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Free Federal And State Tax Filing 2013

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Free Federal And State Tax Filing 2013

Free federal and state tax filing 2013 11. Free federal and state tax filing 2013   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Free federal and state tax filing 2013 Nondeductible losses. Free federal and state tax filing 2013 Family pet. Free federal and state tax filing 2013 Progressive deterioration. Free federal and state tax filing 2013 Decline in market value of stock. Free federal and state tax filing 2013 Mislaid or lost property. Free federal and state tax filing 2013 Farming Losses How To Figure a Loss Deduction Limits on Losses of Personal-Use Property When Loss Is Deductible Proof of Loss Figuring a Gain Other Involuntary ConversionsCondemnation Irrigation Project Livestock Losses Tree Seedlings Postponing GainException. Free federal and state tax filing 2013 Related persons. Free federal and state tax filing 2013 Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Free federal and state tax filing 2013 Covered disaster area. Free federal and state tax filing 2013 Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Free federal and state tax filing 2013 A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Free federal and state tax filing 2013 A theft occurs when property is stolen. Free federal and state tax filing 2013 A condemnation occurs when private property is legally taken for public use without the owner's consent. Free federal and state tax filing 2013 A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Free federal and state tax filing 2013 You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation. Free federal and state tax filing 2013 An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter. Free federal and state tax filing 2013 If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. Free federal and state tax filing 2013 For more information, see Postponing Gain , later. Free federal and state tax filing 2013 Topics - This chapter discusses: Casualties and thefts How to figure a loss or gain Other involuntary conversions Postponing gain Disaster area losses Reporting gains and losses Drought involving property connected with a trade or business or a transaction entered into for profit Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 4684 Casualties and Thefts 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Free federal and state tax filing 2013 Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Free federal and state tax filing 2013 If the insurance or other reimbursement is more than the adjusted basis of the destroyed, damaged, or stolen property, you may have a taxable gain. Free federal and state tax filing 2013 Casualty. Free federal and state tax filing 2013   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Free federal and state tax filing 2013 A sudden event is one that is swift, not gradual or progressive. Free federal and state tax filing 2013 An unexpected event is one that is ordinarily unanticipated and unintended. Free federal and state tax filing 2013 An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged. Free federal and state tax filing 2013 Deductible losses. Free federal and state tax filing 2013   Deductible casualty losses can result from a number of different causes, including the following. Free federal and state tax filing 2013 Airplane crashes. Free federal and state tax filing 2013 Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Free federal and state tax filing 2013 Earthquakes. Free federal and state tax filing 2013 Fires (but see Nondeductible losses next for exceptions). Free federal and state tax filing 2013 Floods. Free federal and state tax filing 2013 Freezing. Free federal and state tax filing 2013 Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses, in Publication 547. Free federal and state tax filing 2013 Lightning. Free federal and state tax filing 2013 Storms, including hurricanes and tornadoes. Free federal and state tax filing 2013 Terrorist attacks. Free federal and state tax filing 2013 Vandalism. Free federal and state tax filing 2013 Volcanic eruptions. Free federal and state tax filing 2013 Nondeductible losses. Free federal and state tax filing 2013   A casualty loss is not deductible if the damage or destruction is caused by the following. Free federal and state tax filing 2013 Accidentally breaking articles such as glassware or china under normal conditions. Free federal and state tax filing 2013 A family pet (explained below). Free federal and state tax filing 2013 A fire if you willfully set it, or pay someone else to set it. Free federal and state tax filing 2013 A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Free federal and state tax filing 2013 The same is true if the willful act or willful negligence of someone acting for you caused the accident. Free federal and state tax filing 2013 Progressive deterioration (explained below). Free federal and state tax filing 2013 Family pet. Free federal and state tax filing 2013   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed above under Casualty are met. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 You keep your horse in your yard. Free federal and state tax filing 2013 The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Free federal and state tax filing 2013 Some of the trees were completely girdled and died. Free federal and state tax filing 2013 Because the damage was not unexpected or unusual, the loss is not deductible. Free federal and state tax filing 2013 Progressive deterioration. Free federal and state tax filing 2013   Loss of property due to progressive deterioration is not deductible as a casualty loss. Free federal and state tax filing 2013 This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Free federal and state tax filing 2013 Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Free federal and state tax filing 2013 However, weather-related conditions or disease may cause another type of involuntary conversion. Free federal and state tax filing 2013 See Other Involuntary Conversions , later. Free federal and state tax filing 2013 Theft. Free federal and state tax filing 2013   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Free federal and state tax filing 2013 The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Free federal and state tax filing 2013 You do not need to show a conviction for theft. Free federal and state tax filing 2013   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Free federal and state tax filing 2013 The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Free federal and state tax filing 2013 Decline in market value of stock. Free federal and state tax filing 2013   You cannot deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. Free federal and state tax filing 2013 However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. Free federal and state tax filing 2013 You report a capital loss on Schedule D (Form 1040). Free federal and state tax filing 2013 For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Free federal and state tax filing 2013 Mislaid or lost property. Free federal and state tax filing 2013   The simple disappearance of money or property is not a theft. Free federal and state tax filing 2013 However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Free federal and state tax filing 2013 The diamond falls from the ring and is never found. Free federal and state tax filing 2013 The loss of the diamond is a casualty. Free federal and state tax filing 2013 Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Free federal and state tax filing 2013 The following is a discussion of some losses you can deduct and some you cannot deduct. Free federal and state tax filing 2013 Livestock or produce bought for resale. Free federal and state tax filing 2013   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Free federal and state tax filing 2013 If you report your income on an accrual method, take casualty and theft losses on property bought for resale by omitting the item from the closing inventory for the year of the loss. Free federal and state tax filing 2013 You cannot take a separate deduction. Free federal and state tax filing 2013 Livestock, plants, produce, and crops raised for sale. Free federal and state tax filing 2013   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Free federal and state tax filing 2013 You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Free federal and state tax filing 2013   For plants with a preproductive period of more than 2 years, you may have a deductible loss if you have a tax basis in the plants. Free federal and state tax filing 2013 You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Free federal and state tax filing 2013 The uniform capitalization rules are discussed in chapter 6. Free federal and state tax filing 2013   If you report your income on an accrual method, casualty or theft losses are deductible only if you included the items in your inventory at the beginning of your tax year. Free federal and state tax filing 2013 You get the deduction by omitting the item from your inventory at the close of your tax year. Free federal and state tax filing 2013 You cannot take a separate casualty or theft deduction. Free federal and state tax filing 2013 Income loss. Free federal and state tax filing 2013   A loss of future income is not deductible. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 A severe flood destroyed your crops. Free federal and state tax filing 2013 Because you are a cash method taxpayer and already deducted the cost of raising the crops as farm expenses, this loss is not deductible, as explained above under Livestock, plants, produce, and crops raised for sale . Free federal and state tax filing 2013 You estimate that the crop loss will reduce your farm income by $25,000. Free federal and state tax filing 2013 This loss of future income is also not deductible. Free federal and state tax filing 2013 Loss of timber. Free federal and state tax filing 2013   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Free federal and state tax filing 2013 If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Free federal and state tax filing 2013 See Postponing Gain , later. Free federal and state tax filing 2013 Property used in farming. Free federal and state tax filing 2013   Casualty and theft losses of property used in your farm business usually result in deductible losses. Free federal and state tax filing 2013 If a fire or storm destroyed your barn, or you lose by casualty or theft an animal you bought for draft, breeding, dairy, or sport, you may have a deductible loss. Free federal and state tax filing 2013 See How To Figure a Loss , later. Free federal and state tax filing 2013 Raised draft, breeding, dairy, or sporting animals. Free federal and state tax filing 2013   Generally, losses of raised draft, breeding, dairy, or sporting animals do not result in deductible casualty or theft losses because you have no basis in the animals. Free federal and state tax filing 2013 However, you may have a basis in the animal and therefore may be able to claim a deduction if either of the following situations applies to you. Free federal and state tax filing 2013 You use inventories to determine your income and you included the animals in your inventory. Free federal and state tax filing 2013 You capitalized the expenses associated with the animals under the uniform capitalization rules and therefore have a tax basis in the animals subject to a casualty or theft. Free federal and state tax filing 2013 When you include livestock in inventory, its last inventory value is its basis. Free federal and state tax filing 2013 When you lose an inventoried animal held for draft, breeding, dairy, or sport by casualty or theft during the year, decrease ending inventory by the amount you included in inventory for the animal. Free federal and state tax filing 2013 You cannot take a separate deduction. Free federal and state tax filing 2013 How To Figure a Loss How you figure a deductible casualty or theft loss depends on whether the loss was to farm or personal-use property and whether the property was stolen or partly or completely destroyed. Free federal and state tax filing 2013 Farm property. Free federal and state tax filing 2013   Farm property is the property you use in your farming business. Free federal and state tax filing 2013 If your farm property was completely destroyed or stolen, your loss is figured as follows:      Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive      You can use the schedules in Publication 584-B to list your stolen, damaged, or destroyed business property and to figure your loss. Free federal and state tax filing 2013   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Free federal and state tax filing 2013 However, the deduction limits, discussed later, do not apply to farm property. Free federal and state tax filing 2013 Personal-use property. Free federal and state tax