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Amendment Tax Return 2012

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Amendment Tax Return 2012

Amendment tax return 2012 Publication 3402 - Introductory Material Table of Contents Reminder IntroductionOrdering forms and publications. Amendment tax return 2012 Tax questions. Amendment tax return 2012 Useful Items - You may want to see: Reminder Photographs of missing children. Amendment tax return 2012  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Amendment tax return 2012 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Amendment tax return 2012 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Amendment tax return 2012 Introduction This publication provides federal income, employment, and excise tax information for limited liability companies. Amendment tax return 2012 This publication does not address state law governing the formation, operation, or termination of limited liability companies. Amendment tax return 2012 This publication does not address any state taxes. Amendment tax return 2012 Comments and suggestions. Amendment tax return 2012   We welcome your comments about this publication and your suggestions for future editions. Amendment tax return 2012   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Amendment tax return 2012 NW, IR–6526 Washington, DC 20224   We respond to many letters by telephone. Amendment tax return 2012 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Amendment tax return 2012   You can email us at *taxforms@irs. Amendment tax return 2012 gov. Amendment tax return 2012 (The asterisk must be included in the address. Amendment tax return 2012 ) Please put “Publications Comment” on the subject line. Amendment tax return 2012 Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products. Amendment tax return 2012 Ordering forms and publications. Amendment tax return 2012   Visit www. Amendment tax return 2012 irs. Amendment tax return 2012 gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Amendment tax return 2012 Internal Revenue Service1201 N. Amendment tax return 2012 Mitsubishi MotorwayBloomington, IL 61705-6613 Tax questions. Amendment tax return 2012   If you have a tax question, check the information available on www. Amendment tax return 2012 irs. Amendment tax return 2012 gov or call 1-800-829-1040. Amendment tax return 2012 We cannot answer tax questions sent to either of the above addresses. Amendment tax return 2012 Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 334 Tax Guide for Small Business 505 Tax Withholding and Estimated Tax 535 Business Expenses 541 Partnerships 542 Corporations 544 Sales and Other Dispositions of Assets 583 Starting a Business and Keeping Records 925 Passive Activity and At-Risk Rules Form (and Instructions) 1065 U. Amendment tax return 2012 S. Amendment tax return 2012 Return of Partnership Income 1120 U. Amendment tax return 2012 S. Amendment tax return 2012 Corporation Income Tax Return 1120S U. Amendment tax return 2012 S. Amendment tax return 2012 Income Tax Return for an S Corporation 2553 Election by a Small Business Corporation 8832 Entity Classification Election See How To Get More Information near the end of this publication for information about getting publications and forms. Amendment tax return 2012 Prev  Up  Next   Home   More Online Publications
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The Amendment Tax Return 2012

Amendment tax return 2012 6. Amendment tax return 2012   Insurance Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Deductible PremiumsSelf-Employed Health Insurance Deduction Nondeductible Premiums Capitalized Premiums When To Deduct Premiums What's New Retiree drug subsidy. Amendment tax return 2012  Beginning in 2013, sponsors of certain qualified retiree prescription drug plans must account for the subsidy received by reducing the amount of qualified retiree prescription drug plans expense by the subsidy received (taking into account the taxpayer's accounting method). Amendment tax return 2012 For more information, see the retiree drug subsidy frequently asked questions on IRS. Amendment tax return 2012 gov. Amendment tax return 2012 Introduction You generally can deduct the ordinary and necessary cost of insurance as a business expense if it is for your trade, business, or profession. Amendment tax return 2012 However, you may have to capitalize certain insurance costs under the uniform capitalization rules. Amendment tax return 2012 For more information, see Capitalized Premiums , later. Amendment tax return 2012 Topics - This chapter discusses: Deductible premiums Nondeductible premiums Capitalized premiums When to deduct premiums Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 538 Accounting Periods and Methods 547 Casualties, Disasters, and Thefts Form (and Instructions) 1040 U. Amendment tax return 2012 S. Amendment tax return 2012 Individual Income Tax Return See chapter 12 for information about getting publications and forms. Amendment tax return 2012 Deductible Premiums You generally can deduct premiums you pay for the following kinds of insurance related to your trade or business. Amendment tax return 2012 Insurance that covers fire, storm, theft, accident, or similar losses. Amendment tax return 2012 Credit