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Form 1040ez 2012

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Form 1040ez 2012

Form 1040ez 2012 5. Form 1040ez 2012   Taxes Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: When To Deduct Taxes Real Estate TaxesSeparate elections. Form 1040ez 2012 Making the election. Form 1040ez 2012 Form 3115. Form 1040ez 2012 Income TaxesAccrual of contested income taxes. Form 1040ez 2012 Employment Taxes Other TaxesAdditional Medicare Tax. Form 1040ez 2012 What's New Additional Medicare Tax. Form 1040ez 2012  Beginning in 2013, you must withhold a 0. Form 1040ez 2012 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Form 1040ez 2012 Also, self-employed individuals may be required to pay Additional Medicare Tax on self-employment income. Form 1040ez 2012 See Employment Taxes , and Self-employment tax , later. Form 1040ez 2012 Introduction You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses. Form 1040ez 2012 You cannot deduct federal income taxes, estate and gift taxes, or state inheritance, legacy, and succession taxes. Form 1040ez 2012 Topics - This chapter discusses: When to deduct taxes Real estate taxes Income taxes Employment taxes Other taxes Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 334 Tax Guide for Small Business 510 Excise Taxes 538 Accounting Periods and Methods 551 Basis of Assets Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch SE (Form 1040) Self-Employment Tax 3115 Application for Change in Accounting Method 8959 Additional Medicare Tax See chapter 12 for information about getting publications and forms. Form 1040ez 2012 When To Deduct Taxes Generally, you can only deduct taxes in the year you pay them. Form 1040ez 2012 This applies whether you use the cash method or an accrual method of accounting. Form 1040ez 2012 Under an accrual method, you can deduct a tax before you pay it if you meet the exception for recurring items discussed under Economic Performance in Publication 538. Form 1040ez 2012 You can also elect to ratably accrue real estate taxes as discussed later under Real Estate Taxes . Form 1040ez 2012 Limit on accrual of taxes. Form 1040ez 2012   A taxing jurisdiction can require the use of a date for accruing taxes that is earlier than the date it originally required. Form 1040ez 2012 However, if you use an accrual method, and can deduct the tax before you pay it, use the original accrual date for the year of change and all future years to determine when you can deduct the tax. Form 1040ez 2012 Example. Form 1040ez 2012 Your state imposes a tax on personal property used in a trade or business conducted in the state. Form 1040ez 2012 This tax is assessed and becomes a lien as of July 1 (accrual date). Form 1040ez 2012 In 2013, the state changed the assessment and lien dates from July 1, 2014, to December 31, 2013, for property tax year 2014. Form 1040ez 2012 Use the original accrual date (July 1, 2014) to determine when you can deduct the tax. Form 1040ez 2012 You must also use the July 1 accrual date for all future years to determine when you can deduct the tax. Form 1040ez 2012 Uniform capitalization rules. Form 1040ez 2012   Uniform capitalization rules apply to certain taxpayers who produce real property or tangible personal property for use in a trade or business or for sale to customers. Form 1040ez 2012 They also apply to certain taxpayers who acquire property for resale. Form 1040ez 2012 Under these rules, you either include certain costs in inventory or capitalize certain expenses related to the property, such as taxes. Form 1040ez 2012 For more information, see chapter 1. Form 1040ez 2012 Carrying charges. Form 1040ez 2012   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. Form 1040ez 2012 You can elect to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. Form 1040ez 2012 For more information, see chapter 7. Form 1040ez 2012 Refunds of taxes. Form 1040ez 2012   If you receive a refund for any taxes you deducted in an earlier year, include the refund in income to the extent the deduction reduced your federal income tax in the earlier year. Form 1040ez 2012 For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1. Form 1040ez 2012    You must include in income any interest you receive on tax refunds. Form 1040ez 2012 Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. Form 1040ez 2012 The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. Form 1040ez 2012 Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. Form 1040ez 2012 See Taxes for local benefits , later. Form 1040ez 2012 If you use an accrual method, you generally cannot accrue real estate taxes until you pay them to the government authority. Form 1040ez 2012 However, you can elect to ratably accrue the taxes during the year. Form 1040ez 2012 See Electing to ratably accrue , later. Form 1040ez 2012 Taxes for local benefits. Form 1040ez 2012   Generally, you cannot deduct taxes charged for local benefits and improvements that tend to increase the value of your property. Form 1040ez 2012 These include assessments for streets, sidewalks, water mains, sewer lines, and public parking facilities. Form 1040ez 2012 You should increase the basis of your property by the amount of the assessment. Form 1040ez 2012   You can deduct taxes for these local benefits only if the taxes are for maintenance, repairs, or interest charges related to those benefits. Form 1040ez 2012 If part of the tax is for maintenance, repairs, or interest, you must be able to show how much of the tax is for these expenses to claim a deduction for that part of the tax. Form 1040ez 2012 Example. Form 1040ez 2012 To improve downtown commercial business, Waterfront City converted a downtown business area street into an enclosed pedestrian mall. Form 1040ez 2012 The city assessed the full cost of construction, financed with 10-year bonds, against the affected properties. Form 1040ez 2012 The city is paying the principal and interest with the annual payments made by the property owners. Form 1040ez 2012 The assessments for construction costs are not deductible as taxes or as business expenses, but are depreciable capital expenses. Form 1040ez 2012 The part of the payments used to pay the interest charges on the bonds is deductible as taxes. Form 1040ez 2012 Charges for services. Form 1040ez 2012   Water bills, sewerage, and other service charges assessed against your business property are not real estate taxes, but are deductible as business expenses. Form 1040ez 2012 Purchase or sale of real estate. Form 1040ez 2012   If real estate is sold, the real estate taxes must be allocated between the buyer and the seller. Form 1040ez 2012   The buyer and seller must allocate the real estate taxes according to the number of days in the real property tax year (the period to which the tax imposed relates) that each owned the property. Form 1040ez 2012 Treat the seller as paying the taxes up to but not including the date of sale. Form 1040ez 2012 Treat the buyer as paying the taxes beginning with the date of sale. Form 1040ez 2012 You can usually find this information on the settlement statement you received at closing. Form 