filing 2013   Personal-use property is property used by you or your family members for personal purposes and not used in your farm business or for income-producing purposes. Free federal and state tax filing 2013 The following items are examples of personal-use property: Your main home. Free federal and state tax filing 2013 Furniture and electronics used in your main home and not used in a home office or for business purposes. Free federal and state tax filing 2013 Clothing and jewelry. Free federal and state tax filing 2013 An automobile used for nonbusiness purposes. Free federal and state tax filing 2013 You figure the casualty or theft loss on this property by taking the following steps. Free federal and state tax filing 2013 Determine your adjusted basis in the property before the casualty or theft. Free federal and state tax filing 2013 Determine the decrease in fair market value of the property as a result of the casualty or theft. Free federal and state tax filing 2013 From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Free federal and state tax filing 2013 You must apply the deduction limits, discussed later, to determine your deductible loss. Free federal and state tax filing 2013    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Free federal and state tax filing 2013 It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Free federal and state tax filing 2013 Adjusted basis. Free federal and state tax filing 2013   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Free federal and state tax filing 2013 For more information about adjusted basis, see chapter 6. Free federal and state tax filing 2013 Decrease in fair market value (FMV). Free federal and state tax filing 2013   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Free federal and state tax filing 2013 FMV is defined in chapter 10 under Payments Received or Considered Received . Free federal and state tax filing 2013 Appraisal. Free federal and state tax filing 2013   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Free federal and state tax filing 2013 But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Free federal and state tax filing 2013   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterward should be made by a competent appraiser. Free federal and state tax filing 2013 The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Free federal and state tax filing 2013 This information is needed to limit any deduction to the actual loss resulting from damage to the property. Free federal and state tax filing 2013 Cost of cleaning up or making repairs. Free federal and state tax filing 2013   The cost of cleaning up after a casualty is not part of a casualty loss. Free federal and state tax filing 2013 Neither is the cost of repairing damaged property after a casualty. Free federal and state tax filing 2013 But you can use the cost of cleaning up or making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Free federal and state tax filing 2013 The repairs are actually made. Free federal and state tax filing 2013 The repairs are necessary to bring the property back to its condition before the casualty. Free federal and state tax filing 2013 The amount spent for repairs is not excessive. Free federal and state tax filing 2013 The repairs fix the damage only. Free federal and state tax filing 2013 The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Free federal and state tax filing 2013 Related expenses. Free federal and state tax filing 2013   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, temporary housing, or a rental car, are not part of your casualty or theft loss. Free federal and state tax filing 2013 However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Free federal and state tax filing 2013 Separate computations for more than one item of property. Free federal and state tax filing 2013   Generally, if a single casualty or theft involves more than one item of property, you must figure your loss separately for each item of property. Free federal and state tax filing 2013 Then combine the losses to determine your total loss. Free federal and state tax filing 2013    There is an exception to this rule for personal-use real property. Free federal and state tax filing 2013 See Exception for personal-use real property, later. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 A fire on your farm damaged a tractor and the barn in which it was stored. Free federal and state tax filing 2013 The tractor had an adjusted basis of $3,300. Free federal and state tax filing 2013 Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Free federal and state tax filing 2013 The barn had an adjusted basis of $28,000. Free federal and state tax filing 2013 Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Free federal and state tax filing 2013 You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Free federal and state tax filing 2013 Figure your deductible casualty loss separately for the two items of property. Free federal and state tax filing 2013     Tractor Barn 1) Adjusted basis $3,300 $28,000 2) FMV before fire $28,000 $55,000 3) FMV after fire 10,000 25,000 4) Decrease in FMV  (line 2 − line 3) $18,000 $30,000 5) Loss (lesser of line 1 or line 4) $3,300 $28,000 6) Minus: Insurance 2,100 26,000 7) Deductible casualty loss $1,200 $2,000 8) Total deductible casualty loss $3,200 Exception for personal-use real property. Free federal and state tax filing 2013   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. Free federal and state tax filing 2013 Figure the loss using the smaller of the following. Free federal and state tax filing 2013 The decrease in FMV of the entire property. Free federal and state tax filing 2013 The adjusted basis of the entire property. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 You bought a farm in 1990 for $160,000. Free federal and state tax filing 2013 The adjusted basis of the residential part is now $128,000. Free federal and state tax filing 2013 In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Free federal and state tax filing 2013 The adjusted basis of the residential part includes the $7,500. Free federal and state tax filing 2013 The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Free federal and state tax filing 2013 The trees were not covered by insurance. Free federal and state tax filing 2013 1) Adjusted basis $128,000 2) FMV before the storm $400,000 3) FMV after the storm 385,000 4) Decrease in FMV (line 2 − line 3) $15,000 5) Loss before insurance (lesser of line 1 or line 4) $15,000 6) Minus: Insurance -0- 7) Amount of loss $15,000 Insurance and other reimbursements. Free federal and state tax filing 2013   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Free federal and state tax filing 2013 You do not have a casualty or theft loss to the extent you are reimbursed. Free federal and state tax filing 2013   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Free federal and state tax filing 2013 You must reduce your loss even if you do not receive payment until a later tax year. Free federal and state tax filing 2013    Do not subtract from your loss any insurance payments you receive for living expenses if you lose the use of your main home or are denied access to it because of a casualty. Free federal and state tax filing 2013 You may have to include a portion of these payments in your income. Free federal and state tax filing 2013 See Insurance payments for living expenses in Publication 547 for details. Free federal and state tax filing 2013 Disaster relief. Free federal and state tax filing 2013   Food, medical supplies, and other forms of assistance you receive do not reduce your casualty loss, unless they are replacements for lost or destroyed property. Free federal and state tax filing 2013 Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Free federal and state tax filing 2013   Generally, disaster relief grants received under the Robert T. Free federal and state tax filing 2013 Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Free federal and state tax filing 2013 See Federal disaster relief grants , later, under Disaster Area Losses . Free federal and state tax filing 2013   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Free federal and state tax filing 2013 See Qualified disaster relief payments , later, under Disaster Area Losses . Free federal and state tax filing 2013 Reimbursement received after deducting loss. Free federal and state tax filing 2013   If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Free federal and state tax filing 2013 Actual reimbursement less than expected. Free federal and state tax filing 2013   If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement. Free federal and state tax filing 2013 Actual reimbursement more than expected. Free federal and state tax filing 2013   If you later receive more reimbursement than you expected after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Free federal and state tax filing 2013 However, if any part of your original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Free federal and state tax filing 2013 Do not refigure your tax for the year you claimed the deduction. Free federal and state tax filing 2013 See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Free federal and state tax filing 2013 If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. Free federal and state tax filing 2013 See Figuring a Gain in Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft. Free federal and state tax filing 2013 Actual reimbursement same as expected. Free federal and state tax filing 2013   If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss. Free federal and state tax filing 2013 Lump-sum reimbursement. Free federal and state tax filing 2013   If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. Free federal and state tax filing 2013 Figure the gain or loss separately for each asset that has a separate basis. Free federal and state tax filing 2013 Adjustments to basis. Free federal and state tax filing 2013   If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive and by any deductible loss. Free federal and state tax filing 2013 The result is your adjusted basis in the property. Free federal and state tax filing 2013 Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Free federal and state tax filing 2013 See Adjusted Basis in chapter 6 for more information. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 You built a new silo for $25,000. Free federal and state tax filing 2013 This is the basis in your silo because that is the total cost you incurred to build it. Free federal and state tax filing 2013 During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Free federal and state tax filing 2013 In addition, your insurance company reimbursed you $4,000 for the damage and you spent $6,000 to restore the silo to its pre-casualty condition. Free federal and state tax filing 2013 Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Free federal and state tax filing 2013 Deduction Limits on Losses of Personal-Use Property Casualty and theft losses of property held for personal use may be deductible if you itemize deductions on Schedule A (Form 1040). Free federal and state tax filing 2013 There are two limits on the deduction for casualty or theft loss of personal-use property. Free federal and state tax filing 2013 You figure these limits on Form 4684. Free federal and state tax filing 2013 $100 rule. Free federal and state tax filing 2013   You must reduce each casualty or theft loss on personal-use property by $100. Free federal and state tax filing 2013 This rule applies after you have subtracted any reimbursement. Free federal and state tax filing 2013 10% rule. Free federal and state tax filing 2013   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Free federal and state tax filing 2013 Apply this rule after you reduce each loss by $100. Free federal and state tax filing 2013 Adjusted gross income is on line 38 of Form 1040. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 In June, you discovered that your house had been burglarized. Free federal and state tax filing 2013 Your loss after insurance reimbursement was $2,000. Free federal and state tax filing 2013 Your adjusted gross income for the year you discovered the burglary is $57,000. Free federal and state tax filing 2013 Figure your theft loss deduction as follows: 1. Free federal and state tax filing 2013 Loss after insurance $2,000 2. Free federal and state tax filing 2013 Subtract $100 100 3. Free federal and state tax filing 2013 Loss after $100 rule $1,900 4. Free federal and state tax filing 2013 Subtract 10% (. Free federal and state tax filing 2013 10) × $57,000 AGI $5,700 5. Free federal and state tax filing 2013 Theft loss deduction -0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($5,700). Free federal and state tax filing 2013    If you have a casualty or theft gain in addition to a loss, you will have to make a special computation before you figure your 10% limit. Free federal and state tax filing 2013 See 10% Rule in Publication 547. Free federal and state tax filing 2013 When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Free federal and state tax filing 2013 You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Free federal and state tax filing 2013 However, losses in federally declared disaster areas are subject to different rules. Free federal and state tax filing 2013 See Disaster Area Losses , later, for an exception. Free federal and state tax filing 2013 If you are not sure whether part of your casualty or theft loss will be reimbursed, do not deduct that part until the tax year when you become reasonably certain that it will not be reimbursed. Free federal and state tax filing 2013 Leased property. Free federal and state tax filing 2013   If you lease property from someone else, you can deduct a loss on the property in the year your liability for the loss is fixed. Free federal and state tax filing 2013 This is true even if the loss occurred or the liability was paid in a different year. Free federal and state tax filing 2013 You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Free federal and state tax filing 2013 Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 Robert leased a tractor from First Implement, Inc. Free federal and state tax filing 2013 , for use in his farm business. Free federal and state tax filing 2013 The tractor was destroyed by a tornado in June 2012. Free federal and state tax filing 2013 The loss was not insured. Free federal and state tax filing 2013 First Implement billed Robert for the fair market value of the tractor on the date of the loss. Free federal and state tax filing 2013 Robert disagreed with the bill and refused to pay it. Free federal and state tax filing 2013 First Implement later filed suit in court against Robert. Free federal and state tax filing 2013 In 2013, Robert and First Implement agreed to settle the suit for $20,000, and the court entered a judgment in favor of First Implement. Free federal and state tax filing 2013 Robert paid $20,000 in June 2013. Free federal and state tax filing 2013 He can claim the $20,000 as a loss on his 2013 tax return. Free federal and state tax filing 2013 Net operating loss (NOL). Free federal and state tax filing 2013   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Free federal and state tax filing 2013 An NOL can be carried back or carried forward and deducted from income in other years. Free federal and state tax filing 2013 See Publication 536 for more information on NOLs. Free federal and state tax filing 2013 Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Free federal and state tax filing 2013 You must have records to support the amount you claim for the loss. Free federal and state tax filing 2013 Casualty loss proof. Free federal and state tax filing 2013   For a casualty loss, your records should show all the following information. Free federal and state tax filing 2013 The type of casualty (car accident, fire, storm, etc. Free federal and state tax filing 2013 ) and when it occurred. Free federal and state tax filing 2013 That the loss was a direct result of the casualty. Free federal and state tax filing 2013 That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage. Free federal and state tax filing 2013 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Free federal and state tax filing 2013 Theft loss proof. Free federal and state tax filing 2013   For a theft loss, your records should show all the following information. Free federal and state tax filing 2013 When you discovered your property was missing. Free federal and state tax filing 2013 That your property was stolen. Free federal and state tax filing 2013 That you were the owner of the property. Free federal and state tax filing 2013 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Free federal and state tax filing 2013 Figuring a Gain A casualty or theft may result in a taxable gain. Free federal and state tax filing 2013 If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. Free federal and state tax filing 2013 You generally report your gain as income in the year you receive the reimbursement. Free federal and state tax filing 2013 However, depending on the type of property you receive, you may not have to report your gain. Free federal and state tax filing 2013 See Postponing Gain , later. Free federal and state tax filing 2013 Your gain is figured as follows: The amount you receive, minus Your adjusted basis in the property at the time of the casualty or theft. Free federal and state tax filing 2013 Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. Free federal and state tax filing 2013 Amount you receive. Free federal and state tax filing 2013   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Free federal and state tax filing 2013 It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 A tornado severely damaged your barn. Free federal and state tax filing 2013 The adjusted basis of the barn was $25,000. Free federal and state tax filing 2013 Your insurance company reimbursed you $40,000 for the damaged barn. Free federal and state tax filing 2013 However, you had legal expenses of $2,000 to collect that insurance. Free federal and state tax filing 2013 Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Free federal and state tax filing 2013 1) Insurance reimbursement $40,000 2) Legal expenses 2,000 3) Amount received  (line 1 − line 2) $38,000 4) Adjusted basis 25,000 5) Gain on casualty (line 3 − line 4) $13,000 Other Involuntary Conversions In addition to casualties and thefts, other events cause involuntary conversions of property. Free federal and state tax filing 2013 Some of these are discussed in the following paragraphs. Free federal and state tax filing 2013 Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Free federal and state tax filing 2013 You report the gain or deduct the loss on your tax return for the year you realize it. Free federal and state tax filing 2013 However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Free federal and state tax filing 2013 See Postponing Gain , later. Free federal and state tax filing 2013 Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Free federal and state tax filing 2013 The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take property. Free federal and state tax filing 2013 The owner receives a condemnation award (money or property) in exchange for the property taken. Free federal and state tax filing 2013 A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Free federal and state tax filing 2013 Threat of condemnation. Free federal and state tax filing 2013   Treat the sale of your property under threat of condemnation as a condemnation, provided you have reasonable grounds to believe that your property will be condemned. Free federal and state tax filing 2013 Main home condemned. Free federal and state tax filing 2013   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. Free federal and state tax filing 2013 For information on this exclusion, see Publication 523. Free federal and state tax filing 2013 If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. Free federal and state tax filing 2013 See Postponing Gain , later. Free federal and state tax filing 2013 (You cannot deduct a loss from the condemnation of your main home. Free federal and state tax filing 2013 ) More information. Free federal and state tax filing 2013   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Free federal and state tax filing 2013 Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Free federal and state tax filing 2013 Irrigation Project The sale or other disposition of property located within an irrigation project to conform to the acreage limits of federal reclamation laws is an involuntary conversion. Free federal and state tax filing 2013 Livestock Losses Diseased livestock. Free federal and state tax filing 2013   If your livestock die from disease, or are destroyed, sold, or exchanged because of disease, even though the disease is not of epidemic proportions, treat these occurrences as involuntary conversions. Free federal and state tax filing 2013 If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Free federal and state tax filing 2013 Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Free federal and state tax filing 2013 If you replace the livestock, you may be able to postpone reporting the gain. Free federal and state tax filing 2013 See Postponing Gain below. Free federal and state tax filing 2013 Reporting dispositions of diseased livestock. Free federal and state tax filing 2013   If you choose to postpone reporting gain on the disposition of diseased livestock, you must attach a statement to your return explaining that the livestock were disposed of because of disease. Free federal and state tax filing 2013 You must also include other information on this statement. Free federal and state tax filing 2013 See How To Postpone Gain , later, under Postponing Gain . Free federal and state tax filing 2013 Weather-related sales of livestock. Free federal and state tax filing 2013   If you sell or exchange livestock (other than poultry) held for draft, breeding, or dairy purposes solely because of drought, flood, or other weather-related conditions, treat the sale or exchange as an involuntary conversion. Free federal and state tax filing 2013 Only livestock sold in excess of the number you normally would sell under usual business practice, in the absence of weather-related conditions, are considered involuntary conversions. Free federal and state tax filing 2013 Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Free federal and state tax filing 2013 If you replace the livestock, you may be able to postpone reporting the gain. Free federal and state tax filing 2013 See Postponing Gain below. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 It is your usual business practice to sell five of your dairy animals during the year. Free federal and state tax filing 2013 This year you sold 20 dairy animals because of drought. Free federal and state tax filing 2013 The sale of 15 animals is treated as an involuntary conversion. Free federal and state tax filing 2013    If you do not replace the livestock, you may be able to report the gain in the following year's income. Free federal and state tax filing 2013 This rule also applies to other livestock (including poultry). Free federal and state tax filing 2013 See Sales Caused by Weather-Related Conditions in chapter 3. Free federal and state tax filing 2013 Tree Seedlings If, because of an abnormal drought, the failure of planted tree seedlings is greater than normally anticipated, you may have a deductible loss. Free federal and state tax filing 2013 Treat the loss as a loss from an involuntary conversion. Free federal and state tax filing 2013 The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Free federal and state tax filing 2013 You deduct the loss on the return for the year the seedlings died. Free federal and state tax filing 2013 Postponing Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed, stolen, or other involuntarily converted property. Free federal and state tax filing 2013 Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Free federal and state tax filing 2013 You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Free federal and state tax filing 2013 However, you can choose to postpone reporting the gain if you purchase replacement property similar or related in service or use to your destroyed, stolen, or other involuntarily converted property within a specific replacement period. Free federal and state tax filing 2013 If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Free federal and state tax filing 2013 To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Free federal and state tax filing 2013 If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. Free federal and state tax filing 2013 Example 1. Free federal and state tax filing 2013 In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Free federal and state tax filing 2013 In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Free federal and state tax filing 2013 In May of this year, the property was worth $100,000. Free federal and state tax filing 2013 In June the barn and silo were destroyed by a tornado. Free federal and state tax filing 2013 At the time of the tornado, you had an adjusted basis of $0 in the property. Free federal and state tax filing 2013 You received $85,000 from the insurance company. Free federal and state tax filing 2013 You had a gain of $85,000 ($85,000 – $0). Free federal and state tax filing 2013 You spent $80,000 to rebuild the barn and silo. Free federal and state tax filing 2013 Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Free federal and state tax filing 2013 Example 2. Free federal and state tax filing 2013 In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Free federal and state tax filing 2013 You made no further improvements or additions to it. Free federal and state tax filing 2013 When a storm destroyed the cabin this January, the cabin was worth $250,000. Free federal and state