insurance that covers losses from business bad debts. Amendment tax return 2012 Group hospitalization and medical insurance for employees, including long-term care insurance. Amendment tax return 2012 If a partnership pays accident and health insurance premiums for its partners, it generally can deduct them as guaranteed payments to partners. Amendment tax return 2012 If an S corporation pays accident and health insurance premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages subject to federal income tax withholding. Amendment tax return 2012 See Publication 15-B. Amendment tax return 2012 Liability insurance. Amendment tax return 2012 Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. Amendment tax return 2012 Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. Amendment tax return 2012 If a partnership pays workers' compensation premiums for its partners, it generally can deduct them as guaranteed payments to partners. Amendment tax return 2012 If an S corporation pays workers' compensation premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages. Amendment tax return 2012 Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. Amendment tax return 2012 Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. Amendment tax return 2012 Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. Amendment tax return 2012 If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. Amendment tax return 2012 If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. Amendment tax return 2012 Life insurance covering your officers and employees if you are not directly or indirectly a beneficiary under the contract. Amendment tax return 2012 Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. Amendment tax return 2012 Self-Employed Health Insurance Deduction You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. Amendment tax return 2012 The insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Amendment tax return 2012 A child includes your son, daughter, stepchild, adopted child, or foster child. Amendment tax return 2012 A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Amendment tax return 2012 One of the following statements must be true. Amendment tax return 2012 You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ (Form 1040), Net Profit From Business; or Schedule F (Form 1040), Profit or Loss From Farming. Amendment tax return 2012 You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Amendment tax return 2012 , box 14, code A. Amendment tax return 2012 You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. Amendment tax return 2012 You received wages in 2013 from an S corporation in which you were a more-than-2% shareholder. Amendment tax return 2012 Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2, Wage and Tax Statement. Amendment tax return 2012 The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business. Amendment tax return 2012 For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual. Amendment tax return 2012 For partners, a policy can be either in the name of the partnership or in the name of the partner. Amendment tax return 2012 You can either pay the premiums yourself or your partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Amendment tax return 2012 However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Amendment tax return 2012 Otherwise, the insurance plan will not be considered to be established under your business. Amendment tax return 2012 For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. Amendment tax return 2012 You can either pay the premiums yourself or your S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. Amendment tax return 2012 However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 as wages to be included in your gross income. Amendment tax return 2012 Otherwise, the insurance plan will not be considered to be established under your business. Amendment tax return 2012 Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. Amendment tax return 2012 If you previously filed returns without using Medicare premiums to figure the deduction, you can file timely amended returns to refigure the deduction. Amendment tax return 2012 For more information, see Form 1040X, Amended U. Amendment tax return 2012 S. Amendment tax return 2012 Individual Income Tax Return. Amendment tax return 2012 Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer cannot be used to figure the deduction. Amendment tax return 2012 Take the deduction on Form 1040, line 29. Amendment tax return 2012 Qualified long-term care insurance. Amendment tax return 2012   You can include premiums paid on a qualified long-term care insurance contract when figuring your deduction. Amendment tax return 2012 But, for each person covered, you can include only the smaller of the following amounts. Amendment tax return 2012 The amount paid for that person. Amendment tax return 2012 The amount shown below. Amendment tax return 2012 Use the person's age at the end of the tax year. Amendment tax return 2012 Age 40 or younger–$360 Age 41 to 50–$680 Age 51 to 60–$1,360 Age 61 to 70–$3,640 Age 71 or older–$4,550 Qualified long-term care insurance contract. Amendment tax return 2012   A qualified long-term care insurance contract is an insurance contract that only provides coverage of