1040ez 2012   If you (the seller) use an accrual method and have not elected to ratably accrue real estate taxes, you are considered to have accrued your part of the tax on the date you sell the property. Form 1040ez 2012 Example. Form 1040ez 2012 Alberto Verde, a calendar year accrual method taxpayer, owns real estate in Olmo County. Form 1040ez 2012 He has not elected to ratably accrue property taxes. Form 1040ez 2012 November 30 of each year is the assessment and lien date for the current real property tax year, which is the calendar year. Form 1040ez 2012 He sold the property on June 30, 2013. Form 1040ez 2012 Under his accounting method he would not be able to claim a deduction for the taxes because the sale occurred before November 30. Form 1040ez 2012 He is treated as having accrued his part of the tax, 181/366  (January 1–June 29), on June 30, and he can deduct it for 2013. Form 1040ez 2012 Electing to ratably accrue. Form 1040ez 2012   If you use an accrual method, you can elect to accrue real estate tax related to a definite period ratably over that period. Form 1040ez 2012 Example. Form 1040ez 2012 Juan Sanchez is a calendar year taxpayer who uses an accrual method. Form 1040ez 2012 His real estate taxes for the real property tax year, July 1, 2013, to June 30, 2014, are $1,200. Form 1040ez 2012 July 1 is the assessment and lien date. Form 1040ez 2012 If Juan elects to ratably accrue the taxes, $600 will accrue in 2013 ($1,200 × 6/12, July 1–December 31) and the balance will accrue in 2014. Form 1040ez 2012 Separate elections. Form 1040ez 2012   You can elect to ratably accrue the taxes for each separate trade or business and for nonbusiness activities if you account for them separately. Form 1040ez 2012 Once you elect to ratably accrue real estate taxes, you must use that method unless you get permission from the IRS to change. Form 1040ez 2012 See Form 3115 , later. Form 1040ez 2012 Making the election. Form 1040ez 2012   If you elect to ratably accrue the taxes for the first year in which you incur real estate taxes, attach a statement to your income tax return for that year. Form 1040ez 2012 The statement should show all the following items. Form 1040ez 2012 The trades or businesses to which the election applies and the accounting method or methods used. Form 1040ez 2012 The period to which the taxes relate. Form 1040ez 2012 The computation of the real estate tax deduction for that first year. Form 1040ez 2012   Generally, you must file your return by the due date (including extensions). Form 1040ez 2012 However, if you timely filed your return for the year without electing to ratably accrue, you can still make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). Form 1040ez 2012 Attach the statement to the amended return and write “Filed pursuant to section 301. Form 1040ez 2012 9100-2” on the statement. Form 1040ez 2012 File the amended return at the same address where you filed the original return. Form 1040ez 2012 Form 3115. Form 1040ez 2012    If you elect to ratably accrue real estate taxes for a year after the first year in which you incur real estate taxes, or if you want to revoke your election to ratably accrue real estate taxes, file Form 3115. Form 1040ez 2012 For more information, including applicable time frames for filing, see the Instructions for Form 3115. Form 1040ez 2012 Note. Form 1040ez 2012 If you are filing an application for a change in accounting method filed after January 9, 2011, for a year of change ending after April 29, 2010, see Revenue Procedure 2011-14, 2011-4 I. Form 1040ez 2012 R. Form 1040ez 2012 B. Form 1040ez 2012 330, as modified and clarified by Revenue Procedure 2012-19, 2012-14 I. Form 1040ez 2012 R. Form 1040ez 2012 B. Form 1040ez 2012 689, and Revenue Procedure 2012-20, 2012-14 I. Form 1040ez 2012 R. Form 1040ez 2012 B. Form 1040ez 2012 700, or any successor. Form 1040ez 2012 Revenue Procedure 2011-14 is available at  www. Form 1040ez 2012 irs. Form 1040ez 2012 gov/irb/2011-04IRB/ar08. Form 1040ez 2012 html. Form 1040ez 2012 Income Taxes This section discusses federal, state, local, and foreign income taxes. Form 1040ez 2012 Federal income taxes. Form 1040ez 2012   You cannot deduct federal income taxes. Form 1040ez 2012 State and local income taxes. Form 1040ez 2012   A corporation or partnership can deduct state and local income taxes imposed on the corporation or partnership as business expenses. Form 1040ez 2012 An individual can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040). Form 1040ez 2012   However, an individual can deduct a state tax on gross income (as distinguished from net income) directly attributable to a trade or business as a business expense. Form 1040ez 2012 Accrual of contested income taxes. Form 1040ez 2012   If you use an accrual method, and you contest a state or local income tax liability, you must accrue and deduct any contested amount in the tax year in which the liability is finally determined. Form 1040ez 2012   If additional state or local income taxes for a prior year are assessed in a later year, you can deduct the taxes in the year in which they were originally imposed (the prior year) if the tax liability is not contested. Form 1040ez 2012 You cannot deduct them in the year in which the liability is finally determined. Form 1040ez 2012    The filing of an income tax return is not considered a contest and, in the absence of an overt act of protest, you can deduct the tax in the prior year. Form 1040ez 2012 Also, you can deduct any additional taxes in the prior year if you do not show some affirmative evidence of denial of the liability. Form 1040ez 2012   However, if you consistently deduct additional assessments in the year they are paid or finally determined (including those for which there was no contest), you must continue to do so. Form 1040ez 2012 You cannot take a deduction in the earlier year unless you receive permission to change your method of accounting. Form 1040ez 2012 For more information on accounting methods, see When Can I Deduct an Expense in chapter 1. Form 1040ez 2012 Foreign income taxes. Form 1040ez 2012   Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. Form 1040ez 2012 S. Form 1040ez 2012 possession. Form 1040ez 2012 However, an individual cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. Form 1040ez 2012 S. Form 1040ez 2012 tax under the foreign earned income exclusion or the foreign housing exclusion. Form 1040ez 2012 For information on these exclusions, see Publication 54, Tax Guide for U. Form 1040ez 2012 S. Form 1040ez 2012 Citizens and Resident Aliens Abroad. Form 1040ez 2012 For information on the foreign tax credit, see Publication 514, Foreign Tax Credit for Individuals. Form 1040ez 2012 Employment Taxes If you have employees, you must withhold various taxes from your employees' pay. Form 1040ez 2012 Most employers must withhold their employees' share of social security, Medicare taxes, and Additional Medicare Tax (if applicable) along with state and federal income taxes. Form 1040ez 2012 You may also need to pay certain employment taxes from your own funds. Form 1040ez 2012 These include your share