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Www irs gov app vita 2. Www irs gov app vita   Filing Requirements and Required Disclosures Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Annual Information ReturnsSupporting Organization Annual Information Return Unrelated Business Income Tax ReturnEstimated tax. Www irs gov app vita Employment Tax ReturnsException. Www irs gov app vita FUTA tax exception. Www irs gov app vita FICA tax exemption election. Www irs gov app vita Revoking the election. Www irs gov app vita Definitions. Www irs gov app vita Effect on employees. Www irs gov app vita Political Organization Income Tax ReturnExempt function. Www irs gov app vita Political organization taxable income. Www irs gov app vita Separate fund. Www irs gov app vita Failure to file. Www irs gov app vita Failure to pay on time. Www irs gov app vita Reporting Requirements for a Political OrganizationForm 8871 Form 8872 Donee Information ReturnCharitable deduction property. Www irs gov app vita Publicly traded securities. Www irs gov app vita Exceptions. Www irs gov app vita Form 8283. Www irs gov app vita Information Provided to DonorsDisclosure of Quid Pro Quo Contributions Acknowledgment of Charitable Contributions of $250 or More Acknowledgment of Vehicle Contribution Qualified Intellectual Property Report of Cash Received Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting FormsAnnual Information Return Public Inspection of Exemption Application Political Organization Reporting Forms Required DisclosuresSolicitation of Nondeductible Contributions Sales of Information or Services Available Free From Government Dues Used for Lobbying or Political Activities Prohibited Tax Shelter Transactions Miscellaneous RulesOrganizational Changes and Exempt Status Introduction Most exempt organizations (including private foundations) must file various returns and reports at some time during (or following the close of) their accounting period. Www irs gov app vita Topics - This chapter discusses: Annual information returns Unrelated business income tax return Employment tax returns Political organization income tax return Reporting requirements for a political organization Donee information return Information provided to donors Report of cash received Public inspection of exemption applications, annual returns, and political organizations reporting forms Required disclosures Miscellaneous rules Useful Items - You may want to see: Publication 15 Circular E, Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 598 Tax on Unrelated Business Income of Exempt Organizations Form (and Instructions) 941 Employer's Quarterly Federal Tax Return 990 Return of Organization Exempt From Income Tax 990-EZ Short Form Return of Organization Exempt From Income Tax Schedule A (Form 990 or 990-EZ) Public Charity Status and Public Support Schedule B (Form 990, 990-EZ, or 990-PF) Schedule of Contributors Schedule C (Form 990 or 990-EZ) Political Campaign and Lobbying Activities Schedule D (Form 990) Supplemental Financial Statements Schedule E (Form 990 or 990-EZ) Schools Schedule F (Form 990) Statement of Activities Outside the United States Schedule G (Form 990 or 990-EZ) Supplemental Information Regarding Fundraising or Gaming Activities Schedule H (Form 990) Hospitals Schedule I (Form 990) Grants and Other Assistance to Organizations, Governments, and Individuals in the United States Schedule J (Form 990) Compensation Information Schedule K (Form 990) Supplemental Information on Tax-Exempt Bonds Schedule L (Form 990 or 990-EZ) Transactions With Interested Persons Schedule M (Form 990) Noncash Contributions Schedule N (Form 990 or 990-EZ) Liquidation, Termination, Dissolution, or Significant Disposition of Assets Schedule O (Form 990 or 990-EZ) Supplemental Information to Form 990 Schedule R (Form 990) Related Organizations and Unrelated Partnerships 990-PF Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation 990-BL Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons 990-T Exempt Organization Business Income Tax Return 990-W Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations 1120-POL U. Www irs gov app vita S. Www irs gov app vita Income Tax Return for Certain Political Organizations 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code 5768 Election/Revocation of Election by an Eligible Section 501(c)(3) Organization To Make Expenditures To Influence Legislation 6069 Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust Under Section 4953 and Computation of Section 192 Deduction 7004 Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns 8274 Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption from Employer Social Security and Medicare Taxes 8282 Donee Information Return 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business 8453-X Political Organization Declaration for Electronic Filing of Notice of Section 527 Status 8822-B Change of Address-Business 8868 Application for Extension of Time to File an Exempt Organization Return 8870 Information Return for Transfers Associated with Certain Personal Benefits Contracts 8871 Political Organization Notice of Section 527 Status 8872 Political Organization Report of Contributions and Expenditures 8886-T Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction 8899 Notice of Income from Donated Intellectual Property 8940 Request for Miscellaneous Determination See chapter 6 for information about getting these publications and forms. Www irs gov app vita Annual Information Returns Every organization exempt from federal income tax under section 501(a) must file an Annual Exempt Organization Return except: A church, an interchurch organization of local units of a church, a convention or association of churches, An integrated auxiliary of a church, A church-affiliated organization that is exclusively engaged in managing funds or maintaining retirement programs, A school below college level affiliated with a church or operated by a religious order, Church-affiliated mission societies if more than half of their activities are conducted in, or are directed at persons in, foreign countries, An exclusively religious activity of any religious order, A state institution, the income of which is excluded from gross income under section 115, A corporation described in section 501(c)(1) that is organized under an Act of Congress, an instrumentality of the United States, and is exempt from Federal income taxes, A stock bonus, pension, or profit-sharing trust that qualifies under section 401 (required to file Form 5500, Annual Return/Report of Employee Benefit Plan), A religious or apostolic organization described in section 501(d) (required to file Form 1065, U. Www irs gov app vita S. Www irs gov app vita Return of Partnership Income), A governmental unit or an affiliate of a governmental unit that meets the requirements of Revenue Procedure 95-48, 1995-2 C. Www irs gov app vita B. Www irs gov app vita 418, www. Www irs gov app vita irs. Www irs gov app vita gov/pub/irs-tege/rp1995-48. Www irs gov app vita pdf, A private foundation described in section 501(c)(3) and exempt under section 501(a) (required to file Form 990-PF, Return of Private Foundation), A political organization that is a state or local committee of a political party, a political committee of a state or local candidate, a caucus or association of state or local officials, or required to report under the Federal Election Campaign Act of 1971 as a political committee, An exempt organization (other than a private foundation) that normally has annual gross receipts of $50,000 or less, or A foreign organization, or an organization located in a U. Www irs gov app vita S. Www irs gov app vita possession, that normally has annual gross receipts from sources within the United States of $50,000 or less. Www irs gov app vita Supporting Organization Annual Information Return For tax years ending after August 17, 2006, all section 509(a)(3) supporting organizations are required to file Form 990 or 990-EZ with the IRS regardless of the organization's gross receipts, unless it qualifies as one of the following: An integrated auxiliary of a church; The exclusively religious activities of a religious order; or An organization, the gross receipts of which are normally not more than $5,000, that supports a section 509(a)(3) religious order. Www irs gov app vita If the organization is described in item (3) above, then it must submit Form 990-N (e-Postcard) unless it voluntarily files Form 990 or 990-EZ. Www irs gov app vita On its annual information return, at Part I, Schedule A (Form 990 or 990-EZ) a supporting organization must: List the section 509(a)(3) organizations to which it provides support, Indicate whether it is a Type I, Type II, or Type III supporting organization, and Certify that the organization is not controlled directly or indirectly by disqualified persons (other than by foundation managers and other than one or more publicly supported organizations). Www irs gov app vita Annual Electronic Filing Requirement for Small Tax-Exempt Organizations Small tax-exempt organizations with annual gross receipts normally $50,000 or less must submit Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ, with the IRS each year, if they choose not to file a Form 990 or 990-EZ. Www irs gov app vita Form 990-N requires the following information: The organization's legal name, and mailing address; Any name under which it operates and does business; Its Internet website address (if any); Its taxpayer identification number; The name and address of a principal officer; Organization's annual tax period; Verification that the organization's annual gross receipts are normally $50,000 or less; and Notification if the organization has terminated. Www irs gov app vita Form 990-N is due by the 15th day of the fifth month after the close of the tax year. Www irs gov app vita For tax years beginning after December 31, 2006, any organization that fails to meet its annual reporting requirement for 3 consecutive years will automatically lose its tax-exempt status. Www irs gov app vita To regain its exempt status an organization will have to reapply for recognition as a tax-exempt organization. Www irs gov app vita Exceptions. Www irs gov app vita   This filing requirement does not apply to: Churches, their integrated