tax filing 2013 You received $146,000 from the insurance company in March. Free federal and state tax filing 2013 You had a gain of $128,000 ($146,000 − $18,000). Free federal and state tax filing 2013 You spent $144,000 to rebuild the cabin. Free federal and state tax filing 2013 Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Free federal and state tax filing 2013 Buying replacement property from a related person. Free federal and state tax filing 2013   You cannot postpone reporting a gain from a casualty, theft, or other involuntary conversion if you buy the replacement property from a related person (discussed later). Free federal and state tax filing 2013 This rule applies to the following taxpayers. Free federal and state tax filing 2013 C corporations. Free federal and state tax filing 2013 Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Free federal and state tax filing 2013 Individuals, partnerships (other than those in (2) above), and S corporations if the total realized gain for the tax year on all involuntarily converted properties on which there are realized gains is more than $100,000. Free federal and state tax filing 2013 For involuntary conversions described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Free federal and state tax filing 2013 If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Free federal and state tax filing 2013 If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Free federal and state tax filing 2013 Exception. Free federal and state tax filing 2013   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the involuntarily converted property. Free federal and state tax filing 2013 Related persons. Free federal and state tax filing 2013   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. Free federal and state tax filing 2013 For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Free federal and state tax filing 2013 Death of a taxpayer. Free federal and state tax filing 2013   If a taxpayer dies after having a gain, but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. Free federal and state tax filing 2013 The executor of the estate or the person succeeding to the funds from the involuntary conversion cannot postpone reporting the gain by buying replacement property. Free federal and state tax filing 2013 Replacement Property You must buy replacement property for the specific purpose of replacing your property. Free federal and state tax filing 2013 Your replacement property must be similar or related in service or use to the property it replaces. Free federal and state tax filing 2013 You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Free federal and state tax filing 2013 If you spend the money you receive for other purposes, and borrow money to buy replacement property, you can still choose to postpone reporting the gain if you meet the other requirements. Free federal and state tax filing 2013 Property you acquire by gift or inheritance does not qualify as replacement property. Free federal and state tax filing 2013 Owner-user. Free federal and state tax filing 2013   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. Free federal and state tax filing 2013 Examples of property that functions in the same way as the property it replaces are a home that replaces another home, a dairy cow that replaces another dairy cow, and farm land that replaces other farm land. Free federal and state tax filing 2013 A grinding mill that replaces a tractor does not qualify. Free federal and state tax filing 2013 Neither does a breeding or draft animal that replaces a dairy cow. Free federal and state tax filing 2013 Soil or other environmental contamination. Free federal and state tax filing 2013   If, because of soil or other environmental contamination, it is not feasible for you to reinvest your insurance money or other proceeds from destroyed or damaged livestock in property similar or related in service or use to the livestock, you can treat other property (including real property) used for farming purposes, as property similar or related in service or use to the destroyed or damaged livestock. Free federal and state tax filing 2013 Weather-related conditions. Free federal and state tax filing 2013   If, because of drought, flood, or other weather-related conditions, it is not feasible for you to reinvest the insurance money or other proceeds in property similar or related in service or use to the livestock, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the livestock you disposed of. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 Each year you normally sell 25 cows from your beef herd. Free federal and state tax filing 2013 However, this year you had to sell 50 cows. Free federal and state tax filing 2013 This is because a severe drought significantly reduced the amount of hay and pasture yield needed to feed your herd for the rest of the year. Free federal and state tax filing 2013 Because, as a result of the severe drought, it is not feasible for you to use the proceeds from selling the extra cows to buy new cows, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the cows you sold. Free federal and state tax filing 2013 Standing crop destroyed by casualty. Free federal and state tax filing 2013   If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. Free federal and state tax filing 2013 The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). Free federal and state tax filing 2013 In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period. Free federal and state tax filing 2013 Timber loss. Free federal and state tax filing 2013   Standing timber you bought with the proceeds from the sale of timber downed as a result of a casualty, such as high winds, earthquakes, or volcanic eruptions, qualifies as replacement property. Free federal and state tax filing 2013 If you bought the standing timber within the replacement period, you can postpone reporting the gain. Free federal and state tax filing 2013 Business or income-producing property located in a federally declared disaster area. Free federal and state tax filing 2013   If your destroyed business or income-producing property was located in a federally declared disaster area, any tangible replacement property you acquire for use in any business is treated as similar or related in service or use to the destroyed property. Free federal and state tax filing 2013 For more information, see Disaster Area Losses in Publication 547. Free federal and state tax filing 2013 Substituting replacement property. Free federal and state tax filing 2013   Once you have acquired qualified replacement property that you designate as replacement property in a statement attached to your tax return, you cannot substitute other qualified replacement property. Free federal and state tax filing 2013 This is true even if you acquire the other property within the replacement period. Free federal and state tax filing 2013 However, if you discover that the original replacement property was not qualified replacement property, you can, within the replacement period, substitute the new qualified replacement property. Free federal and state tax filing 2013 Basis of replacement property. Free federal and state tax filing 2013   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Free federal and state tax filing 2013 In this way, tax on the gain is postponed until you dispose of the replacement property. Free federal and state tax filing 2013 Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Free federal and state tax filing 2013 This is the replacement period. Free federal and state tax filing 2013 The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Free federal and state tax filing 2013 The replacement period generally ends 2 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 You are a calendar year taxpayer. Free federal and state tax filing 2013 While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Free federal and state tax filing 2013 You discovered the theft when you returned to your farm on November 11, 2012. Free federal and state tax filing 2013 Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Free federal and state tax filing 2013 You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Free federal and state tax filing 2013 Main home in disaster area. Free federal and state tax filing 2013   For your main home (or its contents) located in a federally declared disaster area, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Free federal and state tax filing 2013 See Disaster Area Losses , later. Free federal and state tax filing 2013 Property in the Midwestern disaster areas. Free federal and state tax filing 2013   For property located in the Midwestern disaster areas (defined in Table 4 in the 2008 Publication 547) that was destroyed, damaged, stolen, or condemned, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Free federal and state tax filing 2013 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Free federal and state tax filing 2013 Property in the Kansas disaster area. Free federal and state tax filing 2013   For property located in the Kansas disaster area that was destroyed, damaged, stolen, or condemned after May 3, 2007, as a result of the Kansas storms and tornadoes, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Free federal and state tax filing 2013 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Free federal and state tax filing 2013 Property in the Hurricane Katrina disaster area. Free federal and state tax filing 2013   For property located in the Hurricane Katrina disaster area that was destroyed, damaged, stolen, or condemned after August 24, 2005, as a result of Hurricane Katrina, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Free federal and state tax filing 2013 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Free federal and state tax filing 2013 Weather-related sales of livestock in an area eligible for federal assistance. Free federal and state tax filing 2013   For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. Free federal and state tax filing 2013 The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Free federal and state tax filing 2013   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Free federal and state tax filing 2013 R. Free federal and state tax filing 2013 B. Free federal and state tax filing 2013 529, available at  www. Free federal and state tax filing 2013 irs. Free federal and state tax filing 2013 gov/irb/2006-39_IRB/ar11. Free federal and state tax filing 2013 html. Free federal and state tax filing 2013 For a list of counties for which exceptional, extreme, or severe drought was reported during the 12 months ending August 31, 2013, see Notice 2013-62, available at IRS. Free federal and state tax filing 2013 gov. Free federal and state tax filing 2013 Condemnation. Free federal and state tax filing 2013   The replacement period for a condemnation begins on the earlier of the following dates. Free federal and state tax filing 2013 The date on which you disposed of the condemned property. Free federal and state tax filing 2013 The date on which the threat of condemnation began. Free federal and state tax filing 2013 The replacement period generally ends 2 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Free federal and state tax filing 2013 But see Main home in disaster area , Property in the Midwestern disaster areas , Property in the Kansas disaster area , and Property in the Hurricane Katrina disaster area , earlier, for exceptions. Free federal and state tax filing 2013 Business or investment real property. Free federal and state tax filing 2013   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Free federal and state tax filing 2013 Extension. Free federal and state tax filing 2013   You can apply for an extension of the replacement period. Free federal and state tax filing 2013 Send your written application to the Internal Revenue Service Center where you file your tax return. Free federal and state tax filing 2013 See your tax return instructions for the address. Free federal and state tax filing 2013 Include all the details about your need for an extension. Free federal and state tax filing 2013 Make your application before the end of the replacement period. Free federal and state tax filing 2013 However, you can file an application within a reasonable time after the replacement period ends if you can show a good reason for the delay. Free federal and state tax filing 2013 You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Free federal and state tax filing 2013 How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Free federal and state tax filing 2013 You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Free federal and state tax filing 2013 Required statement. Free federal and state tax filing 2013   You should attach a statement to your return for the year you have the gain. Free federal and state tax filing 2013 This statement should include all the following information. Free federal and state tax filing 2013 The date and details of the casualty, theft, or other involuntary conversion. Free