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Free tax calculator 2011 4. Free tax calculator 2011   Tax Withholding and Estimated Tax Table of Contents What's New for 2014 Reminders Introduction Useful Items - You may want to see: Tax Withholding for 2014Salaries and Wages Tips Taxable Fringe Benefits Sick Pay Pensions and Annuities Gambling Winnings Unemployment Compensation Federal Payments Backup Withholding Estimated Tax for 2014Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated Tax How To Figure Estimated Tax When To Pay Estimated Tax How To Figure Each Payment How To Pay Estimated Tax Credit for Withholding and Estimated Tax for 2013Withholding Estimated Tax Underpayment Penalty for 2013 What's New for 2014 Tax law changes for 2014. Free tax calculator 2011  When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2014. Free tax calculator 2011 For more information, see Publication 505. Free tax calculator 2011 Reminders Estimated tax safe harbor for higher income taxpayers. Free tax calculator 2011  If your 2013 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2014 or 110% of the tax shown on your 2013 return to avoid an estimated tax penalty. Free tax calculator 2011 Introduction This chapter discusses how to pay your tax as you earn or receive income during the year. Free tax calculator 2011 In general, the federal income tax is a pay-as-you-go tax. Free tax calculator 2011 There are two ways to pay as you go. Free tax calculator 2011 Withholding. Free tax calculator 2011 If you are an employee, your employer probably withholds income tax from your pay. Free tax calculator 2011 Tax also may be withheld from certain other income, such as pensions, bonuses, commissions, and gambling winnings. Free tax calculator 2011 The amount withheld is paid to the IRS in your name. Free tax calculator 2011 Estimated tax. Free tax calculator 2011 If you do not pay your tax through withholding, or do not pay enough tax that way, you may have to pay estimated tax. Free tax calculator 2011 People who are in business for themselves generally will have to pay their tax this way. Free tax calculator 2011 Also, you may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rent, and royalties. Free tax calculator 2011 Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. Free tax calculator 2011 This chapter explains these methods. Free tax calculator 2011 In addition, it also explains the following. Free tax calculator 2011 Credit for withholding and estimated tax. Free tax calculator 2011 When you file your 2013 income tax return, take credit for all the income tax withheld from your salary, wages, pensions, etc. Free tax calculator 2011 , and for the estimated tax you paid for 2013. Free tax calculator 2011 Also take credit for any excess social security or railroad retirement tax withheld (discussed in chapter 37). Free tax calculator 2011 Underpayment penalty. Free tax calculator 2011 If you did not pay enough tax during the year, either through withholding or by making estimated tax payments, you may have to pay a penalty. Free tax calculator 2011 In most cases, the IRS can figure this penalty for you. Free tax calculator 2011 See Underpayment Penalty for 2013 at the end of this chapter. Free tax calculator 2011 Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-4P Withholding Certificate for Pension or Annuity Payments W-4S Request for Federal Income Tax Withholding From Sick Pay W-4V Voluntary Withholding Request 1040-ES Estimated Tax for Individuals 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F Underpayment of Estimated Tax by Farmers and Fishermen Tax Withholding for 2014 This section discusses income tax withholding on: Salaries and wages, Tips, Taxable fringe benefits, Sick pay, Pensions and annuities, Gambling winnings, Unemployment compensation, and Certain federal payments. Free tax calculator 2011 This section explains the rules for withholding tax from each of these types of income. Free tax calculator 2011 This section also covers backup withholding on interest, dividends, and other payments. Free tax calculator 2011 Salaries and Wages Income tax is withheld from the pay of most employees. Free tax calculator 2011 Your pay includes your regular pay, bonuses, commissions, and vacation allowances. Free tax calculator 2011 It also includes reimbursements and other expense allowances paid under a nonaccountable plan. Free tax calculator 2011 See Supplemental Wages , later, for more information about reimbursements and allowances paid under a nonaccountable plan. Free tax calculator 2011 If your income is low enough that you will not have to pay income tax for the year, you may be exempt from withholding. Free tax calculator 2011 This is explained under Exemption From Withholding , later. Free tax calculator 2011 You can ask your employer to withhold income tax from noncash wages and other wages not subject to withholding. Free tax calculator 2011 If your employer does not agree to withhold tax, or if not enough is withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2014 . Free tax calculator 2011 Military retirees. Free tax calculator 2011   Military retirement pay is treated in the same manner as regular pay for income tax withholding purposes, even though it is treated as a pension or annuity for other tax purposes. Free tax calculator 2011 Household workers. Free tax calculator 2011   If you are a household worker, you can ask your employer to withhold income tax from your pay. Free tax calculator 2011 A household worker is an employee who performs household work in a private home, local college club, or local fraternity or sorority chapter. Free tax calculator 2011   Tax is withheld only if you want it withheld and your employer agrees to withhold it. Free tax calculator 2011 If you do not have enough income tax withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2014 . Free tax calculator 2011 Farmworkers. Free tax calculator 2011   Generally, income tax is withheld from your cash wages for work on a farm unless your employer does both of these: Pays you cash wages of less than $150 during the year, and Has expenditures for agricultural labor totaling less than $2,500 during the year. Free tax calculator 2011 Differential wage payments. Free tax calculator 2011    When employees are on leave from employment for military duty, some employers make up the difference between the military pay and civilian pay. Free tax calculator 2011 Payments to an employee who is on active duty for a period of more than 30 days will be subject to income tax withholding, but not subject to social security or Medicare taxes. Free tax calculator 2011 The wages and withholding will be reported on Form W-2, Wage and Tax Statement. Free tax calculator 2011   The credit employers can claim for differential wages paid to activated military reservists is scheduled to expire for wages paid after December 31, 2013. Free tax calculator 2011 Determining Amount of Tax Withheld Using Form W-4 The amount of income tax your employer withholds from your regular pay depends on two things. Free tax calculator 2011 The amount you earn in each payroll period. Free tax calculator 2011 The information you give your employer on Form W-4. Free tax calculator 2011 Form W-4 includes four types of information that your employer will use to figure your withholding. Free tax calculator 2011 Whether to withhold at the single rate or at the lower married rate. Free tax calculator 2011 How many withholding allowances you claim (each allowance reduces the amount withheld). Free tax calculator 2011 Whether you want an additional amount withheld. Free tax calculator 2011 Whether you are claiming an exemption from withholding in 2014. Free tax calculator 2011 See Exemption From Withholding , later. Free tax calculator 2011 Note. Free tax calculator 2011 You must specify a filing status and a number of withholding allowances on Form W-4. Free tax calculator 2011 You cannot specify only a dollar amount of withholding. Free tax calculator 2011 New Job When you start a new job, you must fill out Form W-4 and give it to your employer. Free tax calculator 2011 Your employer should have copies of the form. Free tax calculator 2011 If you need to change the information later, you must fill out a new form. Free tax calculator 2011 If you work only part of the year (for example, you start working after the beginning of the year), too much tax may be withheld. Free tax calculator 2011 You may be able to avoid overwithholding if your employer agrees to use the part-year method. Free tax calculator 2011 See Part-Year Method in chapter 1 of Publication 505 for more information. Free tax calculator 2011 Employee also receiving pension income. Free tax calculator 2011   If you receive pension or annuity income and begin a new job, you will need to file Form W-4 with your new employer. Free tax calculator 2011 However, you can choose to split your withholding allowances between your pension and job in any manner. Free tax calculator 2011 Changing Your Withholding During the year changes may occur to your marital status, exemptions, adjustments, deductions, or credits you expect to claim on your tax return. Free tax calculator 2011 When this happens, you may need to give your employer a new Form W-4 to change your withholding status or your number of allowances. Free tax calculator 2011 If the changes reduce the number of allowances you are claiming or changes your marital status from married to single, you must give your employer a new Form W-4 within 10 days. Free tax calculator 2011 Generally, you can submit a new Form W-4 whenever you wish to change the number of your withholding allowances for any other reason. Free tax calculator 2011 Changing your withholding for 2015. Free tax calculator 2011   If events in 2014 will decrease the number of your withholding allowances for 2015, you must give your employer a new Form W-4 by December 1, 2014. Free tax calculator 2011 If the event occurs in December 2014, submit a new Form W-4 within 10 days. Free tax calculator 2011 Checking Your Withholding After you have given your employer a Form W-4, you can check to see whether the amount of tax withheld from your pay is too little or too much. Free tax calculator 2011 If too much or too little tax is being withheld, you should give your employer a new Form W-4 to change your withholding. Free tax calculator 2011 You should try to have your withholding match your actual tax liability. Free tax calculator 2011 If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. Free tax calculator 2011 If too much tax is withheld, you will lose the use of that money until you get your refund. Free tax calculator 2011 Always check your withholding if there are personal or financial changes in your life or changes in the law that might change your tax liability. Free tax calculator 2011 Note. Free tax calculator 2011 You cannot give your employer a payment to cover withholding on salaries and wages for past pay periods or a payment for estimated tax. Free tax calculator 2011 Completing Form W-4 and Worksheets Form W-4 has worksheets to help you figure how many withholding allowances you can claim. Free tax calculator 2011 The worksheets are for your own records. Free tax calculator 2011 Do not give them to your employer. Free tax calculator 2011 Multiple jobs. Free tax calculator 2011   If you have income from more than one job at the same time, complete only one set of Form W-4 worksheets. Free tax calculator 2011 Then split your allowances between the Forms W-4 for each job. Free tax calculator 2011 You cannot claim the same allowances with more than one employer at the same time. Free tax calculator 2011 You can claim all your allowances with one employer and none with the other(s), or divide them any other way. Free tax calculator 2011 Married individuals. Free tax calculator 2011   If both you and your spouse are employed and expect to file a joint return, figure your withholding allowances using your combined income, adjustments, deductions, exemptions, and credits. Free tax calculator 2011 Use only one set of worksheets. Free tax calculator 2011 You can divide your total allowances any way, but you cannot claim an allowance that your spouse also claims. Free tax calculator 2011   If you and your spouse expect to file separate returns, figure