 1040ez online Covered disaster area. Free 1040ez online   This is an area of a federally declared disaster in which the IRS has decided to postpone tax deadlines for up to 1 year. Free 1040ez online Abatement of interest and penalties. Free 1040ez online   The IRS may abate the interest and penalties on underpaid income tax for the length of any postponement of tax deadlines. Free 1040ez online More information. Free 1040ez online   For more information, see Disaster Area Losses in Publication 547. Free 1040ez online How To Report Gains and Losses Use Form 4684 to report a gain or a deductible loss from a casualty or theft. Free 1040ez online If you have more than one casualty or theft, use a separate Form 4684 to determine your gain or loss for each event. Free 1040ez online Combine the gains and losses on one Form 4684. Free 1040ez online Follow the form instructions as to which lines to fill out. Free 1040ez online In addition, you must use the appropriate schedule to report a gain or loss. Free 1040ez online The schedule you use depends on whether you have a gain or loss. Free 1040ez online If you have a: Report it on: Gain Schedule D (Form 1040) Loss Schedule A (Form 1040) Adjustments to basis. Free 1040ez online   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. Free 1040ez online Amounts you spend to restore your property after a casualty increase your adjusted basis. Free 1040ez online See Adjusted Basis in chapter 13 for more information. Free 1040ez online Net operating loss (NOL). Free 1040ez online    If your casualty or theft loss deduction causes your deductions for the year to be more than your income for the year, you may have an NOL. Free 1040ez online You can use an NOL to lower your tax in an earlier year, allowing you to get a refund for tax you have already paid. Free 1040ez online Or, you can use it to lower your tax in a later year. Free 1040ez online You do not have to be in business to have an NOL from a casualty or theft loss. Free 1040ez online For more information, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Free 1040ez online Prev  Up  Next   Home   More Online Publications