auxiliaries, and conventions or associations of churches; Organizations that are included in a group return; Private foundations required to file Form 990-PF; and Section 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ. Www irs gov app vita Forms 990 and 990-EZ Exempt organizations, other than private foundations, must file their annual information returns on Form 990 or 990-EZ, unless excepted from filing or allowed to submit Form 990-N, described earlier. Www irs gov app vita Generally, political organizations with gross receipts of $25,000 ($100,000 for a qualified state or local political organization (QSLPO)) or more for the tax year are required to file Form 990 or 990-EZ unless specifically excepted from filing the annual return. Www irs gov app vita The following political organizations are not required to file Form 990 or Form 990-EZ. Www irs gov app vita A state or local committee of a political party. Www irs gov app vita A political committee of a state or local candidate. Www irs gov app vita A caucus or association of state or local officials. Www irs gov app vita A political organization that is required to report as a political committee under the Federal Election Campaign Act. Www irs gov app vita A 501(c) organization that has expenditures for influencing or attempting to influence the selection, nomination, election, or appointment of any individual for a federal, state, or local public office. Www irs gov app vita Form 990-EZ. Www irs gov app vita   This is a shortened version of Form 990. Www irs gov app vita It is designed for use by small exempt organizations and nonexempt charitable trusts. Www irs gov app vita   Beginning in tax year 2010, an organization can file either Form 990 or 990-EZ if it meets the following: Its gross receipts during the year are less than $200,000. Www irs gov app vita Its total assets (line 25, column (B) of Form 990-EZ) at the end of the year are less than $500,000. Www irs gov app vita If your organization does not meet either of these conditions, you cannot file Form 990-EZ. Www irs gov app vita Instead you must file Form 990. Www irs gov app vita Group return. Www irs gov app vita   A group return on Form 990 may be filed by a central, parent, or like organization for two or more local organizations, none of which is a private foundation. Www irs gov app vita This return is in addition to the central organization's separate annual return if it must file a return. Www irs gov app vita It cannot be included in the group return. Www irs gov app vita See the instructions for Form 990 for the conditions under which this procedure may be used. Www irs gov app vita    In any year that an organization is properly included as a subordinate organization on a group return, it should not file its own Form 990. Www irs gov app vita Schedule A (Form 990 or 990-EZ). Www irs gov app vita   Organizations, other than private foundations, that are described in section 501(c)(3) and that are otherwise required to file Form 990 or 990-EZ must also complete Schedule A of that form. Www irs gov app vita Schedule B (Form 990, Form 990-EZ, or 990-PF). Www irs gov app vita   Organizations that file Form 990 or 990-EZ use this schedule to provide required information regarding their contributors. Www irs gov app vita Schedule O (Form 990). Www irs gov app vita   Organizations that file Form 990 must use this schedule to provide required additional information or if additional space is needed. Www irs gov app vita   Other schedules may be required to be filed with Form 990 or 990-EZ. Www irs gov app vita See the instructions for Form 990 or the instructions for Form 990-EZ for more information. Www irs gov app vita Report significant new or changed program services and changes to organizational documents. Www irs gov app vita    An organization should report new significant program services or significant changes in how it conducts program services, and significant changes to its organizational documents, on its Form 990 rather than in a letter to EO Determinations. Www irs gov app vita EO Determinations no longer issues letters confirming the tax-exempt status of organizations that report new services or significant changes, or changes to organizational documents. Www irs gov app vita See Miscellaneous Rules, Organization Changes and Exempt Status, later. Www irs gov app vita Form 990-PF All private foundations exempt under section 501(c)(3) must file Form 990-PF. Www irs gov app vita These organizations are discussed in chapter 3. Www irs gov app vita Electronic Filing You may be required to file Form 990, Form 990-EZ, or Form 990-PF, and related forms, schedules, and attachments electronically. Www irs gov app vita If an organization is required to file a return electronically but does not, the organization is considered to have not filed its return. Www irs gov app vita See Regulations section 301. Www irs gov app vita 6033-4 for more information. Www irs gov app vita The IRS may waive the requirement to file electronically in cases of undue hardship. Www irs gov app vita For information on filing a waiver, see Notice 2010-13, 2010-4 I. Www irs gov app vita R. Www irs gov app vita B. Www irs gov app vita 327, available at www. Www irs gov app vita irs. Www irs gov app vita gov/ir/2010-04_IRSB/ar14. Www irs gov app vita html. Www irs gov app vita Form 990. Www irs gov app vita   An organization is required to file Form 990 electronically if it files at least 250 returns during the calendar year and has total assets of $10 million or more at the end of the tax year. Www irs gov app vita Form 990-PF. Www irs gov app vita   An organization is required to file Form 990-PF electronically if it files at least 250 returns during the calendar year. Www irs gov app vita Due Date Forms 990, 990-EZ, or 990-PF must be filed by the 15th day of the fifth month after the end of your organization's accounting period. Www irs gov app vita Thus, for a calendar year taxpayer, Forms 990, 990-EZ, or 990-PF is due May 15 of the following year. Www irs gov app vita Extension of time to file. Www irs gov app vita   Use Form 8868 to request an automatic 3-month extension of time to file Forms 990, 990-EZ, or 990-PF and also to apply for an additional (not automatic) 3-month extension if needed. Www irs gov app vita   Do not apply for both the automatic 3-month extension and the additional 3-month extension at the same time. Www irs gov app vita For more information, see Form 8868 and its instructions. Www irs gov app vita   When filing Form 8868 for an automatic 3-month extension, neither a signature, nor an explanation is required. Www irs gov app vita However, when filing Form 8868 for an additional 3-month extension, both a signature and an explanation are required. Www irs gov app vita Application for exemption pending. Www irs gov app vita   An organization that claims to be exempt under section 501(a) but has not established its exempt status by the due date for filing an information return must complete and file Form 990, 990-EZ, 990–N or 990-PF (if it considers itself a private foundation), unless the organization is exempt from Form 990-series filing requirements. Www irs gov app vita If the organization's application is pending with the IRS, it must so indicate on Forms 990, 990-EZ, or 990-PF (whichever applies) by checking the application pending block at the top of page 1 of the return. Www irs gov app vita For more information on the filing requirements, see the Instructions for Forms 990, 990-EZ, and 990-PF. Www irs gov app vita State reporting requirements. Www irs gov app vita   Copies of Forms 990, 990-EZ, or 990-PF may be used to satisfy state reporting requirements. Www irs gov app vita See the instructions for those forms. Www irs gov app vita Form 8870. Www irs gov app vita   Organizations that filed a Form 990, 990-EZ, or 990-PF, and paid premiums or received transfers on certain life insurance, annuity, and endowment contracts (personal benefit contracts), must file Form 8870. Www irs gov app vita For more information, see Form 8870 and the instructions for that form. Www irs gov app vita Automatic Revocation If the organization fails to file a Form 990, 990-EZ, or 990-PF, or fails to submit a Form 990-N, as required, for 3 consecutive years, it will automatically lose its tax-exempt status by operation of law. Www irs gov app vita The list of organizations whose tax-exempt status has been automatically revoked is available on IRS. Www irs gov app vita gov. Www irs gov app vita This list (Auto-Revocation List) may be viewed and searched on Exempt Organizations Select Check. Www irs gov app vita The Auto-Revocation List includes each organization's name, Employer Identification Number (EIN) and last known address. Www irs gov app vita It also includes the effective date of the automatic revocation and the date it was posted to the list. Www irs gov app vita The IRS updates the list monthly to include additional organizations that lose their tax-exempt status. Www irs gov app vita Tax Effect of Loss of Tax-Exempt Status If your organization’s tax-exempt status is automatically revoked, you may be required to file one of the following federal income tax returns and pay any applicable income taxes: Form 1120, U. Www irs gov app vita S. Www irs gov app vita Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of your organization’s tax year, or Form 1041, U. Www irs gov app vita S. Www irs gov app vita Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of your organization’s tax year. Www irs gov app vita In addition, a section 501(c)(3) organization that loses its tax-exempt status cannot receive tax-deductible contributions and will not be identified in the IRS Business Master File extract as eligible to received tax-deductible contributions, or be included in Exempt Organizations Select Check (Pub 78 database). Www irs gov app vita An organization whose exemption was automatically revoked must apply for tax exemption in order to regain its tax exemption (even if it was not originally required to apply). Www irs gov app vita In some situations, an organization may be able to obtain exemption retroactive to its date of revocation. Www irs gov app vita For more information about automatic revocation, go to IRS. Www irs gov app vita gov and select Charities & Non-Profits and then