your allowances using separate worksheets based on your own individual income, adjustments, deductions, exemptions, and credits. Free tax calculator 2011 Alternative method of figuring withholding allowances. Free tax calculator 2011   You do not have to use the Form W-4 worksheets if you use a more accurate method of figuring the number of withholding allowances. Free tax calculator 2011 For more information, see Alternative method of figuring withholding allowances under Completing Form W-4 and Worksheets in Publication 505, chapter 1. Free tax calculator 2011 Personal Allowances Worksheet. Free tax calculator 2011   Use the Personal Allowances Worksheet on Form W-4 to figure your withholding allowances based on exemptions and any special allowances that apply. Free tax calculator 2011 Deduction and Adjustments Worksheet. Free tax calculator 2011   Use the Deduction and Adjustments Worksheet on Form W-4 if you plan to itemize your deductions, claim certain credits, or claim adjustments to the income on your 2014 tax return and you want to reduce your withholding. Free tax calculator 2011 Also, complete this worksheet when you have changes to these items to see if you need to change your withholding. Free tax calculator 2011 Two-Earners/Multiple Jobs Worksheet. Free tax calculator 2011   You may need to complete the Two-Earners/Multiple Jobs Worksheet on Form W-4 if you have more than one job, a working spouse, or are also receiving a pension. Free tax calculator 2011 Also, on this worksheet you can add any additional withholding necessary to cover any amount you expect to owe other than income tax, such as self-employment tax. Free tax calculator 2011 Getting the Right Amount of Tax Withheld In most situations, the tax withheld from your pay will be close to the tax you figure on your return if you follow these two rules. Free tax calculator 2011 You accurately complete all the Form W-4 worksheets that apply to you. Free tax calculator 2011 You give your employer a new Form W-4 when changes occur. Free tax calculator 2011 But because the worksheets and withholding methods do not account for all possible situations, you may not be getting the right amount withheld. Free tax calculator 2011 This is most likely to happen in the following situations. Free tax calculator 2011 You are married and both you and your spouse work. Free tax calculator 2011 You have more than one job at a time. Free tax calculator 2011 You have nonwage income, such as interest, dividends, alimony, unemployment compensation, or self-employment income. Free tax calculator 2011 You will owe additional amounts with your return, such as self-employment tax. Free tax calculator 2011 Your withholding is based on obsolete Form W-4 information for a substantial part of the year. Free tax calculator 2011 Your earnings are more than the amount shown under Check your withholding in the instructions at the top of page 1 of Form W-4. Free tax calculator 2011 You work only part of the year. Free tax calculator 2011 You change the number of your withholding allowances during the year. Free tax calculator 2011 Cumulative wage method. Free tax calculator 2011   If you change the number of your withholding allowances during the year, too much or too little tax may have been withheld for the period before you made the change. Free tax calculator 2011 You may be able to compensate for this if your employer agrees to use the cumulative wage withholding method for the rest of the year. Free tax calculator 2011 You must ask your employer in writing to use this method. Free tax calculator 2011   To be eligible, you must have been paid for the same kind of payroll period (weekly, biweekly, etc. Free tax calculator 2011 ) since the beginning of the year. Free tax calculator 2011 Publication 505 To make sure you are getting the right amount of tax withheld, get Publication 505. Free tax calculator 2011 It will help you compare the total tax to be withheld during the year with the tax you can expect to figure on your return. Free tax calculator 2011 It also will help you determine how much, if any, additional withholding is needed each payday to avoid owing tax when you file your return. Free tax calculator 2011 If you do not have enough tax withheld, you may have to pay estimated tax, as explained under Estimated Tax for 2014 , later. Free tax calculator 2011 You can use the IRS Withholding Calculator at www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/Individuals, instead of Publication 505 or the worksheets included with Form W-4, to determine whether you need to have your withholding increased or decreased. Free tax calculator 2011 Rules Your Employer Must Follow It may be helpful for you to know some of the withholding rules your employer must follow. Free tax calculator 2011 These rules can affect how to fill out your Form W-4 and how to handle problems that may arise. Free tax calculator 2011 New Form W-4. Free tax calculator 2011   When you start a new job, your employer should have you complete a Form W-4. Free tax calculator 2011 Beginning with your first payday, your employer will use the information you give on the form to figure your withholding. Free tax calculator 2011   If you later fill out a new Form W-4, your employer can put it into effect as soon as possible. Free tax calculator 2011 The deadline for putting it into effect is the start of the first payroll period ending 30 or more days after you turn it in. Free tax calculator 2011 No Form W-4. Free tax calculator 2011   If you do not give your employer a completed Form W-4, your employer must withhold at the highest rate, as if you were single and claimed no withholding allowances. Free tax calculator 2011 Repaying withheld tax. Free tax calculator 2011   If you find you are having too much tax withheld because you did not claim all the withholding allowances you are entitled to, you should give your employer a new Form W-4. Free tax calculator 2011 Your employer cannot repay any of the tax previously withheld. Free tax calculator 2011 Instead, claim the full amount withheld when you file your tax return. Free tax calculator 2011   However, if your employer has withheld more than the correct amount of tax for the Form W-4 you have in effect, you do not have to fill out a new Form W-4 to have your withholding lowered to the correct amount. Free tax calculator 2011 Your employer can repay the amount that was withheld incorrectly. Free tax calculator 2011 If you are not repaid, your Form W-2 will reflect the full amount actually withheld, which you would claim when you file your tax return. Free tax calculator 2011 Exemption From Withholding If you claim exemption from withholding, your employer will not withhold federal income tax from your wages. Free tax calculator 2011 The exemption applies only to income tax, not to social security or Medicare tax. Free tax calculator 2011 You can claim exemption from withholding for 2014 only if both of the following situations apply. Free tax calculator 2011 For 2013 you had a right to a refund of all federal income tax withheld because you had no tax liability. Free tax calculator 2011 For 2014 you expect a refund of all federal income tax withheld because you expect to have no tax liability. Free tax calculator 2011 Students. Free tax calculator 2011   If you are a student, you are not automatically exempt. Free tax calculator 2011 See chapter 1 to find out if you must file a return. Free tax calculator 2011 If you work only part time or only during the summer, you may qualify for exemption from withholding. Free tax calculator 2011 Age 65 or older or blind. Free tax calculator 2011   If you are 65 or older or blind, use Worksheet 1-3 or 1-4 in chapter 1 of Publication 505, to help you decide if you qualify for exemption from withholding. Free tax calculator 2011 Do not use either worksheet if you will itemize deductions, claim exemptions for dependents, or claim tax credits on your 2014 return. Free tax calculator 2011 Instead, see Itemizing deductions or claiming exemptions or credits in chapter 1 of Publication 505. Free tax calculator 2011 Claiming exemption from withholding. Free tax calculator 2011   To claim exemption, you must give your employer a Form W-4. Free tax calculator 2011 Do not complete lines 5 and 6. Free tax calculator 2011 Enter “Exempt” on line 7. Free tax calculator 2011   If you claim exemption, but later your situation changes so that you will have to pay income tax after all, you must file a new Form W-4 within 10 days after the change. Free tax calculator 2011 If you claim exemption in 2014, but you expect to owe income tax for 2015, you must file a new Form W-4 by December 1, 2014. Free tax calculator 2011   Your claim of exempt status may be reviewed by the IRS. Free tax calculator 2011 An exemption is good for only 1 year. Free tax calculator 2011   You must give your employer a new Form W-4 by February 15 each year to continue your exemption. Free tax calculator 2011 Supplemental Wages Supplemental wages include bonuses, commissions, overtime pay, vacation allowances, certain sick pay, and expense allowances under certain plans. Free tax calculator 2011 The payer can figure withholding on supplemental wages using the same method used for your regular wages. Free tax calculator 2011 However, if these payments are identified separately from your regular wages, your employer or other payer of supplemental wages can withhold income tax from these wages at a flat rate. Free tax calculator 2011 Expense allowances. Free tax calculator 2011   Reimbursements or other expense allowances paid by your employer under a nonaccountable plan are treated as supplemental wages. Free tax calculator 2011   Reimbursements or other expense allowances paid under an accountable plan that are more than your proven expenses are treated as paid under a nonaccountable plan if you do not return the excess payments within a reasonable period of time. Free tax calculator 2011   For more information about accountable and nonaccountable expense allowance plans, see Reimbursements in chapter 26. Free tax calculator 2011 Penalties You may have to pay a penalty of $500 if both of the following apply. Free tax calculator 2011 You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld. Free tax calculator 2011 You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4. Free tax calculator 2011 There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply information that would increase the amount withheld. Free tax calculator 2011 The penalty upon conviction can be either a fine of up to $1,000 or imprisonment for up to 1 year, or both. Free tax calculator 2011 These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an attempt to reduce or eliminate the proper withholding of taxes. Free tax calculator 2011 A simple error or an honest mistake will not result in one of these penalties. Free tax calculator 2011 For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged a W-4 penalty. Free tax calculator 2011 Tips The tips you receive while working on your job are considered part of your pay. Free tax calculator 2011 You must include your tips on your tax return on the same line as your regular pay. Free tax calculator 2011 However, tax is not withheld directly from tip income, as it is from your regular pay. Free tax calculator 2011 Nevertheless, your employer will take into account the tips you report when figuring how much to withhold from your regular pay. Free tax calculator 2011 See chapter 6 for information on reporting your tips to your employer. Free tax calculator 2011 For more information on the withholding rules for tip income, see Publication 531, Reporting Tip Income. Free tax calculator 2011 How employer figures amount to withhold. Free tax calculator 2011   The tips you report to your employer are counted as part of your income for the month you report them. Free tax calculator 2011 Your employer can figure your withholding in either of two ways. Free tax calculator 2011 By withholding at the regular rate on the sum of your pay plus your reported tips. Free tax calculator 2011 By withholding at the regular rate on your pay plus a percentage of your reported tips. Free tax calculator 2011 Not enough pay to cover taxes. Free tax calculator 2011   If your regular pay is not enough for your employer to withhold all