qualified long-term care services. Amendment tax return 2012 The contract must meet all the following requirements. Amendment tax return 2012 It must be guaranteed renewable. Amendment tax return 2012 It must provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits. Amendment tax return 2012 It must not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed. Amendment tax return 2012 It generally must not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. Amendment tax return 2012 Qualified long-term care services. Amendment tax return 2012   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and Maintenance or personal care services. Amendment tax return 2012 The services must be required by a chronically ill individual and prescribed by a licensed health care practitioner. Amendment tax return 2012 Worksheet 6-A. Amendment tax return 2012 Self-Employed Health Insurance Deduction Worksheet Note. Amendment tax return 2012 Use a separate worksheet for each trade or business under which an insurance plan is established. Amendment tax return 2012 1. Amendment tax return 2012 Enter the total amount paid in 2013 for health insurance coverage established under your business for 2013 for you, your spouse, and your dependents. Amendment tax return 2012 Your insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Amendment tax return 2012 But do not include the following. Amendment tax return 2012   Amounts for any month you were eligible to participate in a health plan subsidized by your or your spouse's employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Amendment tax return 2012 Any amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer. Amendment tax return 2012 Any amounts you included on Form 8885, line 4. Amendment tax return 2012 Any qualified health insurance premiums you paid to “U. Amendment tax return 2012 S. Amendment tax return 2012 Treasury-HCTC. Amendment tax return 2012 ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H. Amendment tax return 2012 Any payments for qualified long-term care insurance (see line 2) 1. Amendment tax return 2012   2. Amendment tax return 2012 For coverage under a qualified long-term care insurance contract, enter for each person covered the smaller of the following amounts. Amendment tax return 2012       a) Total payments made for that person during the year. Amendment tax return 2012       b) The amount shown below. Amendment tax return 2012 Use the person's age at the end of the tax year. Amendment tax return 2012         $360— if that person is age 40 or younger          $680— if age 41 to 50         $1,360— if age 51 to 60         $3,640— if age 61 to 70         $4,550— if age 71 or older         Do not include payments for any month you were eligible to participate in a long-term care insurance plan subsidized by your or your spouse’s employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Amendment tax return 2012 If more than one person is covered, figure separately the amount to enter for each person. Amendment tax return 2012 Then enter the total of those amounts 2. Amendment tax return 2012   3. Amendment tax return 2012 Add lines 1 and 2 3. Amendment tax return 2012   4. Amendment tax return 2012 Enter your net profit* and any other earned income** from the trade or business under which the insurance plan is established. Amendment tax return 2012 Do not include Conservation Reserve Program payments exempt from self-employment tax. Amendment tax return 2012 If the business is an S corporation, skip to line 11 4. Amendment tax return 2012   5. Amendment tax return 2012 Enter the total of all net profits* from: Schedule C (Form 1040), line 31; Schedule C-EZ (Form 1040), line 3; Schedule F (Form 1040), line 34; or Schedule K-1 (Form 1065), box 14, code A; plus any other income allocable to the profitable businesses. Amendment tax return 2012 Do not include Conservation Reserve Program payments exempt from self-employment tax. Amendment tax return 2012 See the Instructions for Schedule SE (Form 1040). Amendment tax return 2012 Do not include any net losses shown on these schedules. Amendment tax return 2012 5. Amendment tax return 2012   6. Amendment tax return 2012 Divide line 4 by line 5 6. Amendment tax return 2012   7. Amendment tax return 2012 Multiply Form 1040, line 27, by the percentage on line 6 7. Amendment tax return 2012   8. Amendment tax return 2012 Subtract line 7 from line 4 8. Amendment tax return 2012   9. Amendment tax return 2012 Enter the amount, if any, from Form 1040, line 28, attributable to the same trade or business in which the insurance plan is established 9. Amendment tax return 2012   10. Amendment tax return 2012 Subtract line 9 from line 8 10. Amendment tax return 2012   11. Amendment tax return 2012 Enter your Medicare wages (Form W-2, box 5) from an S corporation in which you are a more-than-2% shareholder and in which the insurance plan is established 11. Amendment tax return 2012   12. Amendment tax return 2012 Enter any amount from Form 2555, line 45, attributable to the amount entered on line 4 or 11 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 11 above 12. Amendment tax return 2012   13. Amendment tax return 2012 Subtract line 12 from line 10 or 11, whichever applies 13. Amendment tax return 2012   14. Amendment tax