select Revoked? Reinstated? Learn More. Www irs gov app vita Penalties Penalties for failure to file. Www irs gov app vita   Generally, an exempt organization that fails to file a required return must pay a penalty of $20 a day for each day the failure continues. Www irs gov app vita The same penalty will apply if the organization does not give all the information required on the return or does not give the correct information. Www irs gov app vita Maximum penalty. Www irs gov app vita   The maximum penalty for any one return is the smaller of $10,000 or 5% of the organization's gross receipts for the year. Www irs gov app vita Organization with gross receipts over $1 million. Www irs gov app vita   For an organization that has gross receipts of over $1 million for the year, the penalty is $100 a day up to a maximum of $50,000. Www irs gov app vita Managers. Www irs gov app vita   If the organization is subject to this penalty, the IRS may specify a date by which the return or correct information must be supplied by the organization. Www irs gov app vita Failure to comply with this demand will result in a penalty imposed upon the manager of the organization, or upon any other person responsible for filing a correct return. Www irs gov app vita The penalty is $10 a day for each day that a return is not filed after the period given for filing. Www irs gov app vita The maximum penalty imposed on all persons with respect to any one return is $5,000. Www irs gov app vita Exception for reasonable cause. Www irs gov app vita   No penalty will be imposed if reasonable cause for failure to file timely can be shown. Www irs gov app vita Unrelated Business Income Tax Return Even though your organization is recognized as tax exempt, it still may be liable for tax on its unrelated business income. Www irs gov app vita Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. Www irs gov app vita If your organization has $1,000 or more of unrelated business income, you must file Form 990-T in addition to your required annual information return. Www irs gov app vita Estimated tax. Www irs gov app vita   Quarterly estimated tax payments are due if your organization expects to owe $500 or more in tax including unrelated business income. Www irs gov app vita Use Form 990-W to figure your organization's estimated tax payments. Www irs gov app vita Travel tour programs. Www irs gov app vita   Travel tour activities that are a trade or business are an unrelated trade or business if the activities are not substantially related to the purpose to which tax exemption was granted to the organization. Www irs gov app vita   Whether travel tour activities conducted by an organization are substantially related to the organization's tax exempt purpose is determined by looking at all the relevant facts and circumstances, including, but not limited to, how a travel tour is developed, promoted, and operated. Www irs gov app vita Example. Www irs gov app vita ABC, a university alumni association, is tax exempt as an educational organization under section 501(c)(3). Www irs gov app vita As part of its activities, ABC operates a travel tour program. Www irs gov app vita The program is open to all current members of ABC and their guests. Www irs gov app vita ABC works with travel agents to schedule approximately ten tours annually to various destinations around the world. Www irs gov app vita Members of ABC pay $1,000 to XYZ Travel Agency to participate in a tour. Www irs gov app vita XYZ pays ABC a per person fee for each participant. Www irs gov app vita Although the literature advertising the tours encourages ABC members to continue their lifelong learning by joining the tours, and a faculty member of ABC's related university frequently joins the tour as a guest of the alumni association, none of the tours include any scheduled instruction or curriculum related to the destinations being visited. Www irs gov app vita The travel tours made available to ABC's members do not contribute importantly to the accomplishment of ABC's educational purpose. Www irs gov app vita Rather, ABC's program is designed to generate revenues for ABC by regularly offering its members travel services. Www irs gov app vita Therefore, ABC's tour program is an unrelated trade or business. Www irs gov app vita For additional information on unrelated business income, see Publication 598 and the Instructions for Form 990-T. Www irs gov app vita Employment Tax Returns Every employer, including an organization exempt from federal income tax, who pays wages to employees is responsible for withholding, depositing, paying, and reporting federal income tax, social security and Medicare (FICA) taxes, and federal unemployment tax (FUTA), unless that employer is specifically excepted by law from those requirements, or if the taxes clearly do not apply. Www irs gov app vita For more information, obtain a copy of Publication 15, which summarizes the responsibilities of an employer, Publication 15-A, Publication 15-B, and Form 941. Www irs gov app vita Small Business Health Care Tax Credit. Www irs gov app vita   If your small tax-exempt organization provides health care coverage for your workers you may qualify for the small business health care tax credit. Www irs gov app vita Go to IRS. Www irs gov app vita gov and select Affordable Care Act Tax Provisions for more details. Www irs gov app vita See Small Business Health Care Tax Credit at www. Www irs gov app vita irs. Www irs gov app vita gov/newsroom/article/0,,id=223666,00. Www irs gov app vita html. Www irs gov app vita Expanded Work Opportunity Tax Credit Available for Hiring Qualified Veterans. Www irs gov app vita   The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC). Www irs gov app vita The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer's share of social security tax. Www irs gov app vita The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013. Www irs gov app vita This tax credit was extended through December 31, 2013, under the American Taxpayer Relief Act, passed on January 1, 2013. Www irs gov app vita   The credit can be as high as $6,240 for qualified tax-exempt organizations. Www irs gov app vita The amount of the credit depends on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. Www irs gov app vita The amount of the credit for qualified tax-exempt organizations may not exceed the organization's employer social security tax for the period for which the credit is claimed. Www irs gov app vita   All employers must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. Www irs gov app vita The process for certifying veterans for this credit is the same for all employers. Www irs gov app vita For more information, see Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit and the instructions to Form 8850. Www irs gov app vita Notice 2012-13, 2012-9 I. Www irs gov app vita R. Www irs gov app vita B. Www irs gov app vita 421, also provides additional guidance on submission Form 8850. Www irs gov app vita   Organizations described in section 501(c) and exempt from taxation under section 501(a) may claim the credit for qualified veterans who begin work on or after Nov. Www irs gov app vita 22, 2011, and before January 1, 2013. Www irs gov app vita After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, Form 5884-C. Www irs gov app vita File Form 5884-C after filing the related employment tax return for the employment tax period for which the credit is claimed. Www irs gov app vita It is recommended that qualified tax-exempt employers do not reduce their required deposits in anticipation of any credit as the forms are processed separately. Www irs gov app vita In addition to Form 5884-C and its instructions, tax-exempt employers should see Notice 2012-13 and the Frequently Asked Questions & Answers for more details for claiming the credit. Www irs gov app vita Trust fund recovery penalty. Www irs gov app vita   If any person required to collect, truthfully account for, and pay over any of these taxes willfully fails to satisfy any of these requirements or willfully tries in any way to evade or defeat any of them, that person will be subject to a penalty. Www irs gov app vita The penalty is equal to the tax evaded, not collected, or not accounted for and paid over. Www irs gov app vita The term person includes: An officer or employee of a corporation, or A member or employee of a partnership. Www irs gov app vita Exception. Www irs gov app vita   The penalty is not imposed on any unpaid volunteer director or member of a board of trustees of an exempt organization if the unpaid volunteer serves solely in an honorary capacity, does not participate in the day-to-day or financial operations of the organization, and does not have actual knowledge of the failure on which the penalty is imposed. Www irs gov app vita   This exception does not apply if it results in no one being liable for the penalty. Www irs gov app vita FICA and FUTA tax exceptions. Www irs gov app vita   Payments for services performed by a minister of a church in the exercise of the ministry, or a member of a religious order performing duties required by the order, are generally not subject to FICA or FUTA taxes. Www irs gov app vita FUTA tax exception. Www irs gov app vita   Payments for services performed by an employee of a religious, charitable, educational, or other organization described in section 501(c)(3) that are generally subject to FICA taxes if the payments are $100 or more for the year, are not subject to FUTA taxes. Www irs gov app vita FICA tax exemption election. Www irs gov app vita   Churches and qualified church-controlled organizations can elect exemption from employer FICA taxes by filing Form 8274. Www irs gov app vita   To elect the exemption, Form 8274 must be filed before the first date on which a quarterly employment tax return would otherwise be due from the electing organization. Www irs gov app vita The organization can make the election only if it is opposed for religious reasons to the payment of FICA taxes. Www irs gov app vita   The election applies to payments for services of current and future employees other than services performed in an unrelated trade or business. Www irs gov app vita Revoking the election. Www irs gov app vita   The election can be revoked by the IRS if the organization fails to