of social security and Medicare taxes as an employer, along with unemployment taxes. Form 1040ez 2012 Note. Form 1040ez 2012 Additional Medicare Tax is only imposed on the employee. Form 1040ez 2012 There is no employer share of Additional Medicare Tax. Form 1040ez 2012 Your deduction for wages paid is not reduced by the social security and Medicare taxes, Additional Medicare Tax, and income taxes you withhold from your employees. Form 1040ez 2012 You can deduct the employment taxes you must pay from your own funds as taxes. Form 1040ez 2012 Example. Form 1040ez 2012 You pay your employee $18,000 a year. Form 1040ez 2012 However, after you withhold various taxes, your employee receives $14,500. Form 1040ez 2012 You also pay an additional $1,500 in employment taxes. Form 1040ez 2012 You should deduct the full $18,000 as wages. Form 1040ez 2012 You can deduct the $1,500 you pay from your own funds as taxes. Form 1040ez 2012 For more information on employment taxes, see Publication 15 (Circular E). Form 1040ez 2012 Unemployment fund taxes. Form 1040ez 2012   As an employer, you may have to make payments to a state unemployment compensation fund or to a state disability benefit fund. Form 1040ez 2012 Deduct these payments as taxes. Form 1040ez 2012 Other Taxes The following are other taxes you can deduct if you incur them in the ordinary course of your trade or business. Form 1040ez 2012 Excise taxes. Form 1040ez 2012   Generally, you can deduct as a business expense all excise taxes that are ordinary and necessary expenses of carrying on your trade or business. Form 1040ez 2012 However, see Fuel taxes , later. Form 1040ez 2012   For more information on excise taxes, see Publication 510. Form 1040ez 2012 Franchise taxes. Form 1040ez 2012   You can deduct corporate franchise taxes as a business expense. Form 1040ez 2012 Fuel taxes. Form 1040ez 2012   Generally, taxes on gasoline, diesel fuel, and other motor fuels that you use in your business are included as part of the cost of the fuel. Form 1040ez 2012 Do not deduct these taxes as a separate item. Form 1040ez 2012   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. Form 1040ez 2012 For more information, see Publication 510. Form 1040ez 2012 Occupational taxes. Form 1040ez 2012   You can deduct as a business expense an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. Form 1040ez 2012 Personal property tax. Form 1040ez 2012   You can deduct any tax imposed by a state or local government on personal property used in your trade or business. Form 1040ez 2012 Sales tax. Form 1040ez 2012   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. Form 1040ez 2012 If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. Form 1040ez 2012 If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. Form 1040ez 2012 If the property is depreciable, add the sales tax to the basis for depreciation. Form 1040ez 2012 For more information on basis, see Publication 551. Form 1040ez 2012    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. Form 1040ez 2012 Also, do not include these taxes in gross receipts or sales. Form 1040ez 2012 Self-employment tax. Form 1040ez 2012   You can deduct part of your self-employment tax as a business expense in figuring your adjusted gross income. Form 1040ez 2012 This deduction only affects your income tax. Form 1040ez 2012 It does not affect your net earnings from self-employment or your self-employment tax. Form 1040ez 2012   To deduct the tax, enter on Form 1040, line 27, the amount shown on the Deduction for one-half of self-employment tax line of Schedule SE (Form 1040). Form 1040ez 2012   For more information on self-employment tax, see Publication 334. Form 1040ez 2012 Additional Medicare Tax. Form 1040ez 2012   Beginning in 2013, you may be required to pay Additional Medicare Tax on self-employment income. Form 1040ez 2012 See Form 8959 and the Instructions for Form 8959 for more information on the Additional Medicare Tax. Form 1040ez 2012 Prev  Up  Next   Home   More Online Publications

Tax Topic Index

Topic 123

These Tax Topics contain general individual and business tax information. If you don't find the answer to your question below, also check Frequently Asked Questions, Interactive Tax Assistant (ITA) and Tax Trails.

IRS Help Available Topic 100
IRS Services – Volunteer Tax Assistance, Outreach Programs and Identity Theft Topic 101
Tax Assistance for Individuals with Disabilities and the Deaf and Hard of Hearing Topic 102
Tax Help for Small Businesses and the Self-Employed Topic 103
Taxpayer Advocate Service – Your Voice at the IRS Topic 104
Armed Forces Tax Information Topic 105
Tax Relief in Disaster Situations Topic 107
IRS Procedures Topic 150
Your Appeal Rights Topic 151
Refund Information Topic 152
What To Do if You Haven't Filed Your Tax Return Topic 153
Form W-2 and Form 1099-R (What to Do if Incorrect or Not Received) Topic 154
Forms and Publications – How to Order Topic 155
Copy of Your Tax Return – How to Get One Topic 156
Change of Address – How to Notify the IRS Topic 157
Ensuring Proper Credit of Payments Topic 158
Prior Year(s) Form W-2 (How to Get a Copy) Topic 159
Form 1099-A (Acquisition or Abandonment of Secured Property) and Form 1099-C (Cancellation of Debt) Topic 160
Collection Topic 200
The Collection Process Topic 201
Tax Payment Options Topic 202
Refund Offsets for Unpaid Child Support, Certain Federal and State Debts, and Unemployment Compensation Debts Topic 203
Offers In Compromise Topic 204
Innocent Spouse Relief (Including Separation of Liability and Equitable Relief) Topic 205
Dishonored Payments Topic 206
Alternative Filing Methods Topic 250
Substitute Tax Forms Topic 253
How to Choose a Tax Return Preparer Topic 254
Self-Select PIN Signature Method for Online Registration Topic 255
General Information Topic 300
When, Where, and How to File Topic 301
Checklist of Common Errors When Preparing Your Tax Return Topic 303
Extensions of Time to File Your Tax Return Topic 304
Recordkeeping Topic 305
Penalty for Underpayment of Estimated Tax Topic 306
Backup Withholding Topic 307
Amended Returns Topic 308
Roth IRA Contributions Topic 309
Coverdell Education Savings Accounts Topic 310
Power of Attorney Information Topic 311
Disclosure Authorizations Topic 312
Qualified Tuition Programs (QTPs) Topic 313
Which Forms to File Topic 350
Which Form – 1040, 1040A, or 1040EZ? Topic 352
Decedents Topic 356
Types of Income Topic 400
Wages and Salaries Topic 401
Interest Received Topic 403
Dividends Topic 404
Business Income Topic 407
Capital Gains and Losses Topic 409
Pensions and Annuities Topic 410
Pensions – The General Rule and the Simplified Method Topic 411
Lump-Sum Distributions Topic 412
Rollovers from Retirement Plans Topic 413
Rental Income and Expenses Topic 414
Renting Residential and Vacation Property Topic 415
Farming and Fishing Income Topic 416
Earnings for Clergy Topic 417
Unemployment Compensation Topic 418
Gambling Income and Losses Topic 419
Bartering Income Topic 420
Scholarship and Fellowship Grants Topic 421
Social Security and Equivalent Railroad Retirement Benefits Topic 423
401(k) Plans Topic 424
Passive Activities – Losses and Credits Topic 425