the tax (including income tax and social security and Medicare taxes (or the equivalent railroad retirement tax)) due on your pay plus your tips, you can give your employer money to cover the shortage. Free tax calculator 2011 See Giving your employer money for taxes in chapter 6. Free tax calculator 2011 Allocated tips. Free tax calculator 2011   Your employer should not withhold income tax, Medicare tax, social security tax, or railroad retirement tax on any allocated tips. Free tax calculator 2011 Withholding is based only on your pay plus your reported tips. Free tax calculator 2011 Your employer should refund to you any incorrectly withheld tax. Free tax calculator 2011 See Allocated Tips in chapter 6 for more information. Free tax calculator 2011 Taxable Fringe Benefits The value of certain noncash fringe benefits you receive from your employer is considered part of your pay. Free tax calculator 2011 Your employer generally must withhold income tax on these benefits from your regular pay. Free tax calculator 2011 For information on fringe benefits, see Fringe Benefits under Employee Compensation in chapter 5. Free tax calculator 2011 Although the value of your personal use of an employer-provided car, truck, or other highway motor vehicle is taxable, your employer can choose not to withhold income tax on that amount. Free tax calculator 2011 Your employer must notify you if this choice is made. Free tax calculator 2011 For more information on withholding on taxable fringe benefits, see chapter 1 of Publication 505. Free tax calculator 2011 Sick Pay Sick pay is a payment to you to replace your regular wages while you are temporarily absent from work due to sickness or personal injury. Free tax calculator 2011 To qualify as sick pay, it must be paid under a plan to which your employer is a party. Free tax calculator 2011 If you receive sick pay from your employer or an agent of your employer, income tax must be withheld. Free tax calculator 2011 An agent who does not pay regular wages to you may choose to withhold income tax at a flat rate. Free tax calculator 2011 However, if you receive sick pay from a third party who is not acting as an agent of your employer, income tax will be withheld only if you choose to have it withheld. Free tax calculator 2011 See Form W-4S , later. Free tax calculator 2011 If you receive payments under a plan in which your employer does not participate (such as an accident or health plan where you paid all the premiums), the payments are not sick pay and usually are not taxable. Free tax calculator 2011 Union agreements. Free tax calculator 2011   If you receive sick pay under a collective bargaining agreement between your union and your employer, the agreement may determine the amount of income tax withholding. Free tax calculator 2011 See your union representative or your employer for more information. Free tax calculator 2011 Form W-4S. Free tax calculator 2011   If you choose to have income tax withheld from sick pay paid by a third party, such as an insurance company, you must fill out Form W-4S. Free tax calculator 2011 Its instructions contain a worksheet you can use to figure the amount you want withheld. Free tax calculator 2011 They also explain restrictions that may apply. Free tax calculator 2011   Give the completed form to the payer of your sick pay. Free tax calculator 2011 The payer must withhold according to your directions on the form. Free tax calculator 2011 Estimated tax. Free tax calculator 2011   If you do not request withholding on Form W-4S, or if you do not have enough tax withheld, you may have to make estimated tax payments. Free tax calculator 2011 If you do not pay enough tax, either through estimated tax or withholding, or a combination of both, you may have to pay a penalty. Free tax calculator 2011 See Underpayment Penalty for 2013 at the end of this chapter. Free tax calculator 2011 Pensions and Annuities Income tax usually will be withheld from your pension or annuity distributions unless you choose not to have it withheld. Free tax calculator 2011 This rule applies to distributions from: A traditional individual retirement arrangement (IRA); A life insurance company under an endowment, annuity, or life insurance contract; A pension, annuity, or profit-sharing plan; A stock bonus plan; and Any other plan that defers the time you receive compensation. Free tax calculator 2011 The amount withheld depends on whether you receive payments spread out over more than 1 year (periodic payments), within 1 year (nonperiodic payments), or as an eligible rollover distribution (ERD). Free tax calculator 2011 Income tax withholding from an ERD is mandatory. Free tax calculator 2011 More information. Free tax calculator 2011   For more information on taxation of annuities and distributions (including ERDs) from qualified retirement plans, see chapter 10. Free tax calculator 2011 For information on IRAs, see chapter 17. Free tax calculator 2011 For more information on withholding on pensions and annuities, including a discussion of Form W-4P, see Pensions and Annuities in chapter 1 of Publication 505. Free tax calculator 2011 Gambling Winnings Income tax is withheld at a flat 25% rate from certain kinds of gambling winnings. Free tax calculator 2011 Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding. Free tax calculator 2011 Any sweepstakes; wagering pool, including payments made to winners of poker tournaments; or lottery. Free tax calculator 2011 Any other wager, if the proceeds are at least 300 times the amount of the bet. Free tax calculator 2011 It does not matter whether your winnings are paid in cash, in property, or as an annuity. Free tax calculator 2011 Winnings not paid in cash are taken into account at their fair market value. Free tax calculator 2011 Exception. Free tax calculator 2011   Gambling winnings from bingo, keno, and slot machines generally are not subject to income tax withholding. Free tax calculator 2011 However, you may need to provide the payer with a social security number to avoid withholding. Free tax calculator 2011 See Backup withholding on gambling winnings in chapter 1 of Publication 505. Free tax calculator 2011 If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. Free tax calculator 2011 See Estimated Tax for 2014 , later. Free tax calculator 2011 If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Free tax calculator 2011 See Underpayment Penalty for 2013 at the end of this chapter. Free tax calculator 2011 Form W-2G. Free tax calculator 2011   If a payer withholds income tax from your gambling winnings, you should receive a Form W-2G, Certain Gambling Winnings, showing the amount you won and the amount withheld. Free tax calculator 2011 Report the tax withheld on line 62 of Form 1040. Free tax calculator 2011 Unemployment Compensation You can choose to have income tax withheld from unemployment compensation. Free tax calculator 2011 To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. Free tax calculator 2011 All unemployment compensation is taxable. Free tax calculator 2011 So, if you do not have income tax withheld, you may have to pay estimated tax. Free tax calculator 2011 See Estimated Tax for 2014 , later. Free tax calculator 2011 If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Free tax calculator 2011 For information, see Underpayment Penalty for 2013 at the end of this chapter. Free tax calculator 2011 Federal Payments You can choose to have income tax withheld from certain federal payments you receive. Free tax calculator 2011 These payments are: Social security benefits, Tier 1 railroad retirement benefits, Commodity credit corporation loans you choose to include in your gross income, Payments under the Agricultural Act of 1949 (7 U. Free tax calculator 2011 S. Free tax calculator 2011 C. Free tax calculator 2011 1421 et. Free tax calculator 2011 seq. Free tax calculator 2011 ), as amended, or title II of the Disaster Assistance Act of 1988, that are treated as insurance proceeds and that you receive because: Your crops were destroyed or damaged by drought, flood, or any other natural disaster, or You were unable to plant crops because of a natural disaster described in (a), and Any other payment under Federal law as determined by the Secretary. Free tax calculator 2011 To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. Free tax calculator 2011 If you do not choose to have income tax withheld, you may have to pay estimated tax. Free tax calculator 2011 See Estimated Tax for 2014 , later. Free tax calculator 2011 If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Free tax calculator 2011 For information, see Underpayment Penalty for 2013 at the end of this chapter. Free tax calculator 2011 More information. Free tax calculator 2011   For more information about the tax treatment of social security and railroad retirement benefits, see chapter 11. Free tax calculator 2011 Get Publication 225, Farmer's Tax Guide, for information about the tax treatment of commodity credit corporation loans or crop disaster payments. Free tax calculator 2011 Backup Withholding Banks or other businesses that pay you certain kinds of income must file an information return (Form 1099) with the IRS. Free tax calculator 2011 The information return shows how much you were paid during the year. Free tax calculator 2011 It also includes your name and taxpayer identification number (TIN). Free tax calculator 2011 TINs are explained in chapter 1 under Social Security Number (SSN) . Free tax calculator 2011 These payments generally are not subject to withholding. Free tax calculator 2011 However, “backup” withholding is required in certain situations. Free tax calculator 2011 Backup withholding can apply to most kinds of payments that are reported on Form 1099. Free tax calculator 2011 The payer must withhold at a flat 28% rate in the following situations. Free tax calculator 2011 You do not give the payer your TIN in the required manner. Free tax calculator 2011 The IRS notifies the payer that the TIN you gave is incorrect. Free tax calculator 2011 You are required, but fail, to certify that you are not subject to backup withholding. Free tax calculator 2011 The IRS notifies the payer to start withholding on interest or dividends because you have underreported interest or dividends on your income tax return. Free tax calculator 2011 The IRS will do this only after it has mailed you four notices over at least a 210-day period. Free tax calculator 2011 See Backup Withholding in chapter 1 of Publication 505 for more information. Free tax calculator 2011 Penalties. Free tax calculator 2011   There are civil and criminal penalties for giving false information to avoid backup withholding. Free tax calculator 2011 The civil penalty is $500. Free tax calculator 2011 The criminal penalty, upon conviction, is a fine of up to $1,000 or imprisonment of up to 1 year, or both. Free tax calculator 2011 Estimated Tax for 2014 Estimated tax is the method used to pay tax on income that is not subject to withholding. Free tax calculator 2011 This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Free tax calculator 2011 You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. Free tax calculator 2011 Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. Free tax calculator 2011 If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Free tax calculator 2011 If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax , later), you may be charged a penalty even if you are due a refund when you file your tax return. Free tax calculator 2011 For information on when the penalty applies, see Underpayment Penalty for 2013 at the end of this chapter. Free tax calculator 2011 Who Does Not Have To Pay Estimated Tax If you receive salaries or wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings. Free tax calculator 2011 To do this, give a new Form W-4 to your employer. Free tax calculator 2011 See chapter 1 of Publication 505. Free tax calculator 2011 Estimated tax not required. Free tax calculator 2011   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. Free tax calculator 2011 You had no tax liability for 2013. Free tax calculator 2011 You were a U. Free tax calculator 2011 S. Free tax calculator 2011 citizen or resident alien for the whole year. Free tax calculator 2011 Your 2013 tax year covered a 12-month