file Form W-2, Wage and Tax Statement, for 2 years and fails to furnish certain information upon request by the IRS. Www irs gov app vita Such revocation will apply retroactively to the beginning of the 2-year period. Www irs gov app vita Definitions. Www irs gov app vita   For purposes of this election, the term church means a church, a convention or association of churches, or an elementary or secondary school that is controlled, operated, or principally supported by a church or by a convention or association of churches. Www irs gov app vita   The term qualified church-controlled organization means any church-controlled section 501(c)(3) tax-exempt organization, other than an organization that both: Offers goods, services, or facilities for sale, other than on an incidental basis, to the general public at other than a nominal charge that is substantially less than the cost of providing such goods, services, or facilities, and Normally receives more than 25% of its support from the sum of governmental sources and receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in activities that are not unrelated trades or businesses. Www irs gov app vita Effect on employees. Www irs gov app vita   If a church or qualified church-controlled organization has made an election, payment for services performed for that church or organization, other than in an unrelated trade or business, will not be subject to FICA taxes. Www irs gov app vita However, the employee, unless otherwise exempt, will be subject to self-employment tax on the income. Www irs gov app vita The tax applies to income of $108. Www irs gov app vita 28 or more for the tax year from that church or organization, and no deductions for trade or business expenses are allowed against this self-employment income. Www irs gov app vita   Schedule SE (Form 1040), Self-Employment Tax, should be attached to the employee's income tax return. Www irs gov app vita Political Organization Income Tax Return Generally, a political organization is treated as an organization exempt from tax. Www irs gov app vita Certain political organizations, however, must file an annual income tax return, Form 1120-POL, U. Www irs gov app vita S. Www irs gov app vita Income Tax Return for Certain Political Organizations, for any year they have political organization taxable income in excess of the $100 specific deduction allowed under section 527. Www irs gov app vita A political organization that has $25,000 ($100,000 for a qualified state or local political organization) or more in gross receipts for the tax year must file Form 990 or Form 990-EZ (and Schedule B of the form), unless excepted. Www irs gov app vita See Forms 990 and 990-EZ , earlier. Www irs gov app vita Political organization. Www irs gov app vita   A political organization is a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. Www irs gov app vita Exempt function. Www irs gov app vita   An exempt function means influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any federal, state, local public office or office in a political organization, or the election of the Presidential or Vice Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed. Www irs gov app vita It also includes certain office expenses of a holder of public office or an office in a political organization. Www irs gov app vita Certain political organizations are required to notify the IRS that they are section 527 organizations. Www irs gov app vita These organizations must use Form 8871. Www irs gov app vita Some of these section 527 organizations must use Form 8872 to file periodic reports with the IRS disclosing their contributions and expenditures. Www irs gov app vita For a discussion on these forms, see Reporting Requirements for a Political Organization, later. Www irs gov app vita Political organization taxable income. Www irs gov app vita   Political organization taxable income is the excess of: Gross income for the tax year (excluding exempt function income) minus Deductions directly connected with the earning of gross income. Www irs gov app vita To figure taxable income, allow for a $100 specific deduction, but do not allow for the net operating loss deduction, the dividends-received deduction, and other special deductions for corporations. Www irs gov app vita Exempt organization not a political organization. Www irs gov app vita   An organization exempt under section 501(c) that spends any amount for an exempt function must file Form 1120-POL for any year which it has political taxable income. Www irs gov app vita These organizations must include in gross income the lesser of: The total amount of its exempt function expenditures, or The organization's net investment income. Www irs gov app vita Separate fund. Www irs gov app vita   A section 501(c) organization can set up a separate segregated fund that will be treated as an independent political organization. Www irs gov app vita The earnings and expenditures made by the separate fund will not be attributed to the section 501(c) organization. Www irs gov app vita Section 501(c)(3) organizations are precluded from, and may suffer loss of exemption for, engaging in any political campaign on behalf of, or in opposition to, any candidate for public office. Www irs gov app vita Due date. Www irs gov app vita   Form 1120-POL is due by the 15th day of the 3rd month after the end of the tax year. Www irs gov app vita Thus, for a calendar year taxpayer, Form 1120-POL is due on March 15 of the following year. Www irs gov app vita If any due date falls on a Saturday, Sunday, or legal holiday, the organization can file the return on the next business day. Www irs gov app vita    Form 1120-POL is not required of an exempt organization that makes expenditures for political purposes if its gross income does not exceed its directly connected deductions by more than $100 for the tax year. Www irs gov app vita Extension of time to file. Www irs gov app vita    Use Form 7004 to request an automatic 6-month extension of time to file Form 1120-POL. Www irs gov app vita The extension will be granted if you complete Form 7004 properly, make a proper estimate of the tax (if applicable), file Form 1120-POL by the due date, and pay any tax due. Www irs gov app vita Failure to file. Www irs gov app vita   A political organization that fails to file Form 1120-POL is subject to a penalty equal to 5% of the tax due for each month (or partial month) the return is late up to a maximum of 25% of the tax due, unless the organization shows the failure was due to reasonable cause. Www irs gov app vita For more information about filing Form 1120-POL, refer to the instructions accompanying the form. Www irs gov app vita Failure to pay on time. Www irs gov app vita   An organization that does not pay the tax when due generally may have to pay a penalty of 1/2 of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. Www irs gov app vita The penalty will not be imposed if the organization can show that the failure to pay on time was due to reasonable cause. Www irs gov app vita Reporting Requirements for a Political Organization Certain political organizations are required to notify the IRS that the organization is to be treated as a section 527 political organization. Www irs gov app vita The organization is also required to periodically report certain contributions received and expenditures made by the organization. Www irs gov app vita To notify the IRS of section 527 treatment, an organization must file Form 8871. Www irs gov app vita To report contributions and expenditures, certain tax-exempt political organizations must file Form 8872. Www irs gov app vita Form 8871 A political organization must electronically file Form 8871 to notify the IRS that it is to be treated as a section 527 organization. Www irs gov app vita However, an organization is not required to file Form 8871 if: It reasonably expects its annual gross receipts to always be less than $25,000. Www irs gov app vita It is a political committee required to report under the Federal Election Campaign Act of 1971 (FECA) (2 U. Www irs gov app vita S. Www irs gov app vita C. Www irs gov app vita 431(4)). Www irs gov app vita It is a state or local candidate committee. Www irs gov app vita It is a state or local committee of a political party. Www irs gov app vita It is a section 501(c) organization that has made an “exempt function expenditure. Www irs gov app vita ” All other political organizations are required to file Form 8871. Www irs gov app vita An organization must provide on Form 8871: Its name and address (including any business address, if different) and its electronic mailing address; Its purpose; The names and addresses of its officers, highly compensated employees, contact person, custodian of records, and members of its board of directors; The name and address of, and relationship to, any related entities (within the meaning of section 168(h)(4)); and Whether it intends to claim an exemption from filing Form 8872, Form 990, or Form 990-EZ. Www irs gov app vita Employer identification number. Www irs gov app vita   If your organization needs an EIN, you can apply for one: Online—Click on the Employer ID Numbers (EINs) link at www. Www irs gov app vita IRS. Www irs gov app vita gov/businesses/small. Www irs gov app vita By telephone at 1-800-829-4933 from 7:00 a. Www irs gov app vita m. Www irs gov app vita to 10:00 p. Www irs gov app vita m. Www irs gov app vita in the organization's local time zone. Www irs gov app vita By mailing or faxing Form SS-4. Www irs gov app vita   If you previously applied for an EIN and have not yet received it, or you are unsure whether you have an EIN, please call our toll-free customer account services number, 1-877-829-5500, for assistance. Www irs gov app vita Due dates. Www irs gov app vita   The initial Form 8871 must be filed within 24 hours of the date on which the organization was established. Www irs gov app vita If there is a material change, an amended Form 8871 must be filed within 30 days of the material change. Www irs gov app vita When the organization terminates its existence, it must file a final Form 8871 within 30 days of termination. Www irs gov app vita   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. Www irs gov app vita How to file. Www irs gov app vita   An organization must