federal and state tax filing 2013 The insurance or other reimbursement you received. Free federal and state tax filing 2013 How you figured the gain. Free federal and state tax filing 2013 Replacement property acquired before return filed. Free federal and state tax filing 2013   If you acquire replacement property before you file your return for the year you have the gain, your statement should also include detailed information about all the following items. Free federal and state tax filing 2013 The replacement property. Free federal and state tax filing 2013 The postponed gain. Free federal and state tax filing 2013 The basis adjustment that reflects the postponed gain. Free federal and state tax filing 2013 Any gain you are reporting as income. Free federal and state tax filing 2013 Replacement property acquired after return filed. Free federal and state tax filing 2013   If you intend to buy replacement property after you file your return for the year you realize gain, your statement should also say that you are choosing to replace the property within the required replacement period. Free federal and state tax filing 2013   You should then attach another statement to your return for the year in which you buy the replacement property. Free federal and state tax filing 2013 This statement should contain detailed information on the replacement property. Free federal and state tax filing 2013 If you acquire part of your replacement property in one year and part in another year, you must attach a statement to each year's return. Free federal and state tax filing 2013 Include in the statement detailed information on the replacement property bought in that year. Free federal and state tax filing 2013 Reporting weather-related sales of livestock. Free federal and state tax filing 2013   If you choose to postpone reporting the gain on weather-related sales or exchanges of livestock, show all the following information on a statement attached to your return for the tax year in which you first realize any of the gain. Free federal and state tax filing 2013 Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Free federal and state tax filing 2013 The gain realized on the sale or exchange. Free federal and state tax filing 2013 The number and kind of livestock sold or exchanged. Free federal and state tax filing 2013 The number of livestock of each kind you would have sold or exchanged under your usual business practice. Free federal and state tax filing 2013   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Free federal and state tax filing 2013 The dates you bought the replacement property. Free federal and state tax filing 2013 The cost of the replacement property. Free federal and state tax filing 2013 Description of the replacement property (for example, the number and kind of the replacement livestock). Free federal and state tax filing 2013 Amended return. Free federal and state tax filing 2013   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Free federal and state tax filing 2013 You do not acquire replacement property within the replacement period, plus extensions. Free federal and state tax filing 2013 On this amended return, you must report the gain and pay any additional tax due. Free federal and state tax filing 2013 You acquire replacement property within the required replacement period, plus extensions, but at a cost less than the amount you receive from the casualty, theft, or other involuntary conversion. Free federal and state tax filing 2013 On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Free federal and state tax filing 2013 Disaster Area Losses Special rules apply to federally declared disaster area losses. Free federal and state tax filing 2013 A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. Free federal and state tax filing 2013 Stafford Disaster Relief and Emergency Assistance Act. Free federal and state tax filing 2013 It includes a major disaster or emergency declaration under the act. Free federal and state tax filing 2013 A list of the areas warranting public or individual assistance (or both) under the Act is available at the Federal Emergency Management Agency (FEMA) web site at www. Free federal and state tax filing 2013 fema. Free federal and state tax filing 2013 gov. Free federal and state tax filing 2013 This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Free federal and state tax filing 2013 For other special rules, see Disaster Area Losses in Publication 547. Free federal and state tax filing 2013 When to deduct the loss. Free federal and state tax filing 2013   You generally must deduct a casualty loss in the year it occurred. Free federal and state tax filing 2013 However, if you have a deductible loss from a disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct that loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster happened. Free federal and state tax filing 2013 If you make this choice, the loss is treated as having occurred in the preceding year. Free federal and state tax filing 2013    Claiming a qualifying disaster loss on the previous year's return may result in a lower tax for that year, often producing or increasing a cash refund. Free federal and state tax filing 2013   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Free federal and state tax filing 2013 The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Free federal and state tax filing 2013 The due date (with extensions) for the return for the preceding tax year. Free federal and state tax filing 2013 Federal disaster relief grants. Free federal and state tax filing 2013   Do not include post-disaster relief grants received under the Robert T. Free federal and state tax filing 2013 Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. Free federal and state tax filing 2013 Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Free federal and state tax filing 2013 If the casualty loss was specifically reimbursed by the grant and you received the grant after the year in which you deducted the casualty loss, see Reimbursement received after deducting loss , earlier. Free federal and state tax filing 2013 Unemployment assistance payments under the Act are taxable unemployment compensation. Free federal and state tax filing 2013 Qualified disaster relief payments. Free federal and state tax filing 2013   Qualified disaster relief payments are not included in the income of individuals to the extent any expenses compensated by these payments are not otherwise compensated for by insurance or other reimbursement. Free federal and state tax filing 2013 These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Free federal and state tax filing 2013 No withholding applies to these payments. Free federal and state tax filing 2013   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Free federal and state tax filing 2013 Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Free federal and state tax filing 2013 Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Free federal and state tax filing 2013 (A personal residence can be a rented residence or one you own. Free federal and state tax filing 2013 ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Free federal and state tax filing 2013   Qualified disaster relief payments include amounts paid by a federal, state, or local government in connection with a federally declared disaster to individuals affected by the disaster. Free federal and state tax filing 2013    Qualified disaster relief payments do not include: Payments for expenses otherwise paid for by insurance or other reimbursements, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Free federal and state tax filing 2013 Qualified disaster mitigation payments. Free federal and state tax filing 2013   Qualified disaster mitigation payments made under the Robert T. Free federal and state tax filing 2013 Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not included in income. Free federal and state tax filing 2013 These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Free federal and state tax filing 2013 You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Free federal and state tax filing 2013 Sale of property under hazard mitigation program. Free federal and state tax filing 2013   Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. Free federal and state tax filing 2013 You report the gain or deduct the loss on your tax return for the year you realize it. Free federal and state tax filing 2013 (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Free federal and state tax filing 2013 ) However, if you sell or otherwise transfer property to the Federal Government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. Free federal and state tax filing 2013 See Postponing Gain , earlier, for the rules that apply. Free federal and state tax filing 2013 Other federal assistance programs. Free federal and state tax filing 2013    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Free federal and state tax filing 2013 Postponed tax deadlines. Free federal and state tax filing 2013   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Free federal and state tax filing 2013 The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns, paying income, excise, and employment taxes, and making contributions to a traditional IRA or Roth IRA. Free federal and state tax filing 2013   If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Free federal and state tax filing 2013 Go to http://www. Free federal and state tax filing 2013 irs. Free federal and state tax filing 2013 gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Free federal and state tax filing 2013 Who is eligible. Free federal and state tax filing 2013   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Free federal and state tax filing 2013 Any individual whose main home is located in a covered disaster area (defined next). Free federal and state tax filing 2013 Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Free federal and state tax filing 2013 Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Free federal and state tax filing 2013 Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Free federal and state tax filing 2013 The main home or principal place of business does not have to be located in the covered disaster area. Free federal and state tax filing 2013 Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Free federal and state tax filing 2013 The spouse on a joint return with a taxpayer who is eligible for postponements. Free federal and state tax filing 2013 Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose necessary records to meet a postponed tax deadline are located in the covered disaster area. Free federal and state tax filing 2013 Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Free federal and state tax filing 2013 Any other person determined by the IRS to be affected by a federally declared disaster. Free federal and state tax filing 2013 Covered disaster area. Free federal and state tax filing 2013   This is an area of a federally declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year. Free federal and state tax filing 2013 Abatement of interest and penalties. Free federal and state tax filing 2013   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Free federal and state tax filing 2013 Reporting Gains and Losses You will have to file one or more of the following forms to report your gains or losses from involuntary conversions. Free federal and state tax filing 2013 Form 4684. Free federal and state tax filing 2013   Use this form to report your gains and losses from casualties and thefts. Free federal and state tax filing 2013 Form 4797. Free federal and state tax filing 2013   Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Free federal and state tax filing 2013 Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income. Free federal and state tax filing 2013 Form 8949. Free federal and state tax filing 2013   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Free federal and state tax filing 2013 Schedule A (Form 1040). Free federal and state tax filing 2013   Use this form to deduct your losses from casualties and thefts of personal-use property and income-producing property, that you reported on Form 4684. Free federal and state tax filing 2013 Schedule D (Form 1040). Free federal and state tax filing 2013   Use this form to carry over the following gains. Free federal and state tax filing 2013 Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Free federal and state tax filing 2013 Net gain shown on Form 4684 from the casualty or theft of personal-use property. Free federal and state tax filing 2013    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Free federal and state tax filing 2013 Schedule F (Form 1040). Free federal and state tax filing 2013   Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 32, if you use the cash method of accounting and have not otherwise deducted these losses. Free federal and state tax filing 2013 Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Arizona Office of the Attorney General- Tucson