Stock Options Topic 427
Traders in Securities (Information for Form 1040 Filers) Topic 429
Receipt of Stock in a Demutualization Topic 430
Canceled Debt – Is It Taxable or Not? Topic 431
Adjustments to Income Topic 450
Individual Retirement Arrangements (IRAs) Topic 451
Alimony Paid Topic 452
Bad Debt Deduction Topic 453
Moving Expenses Topic 455
Student Loan Interest Deduction Topic 456
Tuition and Fees Deduction Topic 457
Educator Expense Deduction Topic 458
Itemized Deductions Topic 500
Should I Itemize? Topic 501
Medical and Dental Expenses Topic 502
Deductible Taxes Topic 503
Home Mortgage Points Topic 504
Interest Expense Topic 505
Charitable Contributions Topic 506
Miscellaneous Expenses Topic 508
Business Use of Home Topic 509
Business Use of Car Topic 510
Business Travel Expenses Topic 511
Business Entertainment Expenses Topic 512
Educational Expenses Topic 513
Employee Business Expenses Topic 514
Casualty, Disaster, and Theft Losses (Including Federally Declared Disaster Areas) Topic 515
Tax Computation Topic 550
Standard Deduction Topic 551
Tax and Credits Figured by the IRS Topic 552
Tax on a Child's Investment Income Topic 553
Self-Employment Tax Topic 554
Alternative Minimum Tax Topic 556
Additional Tax on Early Distributions from Traditional and ROTH IRAs Topic 557
Additional Tax on Early Distributions from Retirement Plans, Other Than IRAs Topic 558
Net Investment Income Tax Topic 559
Additional Medicare Tax Topic 560
Tax Credits Topic 600
Earned Income Credit Topic 601
Child and Dependent Care Credit Topic 602
Adoption Credit and Adoption Assistance Programs Topic 607
Excess Social Security and RRTA Tax Withheld Topic 608
Retirement Savings Contributions Credit Topic 610
Repayment of the First-time Homebuyer Credit Topic 611
IRS Notices Topic 650
Notices – What to Do Topic 651
Notice of Underreported Income – CP-2000 Topic 652
IRS Notices and Bills, Penalties and Interest Charges Topic 653
Basis of Assets, Depreciation, and Sale of Assets Topic 700
Sale of Your Home Topic 701
Basis of Assets Topic 703
Depreciation Topic 704
Installment Sales Topic 705
Employer Tax Information Topic 750
Social Security and Medicare Withholding Rates Topic 751
Form W-2 – Where, When, and How to File Topic 752
Form W-4 – Employee's Withholding Allowance Certificate Topic 753
Employer Identification Number (EIN) – How to Apply Topic 755
Employment Taxes for Household Employees Topic 756
Forms 941 and 944 – Deposit Requirements Topic 757
Form 941 – Employer's Quarterly Federal Tax Return and Form 944 – Employer's Annual Federal Tax Return Topic 758
Form 940 – Employer's Annual Federal Unemployment (FUTA) Tax Return – Filing and Deposit Requirements Topic 759
Reporting and Deposit Requirements for Agricultural Employers Topic 760
Tips – Withholding and Reporting Topic 761
Independent Contractor vs. Employee Topic 762
The Affordable Care Act Topic 763
Electronic Media Filers – 1099 Series and Related Information Returns Topic 800
Who Must File Information Returns Electronically Topic 801
Applications, Forms, and Information Topic 802
Waivers and Extensions Topic 803
Test Files and Combined Federal and State Filing Topic 804
Electronic Filing of Information Returns Topic 805
Tax Information for Aliens and U.S. Citizens Living Abroad Topic 850
Resident and Nonresident Aliens Topic 851
Foreign Tax Credit Topic 856
Individual Taxpayer Identification Number (ITIN) – Form W-7 Topic 857
Alien Tax Clearance Topic 858
Tax Information for Residents of Puerto Rico Topic 900
Is a Person With Income from Puerto Rican Sources Required to File a U.S. Federal Income Tax Return? Topic 901
Credits and Deductions for Taxpayers With Puerto Rican Source Income That is Exempt From U.S. Tax Topic 902
Federal Employment Tax in Puerto Rico Topic 903
Tax Assistance for Residents of Puerto Rico Topic 904

Page Last Reviewed or Updated: March 20, 2014

The Form 1040ez 2012

Form 1040ez 2012 21. Form 1040ez 2012   Medical and Dental Expenses Table of Contents What's New Introduction Useful Items - You may want to see: What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Form 1040ez 2012 How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Yourself Spouse Dependent Decedent What Medical Expenses Are Includible?Insurance Premiums Meals and Lodging Transportation Disabled Dependent Care Expenses How Do You Treat Reimbursements?Insurance Reimbursement Damages for Personal Injuries How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons What's New Medical and dental expenses. Form 1040ez 2012  Beginning January 1, 2013, you can deduct only the part of your medical and dental expenses that exceed 10% of your adjusted gross income (AGI) (7. Form 1040ez 2012 5% if either you or your spouse is age 65 or older). Form 1040ez 2012 Standard mileage rate. Form 1040ez 2012  The standard mileage rate allowed for operating expenses for a car when you use it for medical reasons is 24 cents per mile. Form 1040ez 2012 See Transportation under What Medical Expenses Are Includible. Form 1040ez 2012 Introduction This chapter will help you determine the following. Form 1040ez 2012 What medical expenses are. Form 1040ez 2012 What expenses you can include this year. Form 1040ez 2012 How much of the expenses you can deduct. Form 1040ez 2012 Whose medical expenses you can include. Form 1040ez 2012 What medical expenses are includible. Form 1040ez 2012 How to treat reimbursements. Form 1040ez 2012 How to report the deduction on your tax return. Form 1040ez 2012 How to report impairment-related work expenses. Form 1040ez 2012 How to report health insurance costs if you are self-employed. Form 1040ez 2012 Useful Items - You may want to see: Publications 502 Medical and Dental Expenses 969 Health Savings Accounts and Other Tax-Favored Health Plans Form (and Instructions) Schedule A (Form 1040) Itemized Deductions What Are Medical Expenses? Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Form 1040ez 2012 These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. Form 1040ez 2012 They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Form 1040ez 2012 Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Form 1040ez 2012 They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Form 1040ez 2012 Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Form 1040ez 2012 Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. Form 1040ez 2012 What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. Form 1040ez 2012 If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Form 1040ez 2012 If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. Form 1040ez 2012 If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. Form 1040ez 2012 Separate returns. Form 1040ez 2012   If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Form 1040ez 2012 Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise. Form 1040ez 2012 Community property states. Form 1040ez 2012   If you and your spouse live in a community property state and file separate returns, or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Form 1040ez 2012 Each of you should include half the expenses. Form 1040ez 2012 