file Form 8871 electronically via the IRS Internet website at www. Www irs gov app vita IRS. Www irs gov app vita gov/polorgs (Keyword: political orgs). Www irs gov app vita Form 8453-X, Political Organization Declaration for Electronic Filing of Notice of Section 527 Status. Www irs gov app vita   After electronically submitting Form 8871, the political organization must print, sign, and mail Form 8453-X to the IRS. Www irs gov app vita Upon receipt of the Form 8453-X, the IRS will send the organization a username and password that must be used to file an amended or final Form 8871 or to electronically file Form 8872. Www irs gov app vita Penalties Failure to file. Www irs gov app vita   An organization that is required to file Form 8871, but fails to do so on a timely basis, will not be treated as a tax-exempt section 527 organization for any period before the date Form 8871 is filed. Www irs gov app vita Also, the taxable income of the organization for that period will include its exempt function income (including contributions received, membership dues, and political fundraising receipts) minus any deductions directly connected with the production of that income. Www irs gov app vita   Failure to file an amended Form 8871 will cause the organization not to be treated as a tax-exempt section 527 organization. Www irs gov app vita If an organization is treated as not being a tax-exempt section 527 organization, the taxable income of the organization will be determined by considering any exempt function income and deductions during the period beginning on the date of the material change and ending on the date that the amended Form 8871 is filed. Www irs gov app vita    The tax is computed by multiplying the organization's taxable income by the highest corporate tax rate. Www irs gov app vita Fraudulent returns. Www irs gov app vita   Any individual or corporation that willfully delivers or discloses to the IRS any list, return, account, statement or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation) or imprisoned for not more than 1 year or both. Www irs gov app vita Waiver of penalties. Www irs gov app vita   The IRS may waive any additional tax assessed on an organization for failure to file Form 8871 if the failure was due to reasonable cause and not willful neglect. Www irs gov app vita Additional information. Www irs gov app vita   For more information on Form 8871, see the form and its instructions. Www irs gov app vita For a discussion on the public inspection requirements for the form, see Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting Forms , later. Www irs gov app vita Form 8872 Every tax-exempt section 527 political organization that accepts a contribution or makes an expenditure, for an exempt function during the calendar year, must file Form 8872 except: A political organization that is not required to file Form 8871 (discussed earlier). Www irs gov app vita A political organization that is subject to tax on its income because it did not file or amend Form 8871. Www irs gov app vita A qualified state or local political organization (QSLPO), discussed below. Www irs gov app vita All other tax-exempt section 527 organizations that accept contributions or make expenditures for an exempt function are required to file Form 8872. Www irs gov app vita Qualified state or local political organization. Www irs gov app vita   A state or local political organization may be a QSLPO if: All of its political activities relate solely to state or local public office (or office in a state or local political organization). Www irs gov app vita It is subject to a state law that requires it to report (and it does report) to a state agency information about contributions and expenditures that is similar to the information that the organization would otherwise be required to report to the IRS. Www irs gov app vita The state agency and the organization make the reports publicly available. Www irs gov app vita No federal candidate or office holder: Controls or materially participates in the direction of the organization, Solicits contributions for the organization, or Directs the disbursements of the organization. Www irs gov app vita Information required on Form 8872. Www irs gov app vita   If an organization pays an individual $500 or more for the calendar year, the organization is required to disclose the individual's name, address, occupation, employer, amount of the expense, the date the expense was paid, and the purpose of the expense on Form 8872. Www irs gov app vita   If an organization receives contributions of $200 or more from one contributor for the calendar year, the organization must disclose the donor's name, address, occupation, employer, and the date the contributions were made. Www irs gov app vita   For additional information that is required, see Form 8872. Www irs gov app vita Due dates. Www irs gov app vita   The due dates for filing Form 8872 vary depending on whether the form is due for a reporting period that occurs during a calendar year in which a regularly scheduled election is held, or any other calendar year (a nonelection year). Www irs gov app vita   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. Www irs gov app vita Election year filing. Www irs gov app vita    In election years, Form 8872 must be filed on either a quarterly or a monthly basis. Www irs gov app vita Both a pre-election report and a post-election report are also required to be filed in an election year. Www irs gov app vita An election year is any year in which a regularly scheduled general election for federal office is held (an even-numbered year). Www irs gov app vita Nonelection year filing. Www irs gov app vita    In nonelection years, the form must be filed on a semiannual or monthly basis. Www irs gov app vita A complete listing of these filing periods are in the Form 8872 Instructions. Www irs gov app vita A nonelection year is any odd-numbered year. Www irs gov app vita How to file. Www irs gov app vita   Form 8872 can be filed either electronically or by mail. Www irs gov app vita However, organizations that have, or expect to have, contributions or expenditures of $50,000 or more for the year must file electronically. Www irs gov app vita    To file by mail, send Form 8872 to the:   Department of the Treasury Internal Revenue Service Center Ogden, UT 84201-0027 Electronic filing. Www irs gov app vita   File electronically via the IRS internet website at www. Www irs gov app vita IRS. Www irs gov app vita gov/polorgs. Www irs gov app vita You will need a user ID and password to electronically file Form 8872. Www irs gov app vita Organizations that have completed the electronic filing of Form 8871 and submitted a completed and signed Form 8453-X will receive a username and password in the mail. Www irs gov app vita   Organizations that have completed the electronic filing of Form 8871, but have not received their user ID and password can request one by writing to the following address: Internal Revenue Service Attn: Request for 8872 Password Mail Stop 6273 Ogden, UT 84201 Lost username and password. Www irs gov app vita   If you have forgotten or misplaced the username and password issued to your organization after you filed your initial Form 8871, send a letter requesting a new username and password to the address under Electronic filing. Www irs gov app vita You can also fax your request to (801) 620-3249. Www irs gov app vita It may take 3-6 weeks for your new username and password to arrive, as they will be mailed to the organization. Www irs gov app vita Penalty A penalty will be imposed if the organization is required to file Form 8872 and it: Fails to file the form by the due date, or Files the form but fails to report all of the information required or reports incorrect information. Www irs gov app vita The penalty is 35% of the total amount of contributions and expenditures to which a failure relates. Www irs gov app vita Fraudulent returns. Www irs gov app vita   Any individual or corporation that willfully delivers or discloses any list, return, account, statement, or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned for not more than 1 year, or both. Www irs gov app vita Waiver of penalties. Www irs gov app vita   The IRS may waive any additional tax assessed on an organization for failure to file Form 8872 if the failure was due to reasonable cause and not willful neglect. Www irs gov app vita Donee Information Return Dispositions of donated property. Www irs gov app vita   If an organization receives charitable deduction property and within three years sells, exchanges, or otherwise disposes of the property, the organization must file Form 8282, Donee Information Return. Www irs gov app vita However, an organization is not required to file Form 8282 if: The property is valued at $500 or less, or The property is consumed or distributed for charitable purposes. Www irs gov app vita   Form 8282 must be filed with the IRS within 125 days after the disposition. Www irs gov app vita Additionally, a copy of Form 8282 must be given to the donor. Www irs gov app vita If the organization fails to file the required information return, penalties may apply. Www irs gov app vita Charitable deduction property. Www irs gov app vita   This is any property (other than money or publicly traded securities) for which the donee organization signed an appraisal summary or Form 8283, Noncash Charitable Contributions. Www irs gov app vita Publicly traded securities. Www irs gov app vita   These are securities for which market quotations are readily available on an established securities market as of the date of the contribution. Www irs gov app vita Appraisal summary. Www irs gov app vita   If the value of the donated property exceeds $5,000, the donor must get a qualified appraisal for contributions of property, see the Exceptions. Www irs gov app vita below. Www irs gov app vita Exceptions. Www irs gov app vita   A written appraisal is not needed if the property is: Nonpublicly traded stock of $10,000 or less, A vehicle (including a car, boat, or airplane), if your deduction for the vehicle is limited to the gross proceeds from its sale, Intellectual property, Certain securities considered to have market quotations readily available (see Regulations section 1. Www irs gov app vita 