Website: Arizona Office of the Attorney General- Tucson

Address: Arizona Office of the Attorney General- Tucson
Consumer Information and Complaints
400 W. Congress St.
South Bldg., Suite 315
Tucson, AZ 85701-1367

Phone Number: 520-628-6504

Toll-free: 1-800-352-8431 (AZ, except in Maricopa and Pima Counties)

Arizona Office of the Attorney General-Phoenix

Website: Arizona Office of the Attorney General-Phoenix

Address: Arizona Office of the Attorney General-Phoenix
Consumer Information and Complaints
1275 W. Washington St.
Phoenix, AZ 85007

Phone Number: 602-542-5763

Toll-free: 1-800-352-8431 (AZ, except Phoenix)

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Department of Financial Institutions

Website: Department of Financial Institutions

Address: Department of Financial Institutions
2910 N. 44th St., Suite 310
Phoenix, AZ 85018

Phone Number: 602-771-2800

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Department of Insurance

Website: Department of Insurance

Address: Department of Insurance
Consumer Affairs Division
2910 N. 44th St., Suite 210
Phoenix, AZ 85018-7269

Phone Number: 602-364-2499 602-364-2977 (in Spanish)

Toll-free: 1-800-325-2548 (AZ)

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Arizona Corporation Commission

Website: Arizona Corporation Commission

Address: Arizona Corporation Commission
Securities Division
1300 W. Washington St., 3rd Floor
Phoenix, AZ 85007

Phone Number: 602-542-4242

Toll-free: 1-866-837-4399 (AZ)

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Corporation Commission

Website: Corporation Commission

Address: Corporation Commission
Utilities Division
Consumer Services

1200 W. Washington St.
Phoenix, AZ 85007-2996

Phone Number: 602-542-4251

Toll-free: 1-800-222-7000 (AZ)

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The Free Federal And State Tax Filing 2013