return 2012 Enter the smaller of line 3 or line 13 here and on Form 1040, line 29. Amendment tax return 2012 Do not include this amount when figuring any medical expense deduction on Schedule A (Form 1040). Amendment tax return 2012 14. Amendment tax return 2012   * If you used either optional method to figure your net earnings from self-employment from any business, do not enter your net profit from the business. Amendment tax return 2012 Instead, enter the amount attributable to that business from Schedule SE (Form 1040), Section B, line 4b. Amendment tax return 2012 * *Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. Amendment tax return 2012 However, it does not include capital gain income. Amendment tax return 2012 Chronically ill individual. Amendment tax return 2012   A chronically ill individual is a person who has been certified as one of the following. Amendment tax return 2012 An individual who has been unable, due to loss of functional capacity for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual. Amendment tax return 2012 Activities of daily living are eating, toileting, transferring (general mobility), bathing, dressing, and continence. Amendment tax return 2012 An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Amendment tax return 2012 The certification must have been made by a licensed health care practitioner within the previous 12 months. Amendment tax return 2012 Benefits received. Amendment tax return 2012   For information on excluding benefits you receive from a long-term care contract from gross income, see Publication 525. Amendment tax return 2012 Other coverage. Amendment tax return 2012   You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. Amendment tax return 2012 In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2013, do not use amounts paid for coverage for that month to figure the deduction. Amendment tax return 2012   These rules are applied separately to plans that provide long-term care insurance and plans that do not provide long-term care insurance. Amendment tax return 2012 However, any medical insurance payments not deductible on Form 1040, line 29, can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, if you itemize deductions. Amendment tax return 2012 Effect on itemized deductions. Amendment tax return 2012   Subtract the health insurance deduction from your medical insurance when figuring medical expenses on Schedule A (Form 1040) if you itemize deductions. Amendment tax return 2012 Effect on self-employment tax. Amendment tax return 2012   For tax years beginning before or after 2010, you cannot subtract the self-employed health insurance deduction when figuring net earnings for your self-employment tax from the business under which the insurance plan is established, or considered to be established as discussed earlier. Amendment tax return 2012 For more information, see Schedule SE (Form 1040). Amendment tax return 2012 How to figure the deduction. Amendment tax return 2012   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. Amendment tax return 2012 However, if any of the following apply, you must use Worksheet 6-A in this chapter. Amendment tax return 2012 You had more than one source of income subject to self-employment tax. Amendment tax return 2012 You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Amendment tax return 2012 You are using amounts paid for qualified long-term care insurance to figure the deduction. Amendment tax return 2012 If you are claiming the health coverage tax credit, complete Form 8885, Health Coverage Tax Credit, before you figure this deduction. Amendment tax return 2012 Health coverage tax credit. Amendment tax return 2012   You may be able to take this credit only if you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment trade adjustment assistance (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient. Amendment tax return 2012 Use Form 8885 to figure the amount, if any, of this credit. Amendment tax return 2012   When figuring the amount to enter on line 1 of Worksheet 6-A, do not include the following. Amendment tax return 2012 Any amounts you included on Form 8885, line 4. Amendment tax return 2012 Any qualified health insurance premiums you paid to “U. Amendment tax return 2012 S. Amendment tax return 2012 Treasury-HCTC. Amendment tax return 2012 ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Amendment tax return 2012 More than one health plan and business. Amendment tax return 2012   If you have more than one health plan during the year and each plan is established under a different business, you must use separate worksheets (Worksheet 6-A) to figure each plan's net earnings limit. Amendment tax return 2012 Include the premium you paid under each plan on line 1 or line 2 of that separate worksheet and your net profit (or wages) from that business on line 4 (or line 11). Amendment tax return 2012 For a plan that provides long-term care insurance, the total of the amounts entered for each person on line 2 of all worksheets cannot be more than the appropriate limit shown on line 2 for that person. Amendment tax return 2012 Nondeductible Premiums You cannot deduct premiums on the following kinds of insurance. Amendment tax return 2012 Self-insurance reserve funds. Amendment tax return 2012 You