170A-13(c)(7)(xi)(B)), Inventory and other property donated by a corporation that are qualified contributions for the care of the ill, the needy, or infants, within the meaning of section 170(e)(3)(A), or Any donation of stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of your trade or business. Www irs gov app vita   The donee organization is not a qualified appraiser for the purpose of valuing the donated property. Www irs gov app vita For more information, get Publication 561, Determining the Value of Donated Property. Www irs gov app vita Form 8283. Www irs gov app vita   For noncash donations over $5,000, the donor must attach Form 8283 to the tax return to support the charitable deduction. Www irs gov app vita The donee must sign Part IV of Section B, Form 8283 unless publicly traded securities are donated. Www irs gov app vita The person who signs for the donee must be an official authorized to sign the donee's tax or information returns, or a person specifically authorized to sign by that official. Www irs gov app vita The signature does not represent concurrence in the appraised value of the contributed property. Www irs gov app vita A signed acknowledgment represents receipt of the property described on Form 8283 on the date specified on the form. Www irs gov app vita The signature also indicates knowledge of the information reporting requirements on dispositions, as previously discussed. Www irs gov app vita A copy of Form 8283 must be given to the donee. Www irs gov app vita Information Provided to Donors In some situations, a donor must obtain certain information from a donee organization to obtain a deduction for a charitable contribution. Www irs gov app vita In other situations, the donee organization is required to provide information to the donor. Www irs gov app vita A charitable organization must give a donor a disclosure statement for a quid pro quo contribution over $75. Www irs gov app vita (See Disclosure statement. Www irs gov app vita later. Www irs gov app vita ) This is a payment a donor makes to a charity partly as a contribution and partly for goods or services. Www irs gov app vita See Quid pro quo contribution below for an example. Www irs gov app vita Failure to make the required disclosure may result in a penalty to the organization. Www irs gov app vita A donor cannot deduct a charitable contribution of $250 or more unless the donor has a written acknowledgment from the charitable organization. Www irs gov app vita In certain circumstances, an organization may be able to meet both of these requirements with the same written document. Www irs gov app vita Disclosure of Quid Pro Quo Contributions A charitable organization must provide a written disclosure statement to donors of a quid pro quo contribution over $75. Www irs gov app vita Quid pro quo contribution. Www irs gov app vita   A contribution made by a donor in exchange for goods or services is known as a quid pro quo contribution. Www irs gov app vita Your charitable organization must provide the donor a written statement informing the donor of the fair market value of the items or services it provided in exchange for the contribution. Www irs gov app vita Generally, a written statement is required for each payment, whenever the contribution portion is over $75. Www irs gov app vita Example. Www irs gov app vita If a donor gives your charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. Www irs gov app vita In this example, the charitable part of the payment is $60. Www irs gov app vita Even though the deductible part of the payment is not more than $75, a written statement must be filed because the total payment is more than $75. Www irs gov app vita If your organization fails to disclose quid pro quo contributions, the organization may be subject to a penalty. Www irs gov app vita Disclosure statement. Www irs gov app vita   The required written disclosure statement must: Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the fair market value of goods or services provided by the charity, and Provide the donor with a good faith estimate of the fair market value of the goods or services that the donor received. Www irs gov app vita The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. Www irs gov app vita If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when it actually receives the contribution. Www irs gov app vita   No disclosure statement is required if any of the following are true. Www irs gov app vita The goods or services given to a donor have insubstantial value as described in Revenue Procedure 90-12, 1990-1 C. Www irs gov app vita B. Www irs gov app vita 471, Revenue Procedure 90-12, and Revenue Procedure 92-49, 1992-1 C. Www irs gov app vita B. Www irs gov app vita 507 (as adjusted for inflation), Revenue Procedure 92-49. Www irs gov app vita There is no donative element involved in a particular transaction with a charity (for example, there is generally no donative element involved in a visitor's purchase from a museum gift shop). Www irs gov app vita There is only an intangible religious benefit provided to the donor. Www irs gov app vita The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a commercial transaction outside the donative context. Www irs gov app vita For example, a donor who, for a payment, is granted admission to a religious ceremony for which there is no admission charge is provided an intangible religious benefit. Www irs gov app vita A donor is not provided intangible religious benefits for payments made for tuition for education leading to a recognized degree, travel services, or consumer goods. Www irs gov app vita The donor makes a payment of $75 or less per year and receives only annual membership benefits that consist of: Any rights or privileges (other than the right to purchase tickets for college athletic events) that the taxpayer can exercise often during the membership period, such as free or discounted admissions or parking or preferred access to goods or services, or Admission to events that are open only to members and the cost per person of which is within the limits for low-cost articles described in Revenue Procedure 90-12 (as adjusted for inflation), Revenue Procedure 90-12. Www irs gov app vita Good faith estimate of fair market value (FMV). Www irs gov app vita   An organization can use any reasonable method to estimate the FMV of goods or services it provided to a donor, as long as it applies the method in good faith. Www irs gov app vita   The organization can estimate the FMV of goods or services that generally are not commercially available by using the FMV of similar or comparable goods or services. Www irs gov app vita Goods or services may be similar or comparable even if they do not have the unique qualities of the goods or services being valued. Www irs gov app vita Example 1. Www irs gov app vita A charity provides a 1-hour tennis lesson with a tennis professional for the first $500 payment it receives. Www irs gov app vita The tennis professional provides 1-hour lessons on a commercial basis for $100. Www irs gov app vita A good faith estimate of the lesson's FMV is $100. Www irs gov app vita Example 2. Www irs gov app vita For a payment of $50,000, a museum allows a donor to hold a private event in a room of the museum. Www irs gov app vita A good faith estimate of the FMV of the right to hold the event in the museum can be made by using the cost of renting a hotel ballroom with a capacity, amenities, and atmosphere comparable to the museum room, even though the hotel ballroom lacks the unique art displayed in the museum room. Www irs gov app vita If the hotel ballroom rents for $2,500, a good faith estimate of the FMV of the right to hold the event in the museum is $2,500. Www irs gov app vita Example 3. Www irs gov app vita For a payment of $1,000, a charity provides an evening tour of a museum conducted by a well-known artist. Www irs gov app vita The artist does not provide tours on a commercial basis. Www irs gov app vita Tours of the museum normally are free to the public. Www irs gov app vita A good faith estimate of the FMV of the evening museum tour is $0 even though it is conducted by the artist. Www irs gov app vita Penalty for failure to disclose. Www irs gov app vita   A penalty is imposed on a charity that does not make the required disclosure of a quid pro quo contribution of more than $75. Www irs gov app vita The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing. Www irs gov app vita The charity can avoid the penalty if it can show that the failure was due to reasonable cause. Www irs gov app vita Acknowledgment of Charitable Contributions of $250 or More A donor can deduct a charitable contribution of $250 or more only if the donor has a written acknowledgment from the charitable organization. Www irs gov app vita The donor must get the acknowledgment by the earlier of: The date the donor files the original return for the year the contribution is made, or The due date, including extensions, for filing the return. Www irs gov app vita The donor is responsible for requesting and obtaining the written acknowledgment from the donee. Www irs gov app vita A charitable organization that receives a payment made as a contribution is treated as the donee organization for this purpose even if the organization (according to the donor's instructions or otherwise) distributes the amount received to one or more charities. Www irs gov app vita Quid pro quo contribution. Www irs gov app vita   If the donee provides goods or services to the donor in exchange for the contribution (a quid pro quo contribution), the acknowledgment must include a good faith estimate of the value of the goods or services. Www irs gov app vita See Disclosure of Quid Pro Quo Contributions earlier. Www irs gov app vita Form of acknowledgment. Www irs gov app vita   Although there is no prescribed format for the written acknowledgment, it must provide enough information to substantiate the amount of the contribution. Www irs gov app vita For more information, see IRS Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements. Www irs gov app vita Cash contributions. Www irs gov app vita   To deduct a contribution of cash, a check, or other monetary gift (regardless of the amount), a donor must maintain a bank record or a written communication from