period. Free tax calculator 2011   You had no tax liability for 2013 if your total tax was zero or you did not have to file an income tax return. Free tax calculator 2011 For the definition of “total tax” for 2013, see Publication 505, chapter 2. Free tax calculator 2011 Who Must Pay Estimated Tax If you owe additional tax for 2013, you may have to pay estimated tax for 2014. Free tax calculator 2011 You can use the following general rule as a guide during the year to see if you will have enough withholding, or if you should increase your withholding or make estimated tax payments. Free tax calculator 2011 General rule. Free tax calculator 2011   In most cases, you must pay estimated tax for 2014 if both of the following apply. Free tax calculator 2011 You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. Free tax calculator 2011 You expect your withholding plus your refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return (but see Special rules for farmers, fishermen, and higher income taxpayers, later). Free tax calculator 2011 Your 2013 tax return must cover all 12 months. Free tax calculator 2011    If the result from using the general rule above suggests that you will not have enough withholding, complete the 2014 Estimated Tax Worksheet in Publication 505 for a more accurate calculation. Free tax calculator 2011 Special rules for farmers, fishermen, and higher income taxpayers. Free tax calculator 2011   If at least two-thirds of your gross income for tax year 2013 or 2014 is from farming or fishing, substitute 662/3% for 90% in (2a) under the General rule, earlier. Free tax calculator 2011 If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing a separate return), substitute 110% for 100% in (2b) under General rule , earlier. Free tax calculator 2011 See Figure 4-A and Publication 505, chapter 2 for more information. Free tax calculator 2011 Figure 4-A. Free tax calculator 2011 Do You Have To Pay Estimated Tax? Please click here for the text description of the image. Free tax calculator 2011 Figure 4-A Do You Have To Pay Estimated Tax? Aliens. Free tax calculator 2011   Resident and nonresident aliens also may have to pay estimated tax. Free tax calculator 2011 Resident aliens should follow the rules in this chapter unless noted otherwise. Free tax calculator 2011 Nonresident aliens should get Form 1040-ES (NR), U. Free tax calculator 2011 S. Free tax calculator 2011 Estimated Tax for Nonresident Alien Individuals. Free tax calculator 2011   You are an alien if you are not a citizen or national of the United States. Free tax calculator 2011 You are a resident alien if you either have a green card or meet the substantial presence test. Free tax calculator 2011 For more information about the substantial presence test, see Publication 519, U. Free tax calculator 2011 S. Free tax calculator 2011 Tax Guide for Aliens. Free tax calculator 2011 Married taxpayers. Free tax calculator 2011   If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. Free tax calculator 2011   You and your spouse can make joint estimated tax payments even if you are not living together. Free tax calculator 2011   However, you and your spouse cannot make joint estimated tax payments if:  You are legally separated under a decree of divorce or separate maintenance, You and your spouse have different tax years, or Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes (see chapter 1 of Publication 519)). Free tax calculator 2011   If you do not qualify to make joint estimated tax payments, apply these rules to your separate estimated income. Free tax calculator 2011 Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2014. Free tax calculator 2011 2013 separate returns and 2014 joint return. Free tax calculator 2011   If you plan to file a joint return with your spouse for 2014, but you filed separate returns for 2013, your 2013 tax is the total of the tax shown on your separate returns. Free tax calculator 2011 You filed a separate return if you filed as single, head of household, or married filing separately. Free tax calculator 2011 2013 joint return and 2014 separate returns. Free tax calculator 2011   If you plan to file a separate return for 2014 but you filed a joint return for 2013, your 2013 tax is your share of the tax on the joint return. Free tax calculator 2011 You file a separate return if you file as single, head of household, or married filing separately. Free tax calculator 2011   To figure your share of the tax on the joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2013 using the same filing status as for 2014. Free tax calculator 2011 Then multiply the tax on the joint return by the following fraction. Free tax calculator 2011     The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Free tax calculator 2011 Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. Free tax calculator 2011 Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. Free tax calculator 2011 For 2014, they plan to file married filing separately. Free tax calculator 2011 Joe figures his share of the tax on the 2013 joint return as follows. Free tax calculator 2011   Tax on $40,100 based on a separate return $5,960     Tax on $8,400 based on a separate return 843     Total $6,803     Joe's percentage of total ($5,960 ÷ $6,803) 87. Free tax calculator 2011 6%     Joe's share of tax on joint return  ($6,386 × 87. Free tax calculator 2011 6%) $5,594   How To Figure Estimated Tax To figure your estimated tax, you must figure your expected adjusted gross income (AGI), taxable income, taxes, deductions, and credits for the year. Free tax calculator 2011 When figuring your 2014 estimated tax, it may be helpful to use your income, deductions, and credits for 2013 as a starting point. Free tax calculator 2011 Use your 2013 federal tax return as a guide. Free tax calculator 2011 You can use Form 1040-ES and Publication 505 to figure your estimated tax. Free tax calculator 2011 Nonresident aliens use Form 1040-ES (NR) and Publication 505 to figure estimated tax (see chapter 8 of Publication 519 for more information). Free tax calculator 2011 You must make adjustments both for changes in your own situation and for recent changes in the tax law. Free tax calculator 2011 For a discussion of these changes, visit IRS. Free tax calculator 2011 gov. Free tax calculator 2011 For more complete information on how to figure your estimated tax for 2014, see chapter 2 of Publication 505. Free tax calculator 2011 When To Pay Estimated Tax For estimated tax purposes, the tax year is divided into four payment periods. Free tax calculator 2011 Each period has a specific payment due date. Free tax calculator 2011 If you do not pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return. Free tax calculator 2011 The payment periods and due dates for estimated tax payments are shown next. Free tax calculator 2011   For the period: Due date:*     Jan. Free tax calculator 2011 1 – March 31 April 15     April 1 – May 31 June 16     June 1 – August 31 Sept. Free tax calculator 2011 15     Sept. Free tax calculator 2011 1– Dec. Free tax calculator 2011 31 Jan. Free tax calculator 2011 15, next year     *See Saturday, Sunday, holiday rule and January payment . Free tax calculator 2011 Saturday, Sunday, holiday rule. Free tax calculator 2011   If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or legal holiday. Free tax calculator 2011 January payment. Free tax calculator 2011   If you file your 2014 Form 1040 or Form 1040A by January 31, 2015, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2015. Free tax calculator 2011 Fiscal year taxpayers. Free tax calculator 2011   If your tax year does not start on January 1, see the Form 1040-ES instructions for your payment due dates. Free tax calculator 2011 When To Start You do not have to make estimated tax payments until you have income on which you will owe income tax. Free tax calculator 2011 If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. Free tax calculator 2011 You can pay all your estimated tax at that time, or you can pay it in installments. Free tax calculator 2011 If you choose to pay in installments, make your first payment by the due date for the first payment period. Free tax calculator 2011 Make your remaining installment payments by the due dates for the later periods. Free tax calculator 2011 No income subject to estimated tax during first period. Free tax calculator 2011    If you do not have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. Free tax calculator 2011 You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. Free tax calculator 2011 The following chart shows when to make installment payments. Free tax calculator 2011 If you first have income on which you must pay estimated tax: Make a payment  by:* Make later installments by:* Before April 1 April 15 June 16 Sept. Free tax calculator 2011 15 Jan. Free tax calculator 2011 15 next year April 1–May 31 June 16 Sept. Free tax calculator 2011 15 Jan. Free tax calculator 2011 15 next year June 1–Aug. Free tax calculator 2011 31 Sept. Free tax calculator 2011 15 Jan. Free tax calculator 2011 15 next year After Aug. Free tax calculator 2011 31 Jan. Free tax calculator 2011 15 next year (None) *See Saturday, Sunday, holiday rule and January payment . Free tax calculator 2011 How much to pay to avoid a penalty. Free tax calculator 2011   To determine how much you should pay by each payment due date, see How To Figure Each Payment, next. Free tax calculator 2011 How To Figure Each Payment You should pay enough estimated tax by the due date of each payment period to avoid a penalty for that period. Free tax calculator 2011 You can figure your required payment for each period by using either the regular installment method or the annualized income installment method. Free tax calculator 2011 These methods are described in chapter 2 of Publication 505. Free tax calculator 2011 If you do not pay enough during each payment period, you may be charged a penalty even if you are due a refund when you file your tax return. Free tax calculator 2011 If the earlier discussion of No income subject to estimated tax during first period or the later discussion of Change in estimated tax applies to you, you may benefit from reading Annualized Income Installment Method in chapter 2 of Publication 505 for information on how to avoid a penalty. Free tax calculator 2011 Underpayment penalty. Free tax calculator 2011   Under the regular installment method, if your estimated tax payment for any period is less than one-fourth of your estimated tax, you may be charged a penalty for underpayment of estimated tax for that period when you file your tax return. Free tax calculator 2011 Under the annualized income installment method, your estimated tax payments vary with your income, but the amount required must be paid each period. Free tax calculator 2011 See chapter 4 of Publication 505 for more information. Free tax calculator 2011 Change in estimated tax. Free tax calculator 2011   After you make an estimated tax payment, changes in your income, adjustments, deductions, credits, or exemptions may make it necessary for you to refigure your estimated tax. Free tax calculator 2011 Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods. Free tax calculator 2011 Estimated Tax Payments Not Required You do not have to pay estimated tax if your withholding in each payment period is at least as much as: One-fourth of your required annual payment, or Your required annualized income installment for that period. Free tax calculator 2011 You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you owe with your return under $1,000. Free tax calculator 2011 How To Pay Estimated Tax There are several ways to pay estimated tax. Free tax calculator 2011 Credit an overpayment on your 2013 return to your 2014 estimated tax. Free tax calculator 2011 Pay by direct transfer from your bank account, or pay by credit or debit card using a pay-by-phone system or the Internet. Free tax calculator 2011 Send in your payment (check or money order) with a payment voucher from Form 1040-ES. Free tax calculator 2011 Credit an Overpayment If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2013, you can apply part or all of it to your estimated tax for 2014. Free tax calculator 2011 On line 75 of Form 1040, or line 44 of Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. Free