Free federal and state tax filing 2013 28. Free federal and state tax filing 2013   Miscellaneous Deductions Table of Contents What's New Introduction Useful Items - You may want to see: Deductions Subject to the 2% LimitUnreimbursed Employee Expenses (Line 21) Tax Preparation Fees (Line 22) Other Expenses (Line 23) Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses What's New Standard mileage rate. Free federal and state tax filing 2013  The 2013 rate for business use of a vehicle is 56½ cents per mile. Free federal and state tax filing 2013 Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Free federal and state tax filing 2013 You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Free federal and state tax filing 2013 This chapter covers the following topics. Free federal and state tax filing 2013 Deductions subject to the 2% limit. Free federal and state tax filing 2013 Deductions not subject to the 2% limit. Free federal and state tax filing 2013 Expenses you cannot deduct. Free federal and state tax filing 2013 You must keep records to verify your deductions. Free federal and state tax filing 2013 You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Free federal and state tax filing 2013 For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Free federal and state tax filing 2013 Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). Free federal and state tax filing 2013 You can claim the amount of expenses that is more than 2% of your adjusted gross income. Free federal and state tax filing 2013 You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Free federal and state tax filing 2013 Your adjusted gross income is the amount on Form 1040, line 38. Free federal and state tax filing 2013 Generally, you apply the 2% limit after you apply any other deduction limit. Free federal and state tax filing 2013 For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed in chapter 26) before you apply the 2% limit. Free federal and state tax filing 2013 Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Free federal and state tax filing 2013 Unreimbursed employee expenses (line 21). Free federal and state tax filing 2013 Tax preparation fees (line 22). Free federal and state tax filing 2013 Other expenses (line 23). Free federal and state tax filing 2013 Unreimbursed Employee Expenses (Line 21) Generally, you can deduct on Schedule A (Form 1040), line 21, unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. Free federal and state tax filing 2013 An expense is ordinary if it is common and accepted in your trade, business, or profession. Free federal and state tax filing 2013 An expense is necessary if it is appropriate and helpful to your business. Free federal and state tax filing 2013 An expense does not have to be required to be considered necessary. Free federal and state tax filing 2013 Examples of unreimbursed employee expenses are listed next. Free federal and state tax filing 2013 The list is followed by discussions of additional unreimbursed employee expenses. Free federal and state tax filing 2013 Business bad debt of an employee. Free federal and state tax filing 2013 Education that is work related. Free federal and state tax filing 2013 (See chapter 27. Free federal and state tax filing 2013 ) Legal fees related to your job. Free federal and state tax filing 2013 Licenses and regulatory fees. Free federal and state tax filing 2013 Malpractice insurance premiums. Free federal and state tax filing 2013 Medical examinations required by an employer. Free federal and state tax filing 2013 Occupational taxes. Free federal and state tax filing 2013 Passport for a business trip. Free federal and state tax filing 2013 Subscriptions to professional journals and trade magazines related to your work. Free federal and state tax filing 2013 Travel, transportation, entertainment, and gifts related to your work. Free federal and state tax filing 2013 (See chapter 26. Free federal and state tax filing 2013 ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Free federal and state tax filing 2013 Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer that are attributable to the pay you received from that employer. Free federal and state tax filing 2013 Depreciation on Computers You can claim a depreciation deduction for a computer that you use in your work as an employee if its use is: For the convenience of your employer, and Required as a condition of your employment. Free federal and state tax filing 2013 For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Free federal and state tax filing 2013 Dues to Chambers of Commerce and Professional Societies You may be able to deduct dues paid to professional organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties of your job. Free federal and state tax filing 2013 Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Free federal and state tax filing 2013 Lobbying and political activities. Free federal and state tax filing 2013   You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Free federal and state tax filing 2013 See Dues used for lobbying under Nondeductible Expenses, later. Free federal and state tax filing 2013 Educator Expenses If you were an eligible educator in 2013, you can deduct up to $250 of qualified expenses you paid in 2013 as an adjustment to gross income on Form 1040, line 23, rather than as a miscellaneous itemized deduction. Free federal and state tax filing 2013 If you file Form 1040A, you can deduct these expenses on line 16. Free federal and state tax filing 2013 If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Free federal and state tax filing 2013 However, neither spouse can deduct more than $250 of his or her qualified expenses. Free federal and state tax filing 2013 Home Office If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home. Free federal and state tax filing 2013 You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively: As your principal place of business for any trade or business, As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business, or In the case of a separate structure not attached to your home, in connection with your trade or business. Free federal and state tax filing 2013 The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Free federal and state tax filing 2013 See Publication 587 for more detailed information and a worksheet. Free federal and state tax filing 2013 Job Search Expenses You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. Free federal and state tax filing 2013 You cannot deduct these expenses if: You are looking for a job in a new occupation, There was a substantial break between the ending of your last job and your looking for a new one, or You are looking for a job for the first time. Free federal and state tax filing 2013 Employment and outplacement agency fees. Free federal and state tax filing 2013   You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Free federal and state tax filing 2013 Employer pays you back. Free federal and state tax filing 2013   If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. Free federal and state tax filing 2013 (See Recoveries in chapter 12. Free federal and state tax filing 2013 ) Employer pays the employment agency. Free federal and state tax filing 2013   If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income. Free federal and state tax filing 2013 Résumé. Free federal and state tax filing 2013   You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation. Free federal and state tax filing 2013 Travel and transportation expenses. Free federal and state tax filing 2013   If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. Free federal and state tax filing 2013 You can deduct the travel expenses if the trip is primarily to look for a new job. Free federal and state tax filing 2013 The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. Free federal and state tax filing 2013   Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area. Free federal and state tax filing 2013   You can choose to use the standard mileage rate to figure your car expenses. Free federal and state tax filing 2013 The 2013 rate for business use of a vehicle is 56½ cents per mile. Free federal and state tax filing 2013 See chapter 26 for more information. Free federal and state tax filing 2013 Licenses and Regulatory Fees You can deduct the amount you pay each year to state or local governments for licenses and regulatory fees for your trade, business, or profession. Free federal and state tax filing 2013 Occupational Taxes You can deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. Free federal and state tax filing 2013 If you are an employee, you can claim occupational taxes only as a miscellaneous deduction subject to the 2% limit; you cannot claim them as a deduction for taxes elsewhere on your return. Free federal and state tax filing 2013 Repayment of Income Aid Payment An “income aid payment” is one that is received under an employer's plan to aid employees who lose their jobs because of lack of work. Free federal and state tax filing 2013 If you repay a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment. Free federal and state tax filing 2013 Research Expenses of a College Professor If you are a college professor, you can deduct research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. Free federal and state tax filing 2013 You must have undertaken the research as a means of carrying out the duties expected of a professor and without expectation of profit apart from salary. Free federal and state tax filing 2013 However, you cannot deduct the cost of travel as a form of education. Free federal and state tax filing 2013 Tools Used in Your Work Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. Free federal and state tax filing 2013 You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Free federal and state tax filing 2013 For more information about depreciation, see Publication 946. Free federal and state tax filing 2013 Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Free federal and state tax filing 2013 You can also deduct assessments for benefit payments to unemployed union members. Free federal and state tax filing 2013 However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Free federal and state tax filing 2013 Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Free federal and state tax filing 2013 You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Free federal and state tax filing 2013 See Lobbying Expenses under Nondeductible Expenses, later. Free federal and state tax filing 2013 Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Free federal and state tax filing 2013 You must wear them as a condition of your employment. Free federal and state tax filing 2013 The clothes are not suitable for everyday wear. Free federal and state tax filing 2013 It is not enough that you wear distinctive clothing. Free federal and state tax filing 2013 The clothing must be specifically required by your employer. Free federal and state tax filing 2013 Nor is it enough that you do not, in fact, wear your work clothes away from work. Free federal and state tax filing 2013 The clothing must not be suitable for taking the place of your regular clothing. Free federal and state tax filing 2013 Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc. Free federal and state tax filing 2013 ). Free federal and state tax filing 2013 Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Free federal and state tax filing 2013 However, work clothing consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes, which a painter is required by his union to wear on the job, is not distinctive in character or in the nature of a uniform. Free federal and state tax filing 2013 Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Free federal and state tax filing 2013 Protective clothing. Free federal and state tax filing 2013   You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves. Free federal and state tax filing 2013   Examples of workers who may be required to wear safety items are: carpenters, cement workers, chemical workers, electricians, fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters, and truck drivers. Free federal and state tax filing 2013 Military uniforms. Free federal and state tax filing 2013   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Free federal and state tax filing 2013 However, if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict you from wearing it except while on duty as a reservist. Free federal and state tax filing 2013 In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Free federal and state tax filing 2013   If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive. Free federal and state tax filing 2013   You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Free federal and state tax filing 2013 Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Free federal and state tax filing 2013 Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Free federal and state tax filing 2013 These fees include the cost of tax preparation software programs and tax publications. Free federal and state tax filing 2013 They also include any fee you paid for electronic filing of your return. Free federal and state tax filing 2013 Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Free federal and state tax filing 2013 On Schedule A (Form 1040), line 23, you can deduct expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. Free federal and state tax filing 2013 You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonably and closely related to these purposes. Free federal and state tax filing 2013 Some of these other expenses are explained in the following discussions. Free federal and state tax filing 2013 If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Free federal and state tax filing 2013 Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Free federal and state tax filing 2013 Casualty and Theft Losses You can deduct a casualty or theft loss as a miscellaneous itemized deduction subject to the 2% limit if you used the damaged or stolen property in performing services as an employee. Free federal and state tax filing 2013 First report the loss in Section B of Form 4684, Casualties and Thefts. Free federal and state tax filing 2013 You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Free federal and state tax filing 2013 To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. Free federal and state tax filing 2013 For other casualty and theft losses, see chapter 25. Free federal and state tax filing 2013 Clerical Help and Office Rent You can deduct office expenses, such as rent and clerical help, that you have in connection with your investments and collecting the taxable income on them. Free federal and state tax filing 2013 Credit or Debit Card Convenience Fees You can deduct the convenience fee charged by the card processor for paying your income tax (including estimated tax payments) by credit or debit card. Free federal and state tax filing 2013 The fees are deductible in the year paid. Free federal and state tax filing 2013 Depreciation on Home Computer You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments that produce taxable income). Free federal and state tax filing 2013 You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Free federal and state tax filing 2013 But if you work as an employee and also use the computer in that work, see Publication 946. Free federal and state tax filing 2013 Excess Deductions of an Estate If an estate's total deductions in its last tax year are more than its gross income for that year, the beneficiaries succeeding to the estate's property can deduct the excess. Free federal and state tax filing 2013 Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Free federal and state tax filing 2013 The beneficiaries can claim the deduction only for the tax year in which, or with which, the estate terminates, whether the year of termination is a normal year or a short tax year. Free federal and state tax filing 2013 For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Free federal and state tax filing 2013 Fees to Collect Interest and Dividends You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends on shares of stock. Free federal and state tax filing 2013 But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Free federal and state tax filing 2013 You must add the fee to the cost of the property. Free federal and state tax filing 2013 You cannot deduct the fee you pay to a broker to sell securities. Free federal and state tax filing 2013 You can use the fee only to figure gain or loss from the sale. Free federal and state tax filing 2013 See the Instructions for Form 8949 for information on how to report the fee. Free federal and state tax filing 2013 Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Free federal and state tax filing 2013 A hobby is not a business because it is not carried on to make a profit. Free federal and state tax filing 2013 See Activity not for profit in chapter 12 under Other Income. Free federal and state tax filing 2013 Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Free federal and state tax filing 2013 Deductions of pass-through entities are passed through to the partners or shareholders. Free federal and state tax filing 2013 The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 You are a member of an investment club that is formed solely to invest in securities. Free federal and state tax filing 2013 The club is treated as a partnership. Free federal and state tax filing 2013 The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Free federal and state tax filing 2013 In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Free federal and state tax filing 2013 However, if the investment club partnership has investments that also produce nontaxable income, you cannot deduct your share of the partnership's expenses that produce the nontaxable income. Free federal and state tax filing 2013 Publicly offered mutual funds. Free federal and state tax filing 2013   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Free federal and state tax filing 2013 A mutual fund is “publicly offered” if it is: Continuously offered pursuant to a public offering, Regularly traded on an established securities market, or Held by or for at least 500 persons at all times during the tax year. Free federal and state tax filing 2013   A publicly offered mutual fund will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing the net amount of dividend income (gross dividends minus investment expenses). Free federal and state tax filing 2013 This net figure is the amount you report on your return as income. Free federal and state tax filing 2013 You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Free federal and state tax filing 2013 Information returns. Free federal and state tax filing 2013   You should receive information returns from pass-through entities. Free federal and state tax filing 2013 Partnerships and S corporations. Free federal and state tax filing 2013   These entities issue Schedule K-1, which lists the items and amounts you must report and identifies the tax return schedules and lines to use. Free federal and state tax filing 2013 Nonpublicly offered mutual funds. Free federal and state tax filing 2013   These funds