the donee organization showing the donee's name, date, and amount of the contribution. Www irs gov app vita In the case of a lump-sum contribution (rather than a contribution by payroll deduction) made through the Combined Federal Campaign or a similar program such as a United Way Campaign, the written communication must include the name of the donee organization that is the ultimate recipient of the charitable contribution. Www irs gov app vita Contributions by payroll deduction. Www irs gov app vita   An organization may substantiate an employee's contribution by deduction from its payroll by: A pay stub, Form W-2, or other document showing a contribution to a donee organization, together with A pledge card or other document from the donee organization that shows its name. Www irs gov app vita   For contributions of $250 or more, the document must state that the donee organization provides no goods or services for any payroll contributions. Www irs gov app vita The amount withheld from each payment of wages to a taxpayer is treated as a separate contribution. Www irs gov app vita Acknowledgment of Vehicle Contribution If an exempt organization receives a contribution of a qualified vehicle with a claimed value of more than $500, the donee organization is required to provide a contemporaneous written acknowledgment to the donor. Www irs gov app vita The donee organization can use a completed Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, for the contemporaneous written acknowledgment. Www irs gov app vita See section 3. Www irs gov app vita 03 of Notice 2005-44 for guidance on the information that must be included in a contemporaneous written acknowledgment and the deadline for furnishing the acknowledgment to the donor. Www irs gov app vita Any donee organization that provides a contemporaneous written acknowledgment to a donor is required to report to the IRS the information contained in the acknowledgment. Www irs gov app vita The report is due by February 28 (March 31 if filing electronically) of the year following the year in which the donee organization provides the acknowledgment to the donor. Www irs gov app vita The organization must file the report on Copy A of Form 1098-C. Www irs gov app vita An organization that files Form 1098-C on paper should send it with Form 1096, Annual Summary and Transmittal of U. Www irs gov app vita S. Www irs gov app vita Information Returns. Www irs gov app vita See the Instructions for Form 1096 for the correct filing location. Www irs gov app vita An organization that is required to file 250 or more Forms 1098-C during the calendar year must file the forms electronically or magnetically. Www irs gov app vita Specifications for filing Form 1098-C electronically or magnetically can be found in Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically at www. Www irs gov app vita IRS. Www irs gov app vita gov/pub/irs-pdf/p1220. Www irs gov app vita pdf. Www irs gov app vita Acknowledgment For a contribution of a qualified vehicle with a claimed value of $500 or less, do not file Form 1098-C. Www irs gov app vita However, you can use it as the contemporaneous written acknowledgment under section 170(f)(8) by providing the donor with Copy C only. Www irs gov app vita See the Instructions for Form 1098-C. Www irs gov app vita Generally, the organization should complete Form 1098-C as the written acknowledgment to the donor and the IRS. Www irs gov app vita The contents of the acknowledgment depend upon whether the organization: Sells a qualified vehicle without any significant intervening use or material improvement, Intends to make a significant intervening use of or material improvement to a qualified vehicle prior to sale, or Sells a qualified vehicle to a needy individual at a price significantly below fair market value, or a gratuitous transfer to a needy individual in direct furtherance of a charitable purpose of the organization of relieving the poor and distressed or the underprivileged who are in need of a means of transportation. Www irs gov app vita For more information on the acknowledgment, see Notice 2005-44, 2005-25 I. Www irs gov app vita R. Www irs gov app vita B. Www irs gov app vita 1287, at www. Www irs gov app vita irs. Www irs gov app vita gov/irb/2005-25_IRB/2005-25_IRB/ar09. Www irs gov app vita html. Www irs gov app vita Material improvements or significant intervening use. Www irs gov app vita   To constitute significant intervening use, the organization must actually use the vehicle to substantially further the organization's regularly conducted activities, and the use must be significant, not incidental. Www irs gov app vita Factors in determining whether a use is a significant intervening use depend on the nature, extent, frequency, and duration. Www irs gov app vita For this purpose, use includes providing transportation on a regular basis for a significant period of time or significant use directly related to training in vehicle repair. Www irs gov app vita Use does not include the use of a vehicle to provide training in business skills, such as marketing or sales. Www irs gov app vita Examples of significant use include: Driving a vehicle every day for 1 year to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. Www irs gov app vita Driving a vehicle for 10,000 miles over a 1-year period to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. Www irs gov app vita   Material improvements include major repairs and additions that improve the condition of the vehicle in a manner that significantly increases the value. Www irs gov app vita To be a material improvement, the improvement cannot be funded by an additional payment to the organization from the donor of the vehicle. Www irs gov app vita Material improvements do not include cleaning, minor repairs, routine maintenance, painting, removal of dents or scratches, cleaning or repair of upholstery, and installation of theft deterrent devices. Www irs gov app vita Penalties. Www irs gov app vita   If your charitable organization receives contributions of used motor vehicles, boats, and airplanes valued over $500 it may be subject to a penalty if it knowingly: Fails to furnish an acknowledgement in a timely manner, showing the required information, or Furnishes a false or fraudulent acknowledgement of the contribution. Www irs gov app vita    Other penalties may apply. Www irs gov app vita See Part O in the 2012 General Instructions for Certain Information Returns. Www irs gov app vita   An acknowledgment containing a certification will be presumed to be false or fraudulent if the qualified vehicle is sold to a buyer other than a needy individual without a significant intervening use or material improvement within 6 months of the date of the contribution. Www irs gov app vita   If a charity sells a donated vehicle at auction, the IRS will not accept as substantiation an acknowledgment from the charity stating that the vehicle is to be transferred to a needy individual for significantly below fair market value. Www irs gov app vita Vehicles sold at auction are not sold at prices significantly below fair market value, and the IRS will not treat vehicles sold at auction as qualifying for this exception. Www irs gov app vita   The penalty for a false or fraudulent acknowledgment where the donee certifies that the vehicle will not be transferred for money, other property, or services before completion of material improvements or significant intervening use or the donee certifies that the vehicle is to be transferred to a needy individual for significantly below fair market value in furtherance of the donee's charitable purpose is the larger of $5,000 or the claimed value of the vehicle multiplied by 39. Www irs gov app vita 6%. Www irs gov app vita   The penalty for an acknowledgment relating to a qualified vehicle being sold in an arm's length transaction to an unrelated party is the larger of the gross proceeds from the sale or the sales price stated in the acknowledgment multiplied by 39. Www irs gov app vita 6%. Www irs gov app vita Qualified Intellectual Property A taxpayer who contributes qualified intellectual property to a charity may be entitled to a charitable deduction, in addition to any initial deduction allowed in the year of contribution. Www irs gov app vita The additional deduction is based on a specified percentage of the qualified donee income with respect to the qualified intellectual property. Www irs gov app vita To qualify for the additional charitable deduction, the donor must provide notice to the donee at the time of the contribution that the donor intends to treat the contribution as qualified intellectual property contribution for purposes of sections 170(m) and 6050L. Www irs gov app vita Every donee organization described in section 170(c) (except a private foundation as defined in section 509(a) that is not described in section 170(b)(1)(F)) that receives or accrues net income from a charitable gift of qualified intellectual property must file Form 8899. Www irs gov app vita Form 8899. Www irs gov app vita   Form 8899, Notice of Income From Donated Intellectual Property, is used by a donee to report net income from qualified intellectual property to the donor of the property and to the IRS and is due by the last day of the first full month following the close of the donee’s tax year. Www irs gov app vita This form must be filed for each tax year of the donee in which the donated property produces net income, but only if all or part of that tax year occurs during the 10-year period beginning on the date of the contribution and that tax year does not begin after the expiration of the legal life of the donated property. Www irs gov app vita Qualified donee income. Www irs gov app vita   Qualified donee income is any net income received by or accrued to the donee that is properly allocable to the qualified intellectual property for the tax year of the donee which ends within or with the tax year of the donor. Www irs gov app vita Income is not treated as allocated to qualified intellectual property if it is received or accrued after the earlier of the expiration of the legal life of the qualified intellectual property, or the 10-year period beginning with the date of
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Tax Relief in Disaster Situations