tax calculator 2011 Take the amount you have credited into account when figuring your estimated tax payments. Free tax calculator 2011 You cannot have any of the amount you credited to your estimated tax refunded to you until you file your tax return for the following year. Free tax calculator 2011 You also cannot use that overpayment in any other way. Free tax calculator 2011 Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. Free tax calculator 2011 You can pay using either of the following electronic payment methods. Free tax calculator 2011 Direct transfer from your bank account. Free tax calculator 2011 Credit or debit card. Free tax calculator 2011 To pay your taxes online or for more information, go to www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/e-pay. Free tax calculator 2011 Pay by Phone Paying by phone is another safe and secure method of paying electronically. Free tax calculator 2011 Use one of the following methods. Free tax calculator 2011 Direct transfer from your bank account. Free tax calculator 2011 Credit or debit card. Free tax calculator 2011 To pay by direct transfer from your bank account, call 1-800-555-4477 (English), 1-800-244-4829 (Espanol). Free tax calculator 2011 People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD can call 1-800-733-4829. Free tax calculator 2011 To pay using a credit or debit card, you can call one of the following service providers. Free tax calculator 2011 There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. Free tax calculator 2011 WorldPay 1-888-9-PAY-TAXTM(1-888-972-9829) www. Free tax calculator 2011 payUSAtax. Free tax calculator 2011 com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. Free tax calculator 2011 officialpayments. Free tax calculator 2011 com Link2Gov Corporation 1-888-PAY-1040TM (1-888-729-1040) www. Free tax calculator 2011 PAY1040. Free tax calculator 2011 com For the latest details on how to pay by phone, go to www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/e-pay. Free tax calculator 2011 Pay by Check or Money Order Using the Estimated Tax Payment Voucher Each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. Free tax calculator 2011 During 2013, if you: made at least one estimated tax payment but not by electronic means, did not use software or a paid preparer to prepare or file your return,  then you should receive a copy of the 2014 Form 1040-ES/V. Free tax calculator 2011 The enclosed payment vouchers will be preprinted with your name, address, and social security number. Free tax calculator 2011 Using the preprinted vouchers will speed processing, reduce the chance of error, and help save processing costs. Free tax calculator 2011 Use the window envelopes that came with your Form 1040-ES package. Free tax calculator 2011 If you use your own envelopes, make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live. Free tax calculator 2011 Note. Free tax calculator 2011 These criteria can change without notice. Free tax calculator 2011 If you do not receive a Form 1040-ES/V package and you are required to make an estimated tax payment, you should go to www. Free tax calculator 2011 irs. Free tax calculator 2011 gov and print a copy of Form 1040-ES which includes four blank payment vouchers. Free tax calculator 2011 Complete one of these and make your payment timely to avoid penalties for paying late. Free tax calculator 2011 Do not use the address shown in the Form 1040 or Form 1040A instructions for your estimated tax payments. Free tax calculator 2011 If you did not pay estimated tax last year, you can order Form 1040-ES from the IRS (see inside back cover of this publication) or download it from IRS. Free tax calculator 2011 gov. Free tax calculator 2011 Follow the instructions to make sure you use the vouchers correctly. Free tax calculator 2011 Joint estimated tax payments. Free tax calculator 2011   If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return. Free tax calculator 2011 Change of address. Free tax calculator 2011   You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Free tax calculator 2011 Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. Free tax calculator 2011 Credit for Withholding and Estimated Tax for 2013 When you file your 2013 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Free tax calculator 2011 Also take credit for the estimated tax you paid for 2013. Free tax calculator 2011 These credits are subtracted from your total tax. Free tax calculator 2011 Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax. Free tax calculator 2011 Two or more employers. Free tax calculator 2011   If you had two or more employers in 2013 and were paid wages of more than $113,700, too much social security or tier 1 railroad retirement tax may have been withheld from your pay. Free tax calculator 2011 You may be able to claim the excess as a credit against your income tax when you file your return. Free tax calculator 2011 See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld in chapter 37. Free tax calculator 2011 Withholding If you had income tax withheld during 2013, you should be sent a statement by January 31, 2014, showing your income and the tax withheld. Free tax calculator 2011 Depending on the source of your income, you should receive: Form W-2, Wage and Tax Statement, Form W-2G, Certain Gambling Winnings, or A form in the 1099 series. Free tax calculator 2011 Forms W-2 and W-2G. Free tax calculator 2011   If you file a paper return, always file Form W-2 with your income tax return. Free tax calculator 2011 File Form W-2G with your return only if it shows any federal income tax withheld from your winnings. Free tax calculator 2011   You should get at least two copies of each form. Free tax calculator 2011 If you file a paper return, attach one copy to the front of your federal income tax return. Free tax calculator 2011 Keep one copy for your records. Free tax calculator 2011 You also should receive copies to file with your state and local returns. Free tax calculator 2011 Form W-2 Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. Free tax calculator 2011 You should receive a separate Form W-2 from each employer you worked for. Free tax calculator 2011 If you stopped working before the end of 2013, your employer could have given you your Form W-2 at any time after you stopped working. Free tax calculator 2011 However, your employer must provide or send it to you by January 31, 2014. Free tax calculator 2011 If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later. Free tax calculator 2011 If you have not received your Form W-2 by January 31, you should ask your employer for it. Free tax calculator 2011 If you do not receive it by February 15, call the IRS. Free tax calculator 2011 Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Free tax calculator 2011 Include the federal income tax withheld (as shown in box 2 of Form W-2) on: Line 62 if you file Form 1040, Line 36 if you file Form 1040A, or Line 7 if you file Form 1040EZ. Free tax calculator 2011 In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay. Free tax calculator 2011 Form W-2G If you had gambling winnings in 2013, the payer may have withheld income tax. Free tax calculator 2011 If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld. Free tax calculator 2011 Report the amounts you won on line 21 of Form 1040. Free tax calculator 2011 Take credit for the tax withheld on line 62 of Form 1040. Free tax calculator 2011 If you had gambling winnings, you must use Form 1040; you cannot use Form 1040A or Form 1040EZ. Free tax calculator 2011 The 1099 Series Most forms in the 1099 series are not filed with your return. Free tax calculator 2011 These forms should be furnished to you by January 31, 2014 (or, for Forms 1099-B, 1099-S, and certain Forms 1099-MISC, by February 15, 2014). Free tax calculator 2011 Unless instructed to file any of these forms with your return, keep them for your records. Free tax calculator 2011 There are several different forms in this series, including: Form 1099-B, Proceeds From Broker and Barter Exchange Transactions; Form 1099-DIV, Dividends and Distributions; Form 1099-G, Certain Government Payments; Form 1099-INT, Interest Income; Form 1099-K, Payment Card and Third Party Network Transactions; Form 1099-MISC, Miscellaneous Income; Form 1099-OID, Original Issue Discount; Form 1099-PATR, Taxable Distributions Received from Cooperatives; Form 1099-Q, Payments From Qualified Education Programs; Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free tax calculator 2011 ; Form 1099-S, Proceeds From Real Estate Transactions; Form RRB-1099, Payments by the Railroad Retirement Board. Free tax calculator 2011 If you received the types of income reported on some forms in the 1099 series, you may not be able to use Form 1040A or Form 1040EZ. Free tax calculator 2011 See the instructions to these forms for details. Free tax calculator 2011 Form 1099-R. Free tax calculator 2011   Attach Form 1099-R to your paper return if box 4 shows federal income tax withheld. Free tax calculator 2011 Include the amount withheld in the total on line 62 of Form 1040 or line 36 of Form 1040A. Free tax calculator 2011 You cannot use Form 1040EZ if you received payments reported on Form 1099-R. Free tax calculator 2011 Backup withholding. Free tax calculator 2011   If you were subject to backup withholding on income you received during 2013, include the amount withheld, as shown on your Form 1099, in the total on line 62 of Form 1040, line 36 of Form 1040A, or line 7 of Form 1040EZ. Free tax calculator 2011 Form Not Correct If you receive a form with incorrect information on it, you should ask the payer for a corrected form. Free tax calculator 2011 Call the telephone number or write to the address given for the payer on the form. Free tax calculator 2011 The corrected Form W-2G or Form 1099 you receive will have an “X” in the “CORRECTED” box at the top of the form. Free tax calculator 2011 A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2. Free tax calculator 2011 In certain situations, you will receive two forms in place of the original incorrect form. Free tax calculator 2011 This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV instead of a Form 1099-INT). Free tax calculator 2011 One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. Free tax calculator 2011 This form will have an “X” in the “CORRECTED” box at the top of the form. Free tax calculator 2011 The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box will not be checked). Free tax calculator 2011 Form Received After Filing If you file your return and you later receive a form for income that you did not include on your return, you should report the income and take credit for any income tax withheld by filing Form 1040X, Amended U. Free tax calculator 2011 S. Free tax calculator 2011 Individual Income Tax Return. Free tax calculator 2011 Separate Returns If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Free tax calculator 2011 Do not include any amount withheld from your spouse's income. Free tax calculator 2011 However, different rules may apply if you live in a community property state. Free tax calculator 2011 Community property states are listed in chapter 2. Free tax calculator 2011 For more information on these rules, and some exceptions, see Publication 555, Community Property. Free tax calculator 2011 Fiscal Years If you file your tax return on the basis of a fiscal year (a 12-month period ending on the last day of any month except December), you must follow special rules to determine your credit for federal income tax withholding. Free tax calculator 2011 For a discussion of how to take credit for withholding on a fiscal year return, see Fiscal Years (FY) in chapter 3 of Publication 505. Free tax calculator 2011 Estimated Tax Take credit for all your estimated tax payments for 2013 on line 63 of Form 1040 or line 37 of Form 1040A. Free tax calculator 2011 Include any overpayment from 2012 that you had credited to your 2013 estimated tax. Free tax calculator 2011 You must use Form 1040 or Form 1040A if you paid estimated tax. Free tax calculator 2011 You cannot use Form 1040EZ. Free tax calculator 2011 Name changed. Free tax calculator 2011   If you changed your name, and you made estimated tax payments using your old name, attach