If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. Form 1040ez 2012 If you live in a community property state, and are not filing a joint return, see Publication 555, Community Property. Form 1040ez 2012 How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI (7. Form 1040ez 2012 5% of your AGI if either you or your spouse is age 65 or older)(Form 1040, line 38). Form 1040ez 2012 Example. Form 1040ez 2012 You are unmarried and under age 65 and your AGI is $40,000, 10% of which is $4,000. Form 1040ez 2012 You paid medical expenses of $2,500. Form 1040ez 2012 You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. Form 1040ez 2012 Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. Form 1040ez 2012 There are different rules for decedents and for individuals who are the subject of multiple support agreements. Form 1040ez 2012 See Support claimed under a multiple support agreement , later. Form 1040ez 2012 Yourself You can include medical expenses you paid for yourself. Form 1040ez 2012 Spouse You can include medical expenses you paid for your spouse. Form 1040ez 2012 To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses. Form 1040ez 2012 Example 1. Form 1040ez 2012 Mary received medical treatment before she married Bill. Form 1040ez 2012 Bill paid for the treatment after they married. Form 1040ez 2012 Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. Form 1040ez 2012 If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. Form 1040ez 2012 Mary would include the amounts she paid during the year in her separate return. Form 1040ez 2012 If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. Form 1040ez 2012 Example 2. Form 1040ez 2012 This year, John paid medical expenses for his wife Louise, who died last year. Form 1040ez 2012 John married Belle this year and they file a joint return. Form 1040ez 2012 Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. Form 1040ez 2012 Dependent You can include medical expenses you paid for your dependent. Form 1040ez 2012 For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. Form 1040ez 2012 A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. Form 1040ez 2012 The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. Form 1040ez 2012 S. Form 1040ez 2012 citizen or national, or a resident of the United States, Canada, or Mexico. Form 1040ez 2012 If your qualifying child was adopted, see Exception for adopted child , next. Form 1040ez 2012 You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Form 1040ez 2012 Exception for adopted child. Form 1040ez 2012   If you are a U. Form 1040ez 2012 S. Form 1040ez 2012 citizen or U. Form 1040ez 2012 S. Form 1040ez 2012 national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. Form 1040ez 2012 S. Form 1040ez 2012 citizen or national or a resident of the United States, Canada, or Mexico. Form 1040ez 2012 Qualifying Child A qualifying child is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, or, if he or she did, it was only to claim a refund. Form 1040ez 2012 Adopted child. Form 1040ez 2012   A legally adopted child is treated as your own child. Form 1040ez 2012 This includes a child lawfully placed with you for legal adoption. Form 1040ez 2012   You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid. Form 1040ez 2012   If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. Form 1040ez 2012   But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses. Form 1040ez 2012    You may be able to take an adoption credit for other expenses related to an adoption. Form 1040ez 2012 See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Form 1040ez 2012 Child of divorced or separated parents. Form 1040ez 2012   For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. Form 1040ez 2012 Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child's dependency exemption, if: The child is in the custody of one or both parents for more than half the year, The child receives over half of his or her support during the year from his or her parents, and The child's parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Live apart at all times during the last 6 months of the year. Form 1040ez 2012 This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). Form 1040ez 2012 Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of either of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child earlier) of any other person for 2013, and For whom you provided over half of the support in 2013. Form 1040ez 2012 But see Child of divorced or separated parents , earlier, and Support claimed under a multiple support agreement, next. Form 1040ez 2012 Support claimed under a multiple support agreement. Form 1040ez 2012   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. Form 1040ez 2012 A multiple support agreement is used when two or more people provide more than half of a person's support, but no one alone provides more than half. Form 1040ez 2012   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. Form 1040ez 2012 However, you can include the entire unreimbursed amount you paid for medical expenses. Form 1040ez 2012 Example. Form 1040ez 2012 You and your three brothers each provide one-fourth of your mother's total support. Form 1040ez 2012 Under a multiple support agreement, you treat your mother as your dependent. Form 1040ez 2012 You paid all of her medical expenses. Form 1040ez 2012 Your brothers reimbursed you for three-fourths of these expenses. Form 1040ez 2012 In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. Form 1040ez 2012 Your brothers cannot include any part of the expenses. Form 1040ez 2012 However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses. Form 1040ez 2012 Decedent Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. Form 1040ez 2012 This includes expenses for the decedent's spouse and dependents as well as for the decedent. Form 1040ez 2012 The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. Form 1040ez 2012 The expenses must be paid within the 1-year period beginning with the day after the date of death. Form 1040ez 2012 If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return. Form 1040ez 2012 Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. Form 1040ez 2012 Amended returns and claims for refund are discussed in chapter 1. Form 1040ez 2012 What if you pay medical expenses of a deceased spouse or dependent?   