will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing your share of gross income and investment expenses. Free federal and state tax filing 2013 You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Free federal and state tax filing 2013 Investment Fees and Expenses You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income. Free federal and state tax filing 2013 Legal Expenses You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax. Free federal and state tax filing 2013 You can also deduct legal expenses that are: Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business, For tax advice related to a divorce, if the bill specifies how much is for tax advice and it is determined in a reasonable way, or To collect taxable alimony. Free federal and state tax filing 2013 You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F), on the appropriate schedule. Free federal and state tax filing 2013 You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Free federal and state tax filing 2013 See Tax Preparation Fees , earlier. Free federal and state tax filing 2013 Loss on Deposits For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see Loss on Deposits in chapter 25. Free federal and state tax filing 2013 Repayments of Income If you had to repay an amount that you included in income in an earlier year, you may be able to deduct the amount you repaid. Free federal and state tax filing 2013 If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Free federal and state tax filing 2013 If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Free federal and state tax filing 2013 Repayments of Social Security Benefits For information on how to deduct your repayments of certain social security benefits, see Repayments More Than Gross Benefits in chapter 11. Free federal and state tax filing 2013 Safe Deposit Box Rent You can deduct safe deposit box rent if you use the box to store taxable income-producing stocks, bonds, or investment-related papers and documents. Free federal and state tax filing 2013 You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Free federal and state tax filing 2013 Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Free federal and state tax filing 2013 These service charges include payments for: Holding shares acquired through a plan, Collecting and reinvesting cash dividends, and Keeping individual records and providing detailed statements of accounts. Free federal and state tax filing 2013 Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your individual retirement arrangement (IRA) are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. Free federal and state tax filing 2013 For more information about IRAs, see chapter 17. Free federal and state tax filing 2013 Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Free federal and state tax filing 2013 They are not subject to the 2% limit. Free federal and state tax filing 2013 Report these items on Schedule A (Form 1040), line 28. Free federal and state tax filing 2013 List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Free federal and state tax filing 2013 Amortizable premium on taxable bonds. Free federal and state tax filing 2013 Casualty and theft losses from income- producing property. Free federal and state tax filing 2013 Federal estate tax on income in respect of a decedent. Free federal and state tax filing 2013 Gambling losses up to the amount of gambling winnings. Free federal and state tax filing 2013 Impairment-related work expenses of persons with disabilities. Free federal and state tax filing 2013 Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Free federal and state tax filing 2013 Losses from Ponzi-type investment schemes. Free federal and state tax filing 2013 See Losses from Ponzi-type investment schemes under Theft in chapter 25. Free federal and state tax filing 2013 Repayments of more than $3,000 under a claim of right. Free federal and state tax filing 2013 Unrecovered investment in an annuity. Free federal and state tax filing 2013 Amortizable Premium on Taxable Bonds In general, if the amount you pay for a bond is greater than its stated principal amount, the excess is bond premium. Free federal and state tax filing 2013 You can elect to amortize the premium on taxable bonds. Free federal and state tax filing 2013 The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Free federal and state tax filing 2013 Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Free federal and state tax filing 2013 For more information, see Amortizable Premium on Taxable Bonds in Publication 529, and Bond Premium Amortization in chapter 3 of Publication 550, Investment Income and Expenses. Free federal and state tax filing 2013 Casualty and Theft Losses of Income-Producing Property You can deduct a casualty or theft loss as a miscellaneous itemized deduction not subject to the 2% limit if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). Free federal and state tax filing 2013 First, report the loss in Form 4684, Section B. Free federal and state tax filing 2013 You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Free federal and state tax filing 2013 To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. Free federal and state tax filing 2013 For more information on casualty and theft losses, see chapter 25. Free federal and state tax filing 2013 Federal Estate Tax on Income in Respect of a Decedent You can deduct the federal estate tax attributable to income in respect of a decedent that you as a beneficiary include in your gross income. Free federal and state tax filing 2013 Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent's final income tax return. Free federal and state tax filing 2013 See Publication 559 for more information. Free federal and state tax filing 2013 Gambling Losses Up to the Amount of Gambling Winnings You must report the full amount of your gambling winnings for the year on Form 1040, line 21. Free federal and state tax filing 2013 You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Free federal and state tax filing 2013 You cannot deduct gambling losses that are more than your winnings. Free federal and state tax filing 2013 You cannot reduce your gambling winnings by your gambling losses and report the difference. Free federal and state tax filing 2013 You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. Free federal and state tax filing 2013 Therefore, your records should show your winnings separately from your losses. Free federal and state tax filing 2013 Diary of winnings and losses. Free federal and state tax filing 2013 You must keep an accurate diary or similar record of your losses and winnings. Free federal and state tax filing 2013 Your diary should contain at least the following information. Free federal and state tax filing 2013 The date and type of your specific wager or wagering activity. Free federal and state tax filing 2013 The name and address or location of the gambling establishment. Free federal and state tax filing 2013 The names of other persons present with you at the gambling establishment. Free federal and state tax filing 2013 The amount(s) you won or lost. Free federal and state tax filing 2013 See Publication 529 for more information. Free federal and state tax filing 2013 Impairment-Related Work Expenses If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses. Free federal and state tax filing 2013 Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and for other expenses in connection with your place of work that are necessary for you to be able to work. Free federal and state tax filing 2013 Self-employed. Free federal and state tax filing 2013   If you are self-employed, enter your impairment-related work expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. Free federal and state tax filing 2013 Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 If the amount reported in Schedule K-1 (Form 1065-B), box 2, is a loss, report it on Schedule A (Form 1040), line 28. Free federal and state tax filing 2013 It is not subject to the passive activity limitations. Free federal and state tax filing 2013 Repayments Under Claim of Right If you had to repay more than $3,000 that you included in your income in an earlier year because at the time you thought you had an unrestricted right to it, you may be able to deduct the amount you repaid or take a credit against your tax. Free federal and state tax filing 2013 See Repayments in chapter 12 for more information. Free federal and state tax filing 2013 Unrecovered Investment in Annuity A retiree who contributed to the cost of an annuity can exclude from income a part of each payment received as a tax-free return of the retiree's investment. Free federal and state tax filing 2013 If the retiree dies before the entire investment is recovered tax free, any unrecovered investment can be deducted on the retiree's final income tax return. Free federal and state tax filing 2013 See chapter 10 for more information about the tax treatment of pensions and annuities. Free federal and state tax filing 2013 Nondeductible Expenses Examples of nondeductible expenses are listed next. Free federal and state tax filing 2013 The list is followed by discussions of additional nondeductible expenses. Free federal and state tax filing 2013 List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Free federal and state tax filing 2013 Burial or funeral expenses, including the cost of a cemetery lot. Free federal and state tax filing 2013 Capital expenses. Free federal and state tax filing 2013 Fees and licenses, such as car licenses, marriage licenses, and dog tags. Free federal and state tax filing 2013 Hobby losses, but see Hobby Expenses , earlier. Free federal and state tax filing 2013 Home repairs, insurance, and rent. Free federal and state tax filing 2013 Illegal bribes and kickbacks. Free federal and state tax filing 2013 See Bribes and kickbacks in chapter 11 of Publication 535. Free federal and state tax filing 2013 Losses from the sale of your home, furniture, personal car, etc. Free federal and state tax filing 2013 Personal disability insurance premiums. Free federal and state tax filing 2013 Personal, living, or family expenses. Free federal and state tax filing 2013 The value of wages never received or lost vacation time. Free federal and state tax filing 2013 Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Free federal and state tax filing 2013 See chapter 37. Free federal and state tax filing 2013 Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Free federal and state tax filing 2013 These include qualification and registration fees for primary elections. Free federal and state tax filing 2013 Legal fees. Free federal and state tax filing 2013   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Free federal and state tax filing 2013 Check-Writing Fees on Personal Account If you have a personal checking account, you cannot deduct fees charged by the bank for the privilege of writing checks, even if the account pays interest. Free federal and state tax filing 2013 Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Free federal and state tax filing 2013 This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Free federal and state tax filing 2013 You cannot deduct dues paid to an organization if one of its main purposes is to: Conduct entertainment activities for members or their guests, or Provide members or their guests with access to entertainment facilities. Free federal and state tax filing 2013 Dues paid to airline, hotel, and luncheon clubs are not deductible. Free federal and state tax filing 2013 Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Free federal and state tax filing 2013 If you haul tools, instruments, or other items, in your car to and from work, you can deduct only the additional cost of hauling the items such as the rent on a trailer to carry the items. Free federal and state tax filing 2013 Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Free federal and state tax filing 2013 This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Free federal and state tax filing 2013 Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Free federal and state tax filing 2013 Health Spa Expenses You cannot deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer. Free federal and state tax filing 2013 Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Free federal and state tax filing 2013 However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Free federal and state tax filing 2013 See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Free federal and state tax filing 2013 Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Free federal and state tax filing 2013 Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Free federal and state tax filing 2013 You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Free federal and state tax filing 2013 See chapter 18 for information on alimony. Free federal and state tax filing 2013 Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Free federal and state tax filing 2013 These include expenses to: Influence legislation, Participate or intervene in any political campaign for, or against, any candidate for public office, Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums, or Communicate directly with covered executive branch officials in any attempt to influence the official actions or positions of those officials. Free federal and state tax filing 2013 Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Free federal and state tax filing 2013 Dues used for lobbying. Free federal and state tax filing 2013   If a tax-exempt organization notifies you that part of the dues or other amounts you pay to the organization are used to pay nondeductible lobbying expenses, you cannot deduct that part. Free federal and state tax filing 2013 See Lobbying Expenses in Publication 529 for information on exceptions. Free federal and state tax filing 2013 Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Free federal and state tax filing 2013 However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Free federal and state tax filing 2013 See chapter 25. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Free federal and state tax filing 2013 The diamond falls from the ring and is never found. Free federal and state tax filing 2013 The loss of the diamond is a casualty. Free federal and state tax filing 2013 Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Free federal and state tax filing 2013 See chapter 26 for information on deductible expenses while traveling away from home. Free federal and state tax filing 2013 Meals While Working Late You cannot deduct the cost of meals while working late. Free federal and state tax filing 2013 However, you may be able to claim a deduction if the cost of meals is a deductible entertainment expense, or if you are traveling away from home. Free federal and state tax filing 2013 See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Free federal and state tax filing 2013 Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Free federal and state tax filing 2013 Custody of children. Free federal and state tax filing 2013 Breach of promise to marry suit. Free federal and state tax filing 2013 Civil or criminal charges resulting from a personal relationship. Free federal and state tax filing 2013 Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Free federal and state tax filing 2013 Preparation of a title (or defense or perfection of a title). Free federal and state tax filing 2013 Preparation of a will. Free federal and state tax filing 2013 Property claims or property settlement in a divorce. Free federal and state tax filing 2013 You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Free federal and state tax filing 2013 Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Free federal and state tax filing 2013 Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Free federal and state tax filing 2013 Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Free federal and state tax filing 2013 Accounting certificate fees paid for the initial right to practice accounting. Free federal and state tax filing 2013 Bar exam fees and incidental expenses in securing initial admission to the bar. Free federal and state tax filing 2013 Medical and dental license fees paid to get initial licensing. Free federal and state tax filing 2013 Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Free federal and state tax filing 2013 Relief Fund Contributions You cannot deduct contributions paid to a private plan that pays benefits to any covered employee who cannot work because of any injury or illness not related to the job. Free federal and state tax filing 2013 Residential Telephone Service You cannot deduct any charge (including taxes) for basic local telephone service for the first telephone line to your residence, even if it is used in a trade or business. Free federal and state tax filing 2013 Stockholders' Meetings You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you own stock but have no other interest. Free federal and state tax filing 2013 You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Free federal and state tax filing 2013 Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Free federal and state tax filing 2013 You cannot deduct interest on a debt incurred or continued to buy or carry  tax-exempt securities. Free federal and state tax filing 2013 If you have expenses to produce both taxable and tax-exempt income, but you cannot identify the expenses that produce each type of income, you must divide the expenses based on the amount of each type of income to determine the amount that you can deduct. Free federal and state tax filing 2013 Example. Free federal and state tax filing 2013 During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Free federal and state tax filing 2013 In earning this income, you had total expenses of $500 during the year. Free federal and state tax filing 2013 You cannot identify the amount of each expense item that is for each income item. Free federal and state tax filing 2013 Therefore, 80% ($4,800/$6,000) of the expense is for the taxable interest and 20% ($1,200/$6,000) is for the tax-exempt interest. Free federal and state tax filing 2013 You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Free federal and state tax filing 2013 Travel Expenses for Another Individual You generally cannot deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies you (or your employee) on business or personal travel unless the spouse, dependent, or other individual is an employee of the taxpayer, the travel is for a bona fide business purpose, and such expenses would otherwise be deductible by the spouse, dependent, or other individual. Free federal and state tax filing 2013 See chapter 26 for more information on deductible travel expenses. Free federal and state tax filing 2013 Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Free federal and state tax filing 2013 However, you can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for the loss of wages from unemployment caused by business conditions. Free federal and state tax filing 2013 Wristwatches You cannot deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties. Free federal and state tax filing 2013 Prev  Up  Next   Home   More Online Publications