a brief statement to the front of your paper tax return indicating: When you made the payments, The amount of each payment, Your name when you made the payments, and Your social security number. Free tax calculator 2011 The statement should cover payments you made jointly with your spouse as well as any you made separately. Free tax calculator 2011   Be sure to report the change to the Social Security Administration. Free tax calculator 2011 This prevents delays in processing your return and issuing any refunds. Free tax calculator 2011 Separate Returns If you and your spouse made separate estimated tax payments for 2013 and you file separate returns, you can take credit only for your own payments. Free tax calculator 2011 If you made joint estimated tax payments, you must decide how to divide the payments between your returns. Free tax calculator 2011 One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. Free tax calculator 2011 If you cannot agree, you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2013. Free tax calculator 2011 Divorced Taxpayers If you made joint estimated tax payments for 2013, and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. Free tax calculator 2011 If you cannot agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2013. Free tax calculator 2011 If you claim any of the joint payments on your tax return, enter your former spouse's social security number (SSN) in the space provided on the front of Form 1040 or Form 1040A. Free tax calculator 2011 If you divorced and remarried in 2013, enter your present spouse's SSN in that space and write your former spouse's SSN, followed by “DIV,” to the left of Form 1040, line 63, or Form 1040A, line 37. Free tax calculator 2011 Underpayment Penalty for 2013 If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty. Free tax calculator 2011 Generally, you will not have to pay a penalty for 2013 if any of the following apply. Free tax calculator 2011 The total of your withholding and estimated tax payments was at least as much as your 2012 tax (or 110% of your 2012 tax if your AGI was more than $150,000, $75,000 if your 2013 filing status is married filing separately) and you paid all required estimated tax payments on time. Free tax calculator 2011 The tax balance due on your 2013 return is no more than 10% of your total 2013 tax, and you paid all required estimated tax payments on time. Free tax calculator 2011 Your total 2013 tax minus your withholding and refundable credits is less than $1,000. Free tax calculator 2011 You did not have a tax liability for 2012 and your 2012 tax year was 12 months, or You did not have any withholding taxes and your current year tax less any household employment taxes is less than $1,000. Free tax calculator 2011 See Publication 505, chapter 4, for a definition of “total tax” for 2012 and 2013. Free tax calculator 2011 Farmers and fishermen. Free tax calculator 2011   Special rules apply if you are a farmer or fisherman. Free tax calculator 2011 See Farmers and Fishermen in chapter 4 of Publication 505 for more information. Free tax calculator 2011 IRS can figure the penalty for you. Free tax calculator 2011   If you think you owe the penalty but you do not want to figure it yourself when you file your tax return, you may not have to. Free tax calculator 2011 Generally, the IRS will figure the penalty for you and send you a bill. Free tax calculator 2011 However, if you think you are able to lower or eliminate your penalty, you must complete Form 2210 or Form 2210-F and attach it to your paper return. Free tax calculator 2011 See chapter 4 of Publication 505. Free tax calculator 2011 Prev  Up  Next   Home   More Online Publications
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Verification of Nonfiling Letter

Verification of Nonfiling Letters are proof from the IRS that you did not file a return this year. Current year requests are only available after June 15. A taxpayer may fail to file a tax return even though he/she has a filing requirement. This letter does not address whether or not the taxpayer should have filed a tax return. 

Page Last Reviewed or Updated: 10-Jan-2014

The Free Tax Calculator 2011

Free tax calculator 2011 25. Free tax calculator 2011   Nonbusiness Casualty and Theft Losses Table of Contents What's New Introduction Useful Items - You may want to see: CasualtyFamily pet. Free tax calculator 2011 Progressive deterioration. Free tax calculator 2011 Damage from corrosive drywall. Free tax calculator 2011 Theft Loss on Deposits Proof of Loss Figuring a LossDecrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Single Casualty on Multiple Properties Deduction Limits$100 Rule 10% Rule When To Report Gains and LossesDisaster Area Loss How To Report Gains and Losses What's New New Section C of Form 4684 for Ponzi-type investment schemes. Free tax calculator 2011  Section C of Form 4684 is new for 2013. Free tax calculator 2011 You must complete Section C if you are claiming a theft loss deduction due to a Ponzi-type investment scheme and are using Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58. Free tax calculator 2011 Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Free tax calculator 2011 You do not need to complete Appendix A. Free tax calculator 2011 For details, see Losses from Ponzi-type investment schemes , in this chapter. Free tax calculator 2011 Introduction This chapter explains the tax treatment of personal (not business or investment related) casualty losses, theft losses, and losses on deposits. Free tax calculator 2011 The chapter also explains the following  topics. Free tax calculator 2011 How to figure the amount of your loss. Free tax calculator 2011 How to treat insurance and other reimbursements you receive. Free tax calculator 2011 The deduction limits. Free tax calculator 2011 When and how to report a casualty or theft. Free tax calculator 2011 Forms to file. Free tax calculator 2011    When you have a casualty or theft, you have to file Form 4684. Free tax calculator 2011 You will also have to file one or more of the following forms. Free tax calculator 2011 Schedule A (Form 1040), Itemized Deductions Schedule D (Form 1040), Capital Gains and Losses Condemnations. Free tax calculator 2011   For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544, Sales and Other Disposition of Assets. Free tax calculator 2011 Workbook for casualties and thefts. Free tax calculator 2011    Publication 584 is available to help you make a list of your stolen or damaged personal-use property and figure your loss. Free tax calculator 2011 It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Free tax calculator 2011 Business or investment-related losses. Free tax calculator 2011   For information on a casualty or theft loss of business or income-producing property, see Publication 547, Casualties, Disasters, and Thefts. Free tax calculator 2011 Useful Items - You may want to see: Publication 544 Sales and Other Dispositions  of Assets 547 Casualties, Disasters, and   Thefts 584 Casualty, Disaster, and Theft   Loss Workbook (Personal-Use  Property) Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule D (Form 1040) Capital Gains and Losses 4684 Casualties and Thefts Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Free tax calculator 2011 A sudden event is one that is swift, not gradual or progressive. Free tax calculator 2011 An unexpected event is one that is ordinarily unanticipated and unintended. Free tax calculator 2011 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 tax calculator 2011 Deductible losses. Free tax calculator 2011   Deductible casualty losses can result from a number of different causes, including the following. Free tax calculator 2011 Car accidents (but see Nondeductible losses , next, for exceptions). Free tax calculator 2011 Earthquakes. Free tax calculator 2011 Fires (but see Nondeductible losses , next, for exceptions). Free tax calculator 2011 Floods. Free tax calculator 2011 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 tax calculator 2011 Mine cave-ins. Free tax calculator 2011 Shipwrecks. Free tax calculator 2011 Sonic booms. Free tax calculator 2011 Storms, including hurricanes and tornadoes. Free tax calculator 2011 Terrorist attacks. Free tax calculator 2011 Vandalism. Free tax calculator 2011 Volcanic eruptions. Free tax calculator 2011 Nondeductible losses. Free tax calculator 2011   A casualty loss is not deductible if the damage or destruction is caused by the following. Free tax calculator 2011 Accidentally breaking articles such as glassware or china under normal conditions. Free tax calculator 2011 A family pet (explained below). Free tax calculator 2011 A fire if you willfully set it or pay someone else to set it. Free tax calculator 2011 A car accident if your willful negligence or willful act caused it. Free tax calculator 2011 The same is true if the willful act or willful negligence of someone acting for you caused the accident. Free tax calculator 2011 Progressive deterioration (explained later). Free tax calculator 2011 Family pet. Free tax calculator 2011   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. Free tax calculator 2011 Example. Free tax calculator 2011 Your antique oriental rug was damaged by your new puppy before it was housebroken. Free tax calculator 2011 Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. Free tax calculator 2011 Progressive deterioration. Free tax calculator 2011    Loss of property due to progressive deterioration is not deductible as a casualty loss. Free tax calculator 2011 This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Free tax calculator 2011 The following are examples of damage due to progressive deterioration. Free tax calculator 2011 The steady weakening of a building due to normal wind and weather conditions. Free tax calculator 2011 The deterioration and damage to a water heater that bursts. Free tax calculator 2011 However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. Free tax calculator 2011 Most losses of property caused by droughts. Free tax calculator 2011 To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. Free tax calculator 2011 Termite or moth damage. Free tax calculator 2011 The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. Free tax calculator 2011 However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. Free tax calculator 2011 Damage from corrosive drywall. Free tax calculator 2011   Under a special procedure, you may be able to claim a casualty loss deduction for amounts you paid to repair damage to your home and household appliances that resulted from corrosive drywall. Free tax calculator 2011 For details, see Publication 547. Free tax calculator 2011 Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. Free tax calculator 2011 The taking of property must be illegal under the laws of the state where it occurred and it must have been done with criminal intent. Free tax calculator 2011 You do not need to show a conviction for theft. Free tax calculator 2011 Theft includes the taking of money or property by the following means. Free tax calculator 2011 Blackmail. Free tax calculator 2011 Burglary. Free tax calculator 2011 Embezzlement. Free tax calculator 2011 Extortion. Free tax calculator 2011 Kidnapping for ransom. Free tax calculator 2011 Larceny. Free tax calculator 2011 Robbery. Free tax calculator 2011 The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Free tax calculator 2011 Decline in market value of stock. Free tax calculator 2011   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 tax calculator 2011 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 tax calculator 2011 You report a capital loss on Schedule D (Form 1040). Free tax calculator 2011 For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Free tax calculator 2011 Mislaid or lost property. Free tax calculator 2011   The simple disappearance of money or property is not a theft. Free tax calculator 2011 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 tax calculator 2011 Sudden, unexpected, and unusual events are defined earlier. Free tax calculator 2011 Example. Free tax calculator 2011 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Free tax calculator 2011 The diamond falls from the ring and is never found. Free tax calculator 2011 The loss of the diamond is a casualty. Free