If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Form 1040 in the year paid, whether they are paid before or after the decedent's death. Form 1040ez 2012 The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses. Form 1040ez 2012 What Medical Expenses Are Includible? Use Table 21-1, later, as a guide to determine which medical and dental expenses you can include on Schedule A (Form 1040). Form 1040ez 2012 This table does not include all possible medical expenses. Form 1040ez 2012 To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. Form 1040ez 2012 Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Form 1040ez 2012 Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). Form 1040ez 2012 See Qualified Long-Term Care Insurance Contracts in Publication 502. Form 1040ez 2012 If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. Form 1040ez 2012 The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. Form 1040ez 2012 Note. Form 1040ez 2012 When figuring the amount of insurance premiums you can include in medical expenses on Schedule A, do not include any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Form 1040ez 2012 Also, do not include insurance premiums attributable to a nondependent child under age 27 if your premiums increased as a result of adding this child to your policy. Form 1040ez 2012 Employer-sponsored health insurance plan. Form 1040ez 2012   Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included in box 1 of your Form W-2. Form 1040ez 2012 Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included in box 1 of your Form W-2. Form 1040ez 2012 Example. Form 1040ez 2012 You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Form 1040ez 2012 Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Form 1040ez 2012 Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money. Form 1040ez 2012 Long-term care services. Form 1040ez 2012   Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. Form 1040ez 2012 This amount will be reported as wages in box 1 of your Form W-2. Form 1040ez 2012 Health reimbursement arrangement (HRA). Form 1040ez 2012   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. Form 1040ez 2012 This is because an HRA is funded solely by the employer. Form 1040ez 2012 Retired public safety officers. Form 1040ez 2012   If you are a retired public safety officer, do not include as medical expenses any health or long-term care premiums that you elected to have paid with tax-free distributions from your retirement plan. Form 1040ez 2012 This applies only to distributions that would otherwise be included in income. Form 1040ez 2012 Medicare A. Form 1040ez 2012   If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. Form 1040ez 2012 The payroll tax paid for Medicare A is not a medical expense. Form 1040ez 2012   If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. Form 1040ez 2012 In this situation you can include the premiums you paid for Medicare A as a medical expense. Form 1040ez 2012 Medicare B. Form 1040ez 2012   Medicare B is supplemental medical insurance. Form 1040ez 2012 Premiums you pay for Medicare B are a medical expense. Form 1040ez 2012 Check the information you received from the Social Security Administration to find out your premium. Form 1040ez 2012 Medicare D. Form 1040ez 2012    Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. Form 1040ez 2012 You can include as a medical expense premiums you pay for Medicare D. Form 1040ez 2012 Prepaid insurance premiums. Form 1040ez 2012   Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments, or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). Form 1040ez 2012 Unused sick leave used to pay premiums. Form 1040ez 2012   You must include in gross income cash payments you receive at the time of retirement for unused sick leave. Form 1040ez 2012 You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer's health plan after you retire. Form 1040ez 2012 You can include this cost of continuing participation in the health plan as a medical expense. Form 1040ez 2012   If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. Form 1040ez 2012 You cannot include this cost of continuing participation in that health plan as a medical expense. Form 1040ez 2012 Table 21-1. Form 1040ez 2012 Medical and Dental Expenses Checklist. Form 1040ez 2012 See Publication 502 for more information about these and other expenses. Form 1040ez 2012 You can include: You cannot include: Bandages Birth control pills prescribed by your doctor Body scan Braille books Breast pump and supplies Capital expenses for equipment or improvements to your home needed for medical care (see the worksheet in Publication 502) Diagnostic devices Expenses of an organ donor Eye surgery—to promote the correct function of the eye Fertility enhancement, certain procedures Guide dogs or other animals aiding the blind, deaf, and disabled Hospital services fees (lab work, therapy, nursing services, surgery, etc. Form 1040ez 2012 ) Lead-based paint removal Legal abortion Legal operation to prevent having children such as a vasectomy or tubal ligation Long-term care contracts, qualified Meals and lodging provided by a hospital during medical treatment Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) Medicare Part D premiums Medical and hospital insurance premiums Nursing services Oxygen equipment and oxygen Part of life-care fee paid to retirement home designated for medical care Physical examination Pregnancy test kit Prescription medicines (prescribed by a doctor) and insulin Psychiatric and psychological treatment Social security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (see Wages for nursing services, below) Special items (artificial limbs, false teeth, eye-glasses, contact lenses, hearing aids, crutches, wheelchair, etc. Form 1040ez 2012 ) Special education for mentally or physically disabled persons Stop-smoking programs Transportation for needed medical care Treatment at a drug or alcohol center (includes meals and lodging provided by the center) Wages for nursing services Weight-loss, certain expenses for obesity Baby sitting and childcare Bottled water Contributions to Archer MSAs (see Publication 969) Diaper service Expenses for your general health (even if following your doctor's advice) such as— —Health club dues —Household help (even if recommended by a doctor) —Social activities, such as dancing or swimming lessons —Trip for general health improvement Flexible spending account reimbursements for medical expenses (if contributions were on a pre-tax basis) Funeral, burial, or cremation expenses Health savings account payments for medical expenses Illegal operation, treatment, or medicine Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. Form 1040ez 2012 Maternity clothes Medical insurance included in a car insurance policy covering all persons injured in or by your car Medicine you buy without a prescription Nursing care for a healthy baby Prescription drugs you brought in (or ordered shipped) from another country, in most cases Nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. Form 1040ez 2012 , unless recommended by a medical practitioner as a treatment for a specific medical condition diagnosed by a physician Surgery for purely cosmetic reasons Toothpaste, toiletries, cosmetics, etc. Form 1040ez 2012 Teeth whitening Weight-loss expenses not for the treatment of obesity or other disease Meals and Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to get medical care. Form 1040ez 2012 See Nursing home , later. Form 1040ez 2012 You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. Form 1040ez 2012 You can include the cost of such lodging while away from home if all of the following requirements are met. Form 1040ez 2012 The lodging is primarily for and essential to medical care. Form 1040ez 2012 The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. Form 1040ez 2012 The lodging is not lavish or extravagant under the circumstances. Form 1040ez 2012 