Recent Tax Relief

  • Colorado victims of September 2013 floods, see news release
  • Illinois victims of November 2013 storms and flooding, see news release
  • Colorado victims of September 2013 storms and flooding, see news release
  • Alaska victims of May 2013 flooding, see news release
  • Oklahoma victims of May 2013 tornado see news release
  • Illinois victims of April 16, 2013 storms, tornadoes and flooding, see news release
  • Mississippi victims of February 10, 2013 storms, tornadoes and flooding, see news release
  • West Virginia victims of June 2012 storms and straight-line winds, see news release
  • Oklahoma victims of Freedom Wildfire that began on Aug. 3, 2012, see news release
  • Florida victims of June 2012 Tropical Storm Debby, see news release 
  • West Virginia victims of March 2012 storms, see news release
  • Tennessee victims of February 2012 storms, see news release
  • West Virginia victims of February 2012 storms, see news release
  • Indiana victims of February 2012 storms, see news release
  • Kentucky victims of February 2012 storms, see news release
  • Alabama victims of January 2012 storms, see news release
  • Virginia victims of August 2011 earthquake, see news release
  • Puerto Rico victims of September 2011 Tropical Storm Maria, see news release
  • Iowa victims of May 2011 flooding, see news release
  • New York victims of September 2011 remnants of Tropical Storm Lee, see news release
  • Pennsylvania victims of September 2011 Tropical Storm Lee, see news release
  • Texas victims of August 2011 wildfires, see news release
  • Kentucky victims of June 2011 severe storms, see news release
  • South Dakota victims of March 2011 flooding, see news release
  • Missouri victims of June flooding, see news release
  • Nebraska victims of May flooding, see news release
  • Montana victims of April 2011 storms and flooding, see news release

Relief for Victims of Hurricane Sandy

The IRS is in the process of providing tax relief to victims of Hurricane Sandy in the Mid-Atlantic and Northeastern United States. So far, IRS filing and payment relief applies to the following localities:

  • Tax Relief in Connecticut: Fairfield, Middlesex, New Haven and New London counties and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London County;
  • Tax Relief in Maryland: Somerset County;
  • Tax Relief in New Jersey: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren counties;
  • Tax Relief in New York: Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Sullivan, Suffolk, Ulster and Westchester counties;
  • Tax Relief in Rhode Island: Newport and Washington counties.

The IRS also announced additional tax relief to certain affected individuals and businesses, further extending tax deadlines of that relief until April 1 for the following localities:

  • In New Jersey: Monmouth and Ocean counties.
  • In New York: Nassau, Queens, Richmond and Suffolk counties.

The IRS filing and payment relief will be updated based on FEMA's declarations of individual assistance. Visit the page Help for Victims of Hurricane Sandy for additional information on IRS relief for victims of Hurricane Sandy.
 


Relief for Victims of Hurricane Isaac

The IRS has provided tax relief to victims of Hurricane Isaac. Relief for taxpayers in various locations, including postponement of filing and payment deadlines, is listed here. 

For information on disaster recovery, visit disasterassistance.gov.
 


Relief for Victims of Hurricane Irene

The IRS is in the process of providing tax relief to victims of Hurricane Irene. Relief for taxpayers in various locations, including postponement of filing and payment deadlines, will be listed here as it is announced. Watch this page for updates.

Update: IRS e-File, Free File to Remain Available to Victims of Irene, Lee and Texas Wildfires through Oct. 31.

 


Tax Relief for Hurricane Katrina, Rita and Wilma Victims

The Housing and Economic Recovery Act of 2008 offers a new option to homeowners who previously claimed a casualty loss deduction resulting from hurricanes Katrina, Rita and Wilma. See the news release, notice and questions and answers for further details.

The IRS offers tax assistance to victims of the 2005 Gulf Coast hurricanes.

 


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Page Last Reviewed or Updated: 25-Mar-2014

The Www Irs Gov App Vita

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