tax calculator 2011 Losses from Ponzi-type investment schemes. Free tax calculator 2011   If you had a loss from a Ponzi-type investment scheme, see: Revenue Ruling 2009-9, 2009-14 I. Free tax calculator 2011 R. Free tax calculator 2011 B. Free tax calculator 2011 735 (available at www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/irb/2009-14_IRB/ar07. Free tax calculator 2011 html). Free tax calculator 2011 Revenue Procedure 2009-20, 2009-14 I. Free tax calculator 2011 R. Free tax calculator 2011 B. Free tax calculator 2011 749 (available at www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/irb/2009-14_IRB/ar11. Free tax calculator 2011 html). Free tax calculator 2011 Revenue Procedure 2011-58, 2011-50 I. Free tax calculator 2011 R. Free tax calculator 2011 B. Free tax calculator 2011 849 (available at www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/irb/2011-50_IRB/ar11. Free tax calculator 2011 html). Free tax calculator 2011 If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. Free tax calculator 2011 Skip lines 19 to 27. Free tax calculator 2011 Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Free tax calculator 2011 You do not need to complete Appendix A. Free tax calculator 2011 For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. Free tax calculator 2011   If you choose not to use the procedures in Revenue Procedure 2009-20, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. Free tax calculator 2011 Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. Free tax calculator 2011 If you incurred this type of loss, you can choose one of the following ways to deduct the loss. Free tax calculator 2011 As a casualty loss. Free tax calculator 2011 As an ordinary loss. Free tax calculator 2011 As a nonbusiness bad debt. Free tax calculator 2011 Casualty loss or ordinary loss. Free tax calculator 2011   You can choose to deduct a loss on deposits as a casualty loss or as an ordinary loss for any year in which you can reasonably estimate how much of your deposits you have lost in an insolvent or bankrupt financial institution. Free tax calculator 2011 The choice is generally made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. Free tax calculator 2011 If you treat the loss as a casualty or ordinary loss, you cannot treat the same amount of the loss as a nonbusiness bad debt when it actually becomes worthless. Free tax calculator 2011 However, you can take a nonbusiness bad debt deduction for any amount of loss that is more than the estimated amount you deducted as a casualty or ordinary loss. Free tax calculator 2011 Once you make this choice, you cannot change it without permission from the Internal Revenue Service. Free tax calculator 2011   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Free tax calculator 2011 The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. Free tax calculator 2011 Your loss is subject to the 2%-of-adjusted-gross-income limit. Free tax calculator 2011 You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. Free tax calculator 2011 Nonbusiness bad debt. Free tax calculator 2011   If you do not choose to deduct the loss as a casualty loss or as an ordinary loss, you must wait until the year the actual loss is determined and deduct the loss as a nonbusiness bad debt in that year. Free tax calculator 2011 How to report. Free tax calculator 2011   The kind of deduction you choose for your loss on deposits determines how you report your loss. Free tax calculator 2011 If you choose: Casualty loss — report it on Form 4684 first and then on Schedule A (Form 1040). Free tax calculator 2011 Ordinary loss — report it on Schedule A (Form 1040) as a miscellaneous itemized deduction. Free tax calculator 2011 Nonbusiness bad debt — report it on Form 8949 first and then on Schedule D (Form 1040). Free tax calculator 2011 More information. Free tax calculator 2011   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684 or Deposit in Insolvent or Bankrupt Financial Institution in Publication 550. Free tax calculator 2011 Proof of Loss To deduct a casualty or theft loss, you must be able to prove that you had a casualty or theft. Free tax calculator 2011 You also must be able to support the amount you take as a deduction. Free tax calculator 2011 Casualty loss proof. Free tax calculator 2011   For a casualty loss, your records should show all the following. Free tax calculator 2011 The type of casualty (car accident, fire, storm, etc. Free tax calculator 2011 ) and when it occurred. Free tax calculator 2011 That the loss was a direct result of the casualty. Free tax calculator 2011 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 tax calculator 2011 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Free tax calculator 2011 Theft loss proof. Free tax calculator 2011   For a theft loss, your records should show all the following. Free tax calculator 2011 When you discovered that your property was missing. Free tax calculator 2011 That your property was stolen. Free tax calculator 2011 That you were the owner of the property. Free tax calculator 2011 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Free tax calculator 2011 It is important that you have records that will prove your deduction. Free tax calculator 2011 If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. Free tax calculator 2011 Figuring a Loss Figure the amount of your loss using the following steps. Free tax calculator 2011 Determine your adjusted basis in the property before the casualty or theft. Free tax calculator 2011 Determine the decrease in fair market value of the property as a result of the casualty or theft. Free tax calculator 2011 From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. Free tax calculator 2011 For personal-use property and property used in performing services as an employee, apply the deduction limits, discussed later, to determine the amount of your deductible loss. Free tax calculator 2011 Gain from reimbursement. Free tax calculator 2011   If your reimbursement is more than your adjusted basis in the property, you have a gain. Free tax calculator 2011 This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. Free tax calculator 2011 If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. Free tax calculator 2011 See Publication 547 for more information on how to treat a gain from a reimbursement for a casualty or theft. Free tax calculator 2011 Leased property. Free tax calculator 2011   If you are liable for casualty damage to property you lease, your loss is the amount you must pay to repair the property minus any insurance or other reimbursement you receive or expect to receive. Free tax calculator 2011 Decrease in Fair Market Value Fair market value (FMV) is the price for which you could sell your property to a willing buyer when neither of you has to sell or buy and both of you know all the relevant facts. Free tax calculator 2011 The decrease in FMV used to figure the amount of a casualty or theft loss is the difference between the property's fair market value immediately before and immediately after the casualty or theft. Free tax calculator 2011 FMV of stolen property. Free tax calculator 2011   The FMV of property immediately after a theft is considered to be zero, since you no longer have the property. Free tax calculator 2011 Example. Free tax calculator 2011 Several years ago, you purchased silver dollars at face value for $150. Free tax calculator 2011 This is your adjusted basis in the property. Free tax calculator 2011 Your silver dollars were stolen this year. Free tax calculator 2011 The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. Free tax calculator 2011 Your theft loss is $150. Free tax calculator 2011 Recovered stolen property. Free tax calculator 2011   Recovered stolen property is your property that was stolen and later returned to you. Free tax calculator 2011 If you recovered property after you had already taken a theft loss deduction, you must refigure your loss using the smaller of the property's adjusted basis (explained later) or the decrease in FMV from the time just before it was stolen until the time it was recovered. Free tax calculator 2011 Use this amount to refigure your total loss for the year in which the loss was deducted. Free tax calculator 2011   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. Free tax calculator 2011 But report the difference only up to the amount of the loss that reduced your tax. Free tax calculator 2011 For more information on the amount to report, see Recoveries in chapter 12. Free tax calculator 2011 Figuring Decrease in FMV— Items To Consider To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Free tax calculator 2011 However, other measures can also be used to establish certain decreases. Free tax calculator 2011 Appraisal. Free tax calculator 2011   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 tax calculator 2011 The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Free tax calculator 2011 This information is needed to limit any deduction to the actual loss resulting from damage to the property. Free tax calculator 2011   Several factors are important in evaluating the accuracy of an appraisal, including the following. Free tax calculator 2011 The appraiser's familiarity with your property before and after the casualty or theft. Free tax calculator 2011 The appraiser's knowledge of sales of comparable property in the area. Free tax calculator 2011 The appraiser's knowledge of conditions in the area of the casualty. Free tax calculator 2011 The appraiser's method of appraisal. Free tax calculator 2011    You may be able to use an appraisal that you used to get a federal loan (or a federal loan guarantee) as the result of a federally declared disaster to establish the amount of your disaster loss. Free tax calculator 2011 For more information on disasters, see Disaster Area Losses, in Pub. Free tax calculator 2011 547. Free tax calculator 2011 Cost of cleaning up or making repairs. Free tax calculator 2011   The cost of repairing damaged property is not part of a casualty loss. Free tax calculator 2011 Neither is the cost of cleaning up after a casualty. Free tax calculator 2011 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 tax calculator 2011 The repairs are actually made. Free tax calculator 2011 The repairs are necessary to bring the property back to its condition before the casualty. Free tax calculator 2011 The amount spent for repairs is not excessive. Free tax calculator 2011 The repairs take care of the damage only. Free tax calculator 2011 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 tax calculator 2011 Landscaping. Free tax calculator 2011   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. Free tax calculator 2011 You may be able to measure your loss by what you spend on the following. Free tax calculator 2011 Removing destroyed or damaged trees and shrubs minus any salvage you receive. Free tax calculator 2011 Pruning and other measures taken to preserve damaged trees and shrubs. Free tax calculator 2011 Replanting necessary to restore the property to its approximate value before the casualty. Free tax calculator 2011 Car value. Free tax calculator 2011    Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. Free tax calculator 2011 You can use the book's retail values and modify them by such factors as mileage and the condition of your car to figure its value. Free tax calculator 2011 The prices are not official, but they may be useful in determining value and suggesting relative prices for comparison with current sales and offerings in your area. Free tax calculator 2011 If your car is not listed in the books, determine its value from other sources. Free tax calculator 2011 A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. Free tax calculator 2011 Figuring Decrease in FMV— Items Not To Consider You generally should not consider the following items when attempting to establish the decrease in FMV of your property. Free tax calculator 2011 Cost of protection. Free tax calculator 2011   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. Free tax calculator 2011 The amount you spend on insurance or to board up your house against a storm is not part of your loss. Free tax calculator 2011   If you make permanent improvements to your property to protect it against a