There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Form 1040ez 2012 The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. Form 1040ez 2012 You can include lodging for a person traveling with the person receiving the medical care. Form 1040ez 2012 For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Form 1040ez 2012 Meals are not included. Form 1040ez 2012 Nursing home. Form 1040ez 2012   You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. Form 1040ez 2012 This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Form 1040ez 2012   Do not include the cost of meals and lodging if the reason for being in the home is personal. Form 1040ez 2012 You can, however, include in medical expenses the part of the cost that is for medical or nursing care. Form 1040ez 2012 Transportation Include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Form 1040ez 2012 You can include: Bus, taxi, train, or plane fares, or ambulance service, Transportation expenses of a parent who must go with a child who needs medical care, Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment. Form 1040ez 2012 Car expenses. Form 1040ez 2012   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use your car for medical reasons. Form 1040ez 2012 You cannot include depreciation, insurance, general repair, or maintenance expenses. Form 1040ez 2012   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents per mile. Form 1040ez 2012    You can also include parking fees and tolls. Form 1040ez 2012 You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate. Form 1040ez 2012 Example. Form 1040ez 2012 In 2013, Bill Jones drove 2,800 miles for medical reasons. Form 1040ez 2012 He spent $500 for gas, $30 for oil, and $100 for tolls and parking. Form 1040ez 2012 He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. Form 1040ez 2012 He figures the actual expenses first. Form 1040ez 2012 He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. Form 1040ez 2012 He then figures the standard mileage amount. Form 1040ez 2012 He multiplies 2,800 miles by 24 cents a mile for a total of $672. Form 1040ez 2012 He then adds the $100 tolls and parking for a total of $772. Form 1040ez 2012 Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. Form 1040ez 2012 Transportation expenses you cannot include. Form 1040ez 2012   You cannot include in medical expenses the cost of transportation in the following situations. Form 1040ez 2012 Going to and from work, even if your condition requires an unusual means of transportation. Form 1040ez 2012 Travel for purely personal reasons to another city for an operation or other medical care. Form 1040ez 2012 Travel that is merely for the general improvement of one's health. Form 1040ez 2012 The costs of operating a specially equipped car for other than medical reasons. Form 1040ez 2012 Disabled Dependent Care Expenses Some disabled dependent care expenses may qualify as either: Medical expenses, or Work-related expenses for purposes of taking a credit for dependent care. Form 1040ez 2012 (See chapter 32 and Publication 503, Child and Dependent Care Expenses. Form 1040ez 2012 ) You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction. Form 1040ez 2012 How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the taxable year for which you received no insurance or other reimbursement. Form 1040ez 2012 Insurance Reimbursement You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. Form 1040ez 2012 This includes payments from Medicare. Form 1040ez 2012 Even if a policy provides reimbursement for only certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse. Form 1040ez 2012 Example. Form 1040ez 2012 You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. Form 1040ez 2012 The insurance you receive for the hospital and doctors' bills is more than their charges. Form 1040ez 2012 In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses. Form 1040ez 2012 Health reimbursement arrangement (HRA). Form 1040ez 2012   A health reimbursement arrangement is an employer-funded plan that reimburses employees for medical care expenses and allows unused amounts to be carried forward. Form 1040ez 2012 An HRA is funded solely by the employer and the reimbursements for medical expenses, up to a maximum dollar amount for a coverage period, are not included in your income. Form 1040ez 2012 Other reimbursements. Form 1040ez 2012   Generally, you do not reduce medical expenses by payments you receive for: Permanent loss or loss of use of a member or function of the body (loss of limb, sight, hearing, etc. Form 1040ez 2012 ) or disfigurement to the extent the payment is based on the nature of the injury without regard to the amount of time lost from work, or Loss of earnings. Form 1040ez 2012   You must, however, reduce your medical expenses by any part of these payments that is designated for medical costs. Form 1040ez 2012 See How Do You Figure and Report the Deduction on Your Tax Return , later. Form 1040ez 2012   For how to treat damages received for personal injury or sickness, see Damages for Personal Injuries , later. Form 1040ez 2012 You do not have a medical deduction if you are reimbursed for all of your medical expenses for the year. Form 1040ez 2012 Excess reimbursement. Form 1040ez 2012   If you are reimbursed more than your medical expenses, you may have to include the excess in income. Form 1040ez 2012 You may want to use Figure 21-A to help you decide if any of your reimbursement is taxable. Form 1040ez 2012 Premiums paid by you. Form 1040ez 2012   If you pay either the entire premium for your medical insurance or all of the costs of a plan similar to medical insurance and your insurance payments or other reimbursements are more than your total medical expenses for the year, you have an excess reimbursement. Form 1040ez 2012 Generally, you do not include the excess reimbursement in your gross income. Form 1040ez 2012 Premiums paid by you and your employer. Form 1040ez 2012   If both you and your employer contribute to your medical insurance plan and your employer's contributions are not included in your gross income, you must include in your gross income the part of your excess reimbursement that is from your employer's contribution. Form 1040ez 2012   See Publication 502 to figure the amount of the excess reimbursement you must include in gross income. Form 1040ez 2012 Reimbursement in a later year. Form 1040ez 2012   If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you generally must report the reimbursement as income up to the amount you previously deducted as medical expenses. Form 1040ez 2012   However, do not report as income the amount of reimbursement you received up to the amount of your medical deductions that did not reduce your tax for the earlier year. Form 1040ez 2012 For more information about the recovery of an amount that you claimed as an itemized deduction in an earlier year, see Itemized Deduction Recoveries in chapter 12. Form 1040ez 2012 Figure 21-A. Form 1040ez 2012 Is Your Excess Medical Reimbursement Taxable? Please click here for the text description of the image. Form 1040ez 2012 Figure 21-A. Form 1040ez 2012 Is Your Excess