cannot deduct amounts credited to a reserve set up for self-insurance. Amendment tax return 2012 This applies even if you cannot get business insurance coverage for certain business risks. Amendment tax return 2012 However, your actual losses may be deductible. Amendment tax return 2012 See Publication 547. Amendment tax return 2012 Loss of earnings. Amendment tax return 2012 You cannot deduct premiums for a policy that pays for lost earnings due to sickness or disability. Amendment tax return 2012 However, see the discussion on overhead insurance, item (8), under Deductible Premiums , earlier. Amendment tax return 2012 Certain life insurance and annuities. Amendment tax return 2012 For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. Amendment tax return 2012 You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. Amendment tax return 2012 A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. Amendment tax return 2012 For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. Amendment tax return 2012 The disallowance applies without regard to whom the policy covers. Amendment tax return 2012 Partners. Amendment tax return 2012 If, as a partner in a partnership, you take out an insurance policy on your own life and name your partners as beneficiaries to induce them to retain their investments in the partnership, you are considered a beneficiary. Amendment tax return 2012 You cannot deduct the insurance premiums. Amendment tax return 2012 Insurance to secure a loan. Amendment tax return 2012 If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. Amendment tax return 2012 Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. Amendment tax return 2012 In the event of death, the proceeds of the policy are generally not taxed as income even if they are used to liquidate the debt. Amendment tax return 2012 Capitalized Premiums Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Amendment tax return 2012 Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Amendment tax return 2012 You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Amendment tax return 2012 Indirect costs include premiums for insurance on your plant or facility, machinery, equipment, materials, property produced, or property acquired for resale. Amendment tax return 2012 Uniform capitalization rules. Amendment tax return 2012   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Amendment tax return 2012 Produce real property or tangible personal property. Amendment tax return 2012 For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Amendment tax return 2012 Acquire property for resale. Amendment tax return 2012 However, these rules do not apply to the following property. Amendment tax return 2012 Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Amendment tax return 2012 Property you produce if you meet either of the following conditions. Amendment tax return 2012 Your indirect costs of producing the property are $200,000 or less. Amendment tax return 2012 You use the cash method of accounting and do not account for inventories. Amendment tax return 2012 More information. Amendment tax return 2012   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Amendment tax return 2012 When To Deduct Premiums You can usually deduct insurance premiums in the tax year to which they apply. Amendment tax return 2012 Cash method. Amendment tax return 2012   If you use the cash method of accounting, you generally deduct insurance premiums in the tax year you actually paid them, even if you incurred them in an earlier year. Amendment tax return 2012 However, see Prepayment , later. Amendment tax return 2012 Accrual method. Amendment tax return 2012   If you use an accrual method of accounting, you cannot deduct insurance premiums before the tax year in which you incur a liability for them. Amendment tax return 2012 In addition, you cannot deduct insurance premiums before the tax year in which you actually pay them (unless the exception for recurring items applies). Amendment tax return 2012 For more information about the accrual method of accounting, see chapter 1. Amendment tax return 2012 For information about the exception for recurring items, see Publication 538. Amendment tax return 2012 Prepayment. Amendment tax return 2012   You cannot deduct expenses in advance, even if you pay them in advance. Amendment tax return 2012 This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Amendment tax return 2012   Expenses such as insurance are generally allocable to a period of time. Amendment tax return 2012 You can deduct insurance expenses for the year to which they are allocable. Amendment tax return 2012 Example. Amendment tax return 2012 In 2013, you signed a 3-year insurance contract. Amendment tax return 2012 Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. Amendment tax return 2012 You can deduct in 2014 and 2015 the premium allocable to those years. Amendment tax return 2012 Dividends received. Amendment tax return 2012   If you receive dividends from business insurance and you deducted the premiums in prior years, at least part of the dividends generally are income. Amendment tax return 2012 For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1 under How Much Can I Deduct. Amendment tax return 2012 Prev  Up  Next   Home   More Online Publications