Medical Reimbursement Taxable? Medical expenses not deducted. Form 1040ez 2012   If you did not deduct a medical expense in the year you paid it because your medical expenses were not more than 10% of your AGI (7. Form 1040ez 2012 5% of your AGI if either you or your spouse was age 65 or older), or because you did not itemize deductions, do not include the reimbursement up to the amount of the expense in income. Form 1040ez 2012 However, if the reimbursement is more than the expense, see Excess reimbursement , earlier. Form 1040ez 2012 Example. Form 1040ez 2012 For 2013, you were unmarried and under age 65 and you had medical expenses of $500. Form 1040ez 2012 You cannot deduct the $500 because it is less than 10% of your AGI. Form 1040ez 2012 If, in a later year, you are reimbursed for any of the $500 in medical expenses, you do not include the amount reimbursed in your gross income. Form 1040ez 2012 Damages for Personal Injuries If you receive an amount in settlement of a personal injury suit, part of that award may be for medical expenses that you deducted in an earlier year. Form 1040ez 2012 If it is, you must include that part in your income in the year you receive it to the extent it reduced your taxable income in the earlier year. Form 1040ez 2012 See Reimbursement in a Later Year , discussed under How Do You Treat Reimbursements, earlier. Form 1040ez 2012 Future medical expenses. Form 1040ez 2012   If you receive an amount in settlement of a damage suit for personal injuries, part of that award may be for future medical expenses. Form 1040ez 2012 If it is, you must reduce any future medical expenses for these injuries until the amount you received has been completely used. Form 1040ez 2012 How Do You Figure and Report the Deduction on Your Tax Return? Once you have determined which medical expenses you can include, you figure and report the deduction on your tax return. Form 1040ez 2012 What Tax Form Do You Use? You figure your medical expense deduction on Schedule A (Form 1040). Form 1040ez 2012 You cannot claim medical expenses on Form 1040A or Form 1040EZ. Form 1040ez 2012 If you need more information on itemized deductions or you are not sure if you can itemize, see chapter 20. Form 1040ez 2012 Enter the amount you paid for medical and dental expenses on Schedule A (Form 1040). Form 1040ez 2012 This should be your expenses that were not reimbursed by insurance or any other sources. Form 1040ez 2012 Generally, you can deduct only the amount of your medical and dental expenses that is more than 10% of your AGI (7. Form 1040ez 2012 5% if either you or your spouse was age 65 or older) shown on line 38, Form 1040. Form 1040ez 2012 Impairment-Related Work Expenses If you are a person with a disability, you can take a business deduction for expenses that are necessary for you to be able to work. Form 1040ez 2012 If you take a business deduction for impairment-related work expenses, do not take a medical deduction for the same expenses. Form 1040ez 2012 You have a disability if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Form 1040ez 2012 Impairment-related expenses defined. Form 1040ez 2012   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Form 1040ez 2012 Where to report. Form 1040ez 2012   If you are self-employed, deduct the business expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. Form 1040ez 2012   If you are an employee, complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. Form 1040ez 2012 Enter on Schedule A (Form 1040), that part of the amount on Form 2106, or Form 2106-EZ, that is related to your impairment. Form 1040ez 2012 Enter the amount that is unrelated to your impairment also on Schedule A (Form 1040). Form 1040ez 2012 Your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to other employee business expenses. Form 1040ez 2012 Example. Form 1040ez 2012 You are blind. Form 1040ez 2012 You must use a reader to do your work. Form 1040ez 2012 You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Form 1040ez 2012 The reader's services are only for your work. Form 1040ez 2012 You can deduct your expenses for the reader as business expenses. Form 1040ez 2012 Health Insurance Costs for Self-Employed Persons If you were self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, amounts paid for medical and qualified long-term care insurance on behalf of yourself, your spouse, your dependents, and, your children who were under age 27 at the end of 2013. Form 1040ez 2012 For this purpose, you were self-employed if you were a general partner (or a limited partner receiving guaranteed payments) or you received wages from an S corporation in which you were more than a 2% shareholder. Form 1040ez 2012 The insurance plan must be established under your trade or business and the deduction cannot be more than your earned income from that trade or business. Form 1040ez 2012 You cannot deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer, your spouse's employer, or, an employer of your dependent or your child under age 27 at the end of 2013. Form 1040ez 2012 You cannot deduct payments for a qualified long-term care insurance contract for any month in which you were eligible to participate in a long-term care insurance plan subsidized by your employer or your spouse's employer. Form 1040ez 2012 If you qualify to take the deduction, use the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 instructions to figure the amount you can deduct. Form 1040ez 2012 But if any of the following applies, do not use that worksheet. Form 1040ez 2012 You had more than one source of income subject to self-employment tax. Form 1040ez 2012 You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Form 1040ez 2012 You are using amounts paid for qualified long-term care insurance to figure the deduction. Form 1040ez 2012 If you cannot use the worksheet in the Form 1040 instructions, use the worksheet in Publication 535, Business Expenses, to figure your deduction. Form 1040ez 2012 Note. Form 1040ez 2012 When figuring the amount you can deduct for insurance premiums, do not include any advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Form 1040ez 2012 If you are claiming the health coverage tax credit, subtract the amount shown on Form 8885, from the total insurance premiums you paid. Form 1040ez 2012 Do not include amounts paid for health insurance coverage with retirement plan distributions that were tax-free because you are a retired public safety officer. Form 1040ez 2012 Where to report. Form 1040ez 2012    You take this deduction on Form 1040. Form 1040ez 2012 If you itemize your deductions and do not claim 100% of your self-employed health insurance on Form 1040, you can generally include any remaining premiums with all other medical expenses on Schedule A (Form 1040), subject to the 10% limit (7. Form 1040ez 2012 5% if either you or your spouse was age 65 or older). Form 1040ez 2012 See Self-Employed Health Insurance Deduction in chapter 6 of Publication 535, Business Expenses, and Medical and Dental Expenses in the Instructions for Schedule A (Form 1040), for more information. 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