casualty or theft, add the cost of these improvements to your basis in the property. Free tax calculator 2011 An example would be the cost of a dike to prevent flooding. Free tax calculator 2011 Exception. Free tax calculator 2011   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments. Free tax calculator 2011 See Disaster Area Losses in Publication 547. Free tax calculator 2011 Incidental expenses. Free tax calculator 2011   Any incidental expenses you have due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. Free tax calculator 2011 Replacement cost. Free tax calculator 2011   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. Free tax calculator 2011 Sentimental value. Free tax calculator 2011   Do not consider sentimental value when determining your loss. Free tax calculator 2011 If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV, as limited by your adjusted basis in the property. Free tax calculator 2011 Decline in market value of property in or near casualty area. Free tax calculator 2011   A decrease in the value of your property because it is in or near an area that suffered a casualty, or that might again suffer a casualty, is not to be taken into consideration. Free tax calculator 2011 You have a loss only for actual casualty damage to your property. Free tax calculator 2011 However, if your home is in a federally declared disaster area, see Disaster Area Losses in Publication 547. Free tax calculator 2011 Costs of photographs and appraisals. Free tax calculator 2011    Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. Free tax calculator 2011 Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. Free tax calculator 2011    Appraisals are used to figure the decrease in FMV because of a casualty or theft. Free tax calculator 2011 See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. Free tax calculator 2011   The costs of photographs and appraisals used as evidence of the value and condition of property damaged as a result of a casualty are not a part of the loss. Free tax calculator 2011 You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). Free tax calculator 2011 For information about miscellaneous deductions, see chapter 28. Free tax calculator 2011 Adjusted Basis Adjusted basis is your basis in the property (usually cost) increased or decreased by various events, such as improvements and casualty losses. Free tax calculator 2011 For more information, see chapter 13. Free tax calculator 2011 Insurance and Other Reimbursements If you receive an insurance payment or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Free tax calculator 2011 You do not have a casualty or theft loss to the extent you are reimbursed. Free tax calculator 2011 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 tax calculator 2011 You must reduce your loss even if you do not receive payment until a later tax year. Free tax calculator 2011 See Reimbursement Received After Deducting Loss , later. Free tax calculator 2011 Failure to file a claim for reimbursement. Free tax calculator 2011   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. Free tax calculator 2011 Otherwise, you cannot deduct this loss as a casualty or theft loss. Free tax calculator 2011 However, this rule does not apply to the portion of the loss not covered by insurance (for example, a deductible). Free tax calculator 2011 Example. Free tax calculator 2011 You have a car insurance policy with a $1,000 deductible. Free tax calculator 2011 Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the deduction limits discussed later). Free tax calculator 2011 This is true even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. Free tax calculator 2011 Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. Free tax calculator 2011 Other types of reimbursements are discussed next. Free tax calculator 2011 Also see the Instructions for Form 4684. Free tax calculator 2011 Employer's emergency disaster fund. Free tax calculator 2011   If you receive money from your employer's emergency disaster fund and you must use that money to rehabilitate or replace property on which you are claiming a casualty loss deduction, you must take that money into consideration in computing the casualty loss deduction. Free tax calculator 2011 Take into consideration only the amount you used to replace your destroyed or damaged property. Free tax calculator 2011 Example. Free tax calculator 2011 Your home was extensively damaged by a tornado. Free tax calculator 2011 Your loss after reimbursement from your insurance company was $10,000. Free tax calculator 2011 Your employer set up a disaster relief fund for its employees. Free tax calculator 2011 Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. Free tax calculator 2011 You received $4,000 from the fund and spent the entire amount on repairs to your home. Free tax calculator 2011 In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. Free tax calculator 2011 Your casualty loss before applying the deduction limits discussed later is $6,000. Free tax calculator 2011 Cash gifts. Free tax calculator 2011   If you receive excludable cash gifts as a disaster victim and there are no limits on how you can use the money, you do not reduce your casualty loss by these excludable cash gifts. Free tax calculator 2011 This applies even if you use the money to pay for repairs to property damaged in the disaster. Free tax calculator 2011 Example. Free tax calculator 2011 Your home was damaged by a hurricane. Free tax calculator 2011 Relatives and neighbors made cash gifts to you that were excludable from your income. Free tax calculator 2011 You used part of the cash gifts to pay for repairs to your home. Free tax calculator 2011 There were no limits or restrictions on how you could use the cash gifts. Free tax calculator 2011 Because it was an excludable gift, the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. Free tax calculator 2011 Insurance payments for living expenses. Free tax calculator 2011   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. Free tax calculator 2011 You lose the use of your main home because of a casualty. Free tax calculator 2011 Government authorities do not allow you access to your main home because of a casualty or threat of one. Free tax calculator 2011 Inclusion in income. Free tax calculator 2011   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. Free tax calculator 2011 Report this amount on Form 1040, line 21. Free tax calculator 2011 However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. Free tax calculator 2011 See Qualified disaster relief payments, under Disaster Area Losses in Publication 547. Free tax calculator 2011   A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. Free tax calculator 2011 Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. Free tax calculator 2011 Generally, these expenses include the amounts you pay for the following. Free tax calculator 2011 Rent for suitable housing. Free tax calculator 2011 Transportation. Free tax calculator 2011 Food. Free tax calculator 2011 Utilities. Free tax calculator 2011 Miscellaneous services. Free tax calculator 2011 Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one. Free tax calculator 2011 Example. Free tax calculator 2011 As a result of a fire, you vacated your apartment for a month and moved to a motel. Free tax calculator 2011 You normally pay $525 a month for rent. Free tax calculator 2011 None was charged for the month the apartment was vacated. Free tax calculator 2011 Your motel rent for this month was $1,200. Free tax calculator 2011 You normally pay $200 a month for food. Free tax calculator 2011 Your food expenses for the month you lived in the motel were $400. Free tax calculator 2011 You received $1,100 from your insurance company to cover your living expenses. Free tax calculator 2011 You determine the payment you must include in income as follows. Free tax calculator 2011 1) Insurance payment for living expenses $1,100 2) Actual expenses during the month you are unable to use your home because of fire 1,600   3) Normal living expenses 725   4) Temporary increase in living  expenses: Subtract line 3 from line 2 875 5) Amount of payment includible  in income: Subtract line 4  from line 1 $ 225 Tax year of inclusion. Free tax calculator 2011   You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment. Free tax calculator 2011 Example. Free tax calculator 2011 Your main home was destroyed by a tornado in August 2011. Free tax calculator 2011 You regained use of your home in November 2012. Free tax calculator 2011 The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. Free tax calculator 2011 You include this amount in income on your 2012 Form 1040. Free tax calculator 2011 If, in 2013, you receive further payments to cover the living expenses you had in 2011 and 2012, you must include those payments in income on your 2013 Form 1040. Free tax calculator 2011 Disaster relief. Free tax calculator 2011   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 tax calculator 2011 Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Free tax calculator 2011 For more information, see Disaster Area Losses in Publication 547. Free tax calculator 2011 Disaster unemployment assistance payments are unemployment benefits that are taxable. Free tax calculator 2011 Generally, disaster relief grants and qualified disaster mitigation payments made under the Robert T. Free tax calculator 2011 Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not includible in your income. Free tax calculator 2011 See Disaster Area Losses in Publication 547. Free tax calculator 2011 Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you receive your actual reimbursement. Free tax calculator 2011 This section explains the adjustment you may have to make. Free tax calculator 2011 Actual reimbursement less than expected. Free tax calculator 2011   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 tax calculator 2011 Example. Free tax calculator 2011 Your personal car had an FMV of $2,000 when it was destroyed in a collision with another car in 2012. Free tax calculator 2011 The accident was due to the negligence of the other driver. Free tax calculator 2011 At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. Free tax calculator 2011 You did not have a deductible loss in 2012. Free tax calculator 2011 In January 2013, the court awarded you a judgment of $2,000. Free tax calculator 2011 However, in July it became apparent that you will be unable to collect any amount from the other driver. Free tax calculator 2011 You can deduct the loss in 2013 subject to the limits discussed later. Free tax calculator 2011 Actual reimbursement more than expected. Free tax calculator 2011   If you later receive more reimbursement than you expected after you claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Free tax calculator 2011 However, if any part of the original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Free tax calculator 2011 You do not refigure your tax for the year you claimed the deduction. Free tax calculator 2011 For more information, see Recoveries in chapter 12. Free tax calculator 2011 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 tax calculator 2011 If you have already taken a deduction for a loss and you receive the reimbursement in a later year, you may have to include the gain in your income for the later year. Free tax calculator 2011 Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. Free tax calculator 2011 See Figuring a Gain in Publication 547 for more information on how to treat a gain from the reimbursement of a casualty or theft. Free tax calculator 2011 Actual reimbursement same as expected. Free tax calculator 2011   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 tax calculator 2011 Example. Free tax calculator 2011 In December 2013, you had a collision while driving your personal car. Free tax calculator 2011 Repairs to the car cost $950. Free tax calculator 2011 You had $100 deductible collision insurance. Free tax calculator 2011 Your insurance company agreed to reimburse you for the rest of the damage. Free tax calculator 2011 Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. Free tax calculator 2011 Due to the $100 rule (discussed later under Deduction Limits ), you cannot deduct the $100 you paid as the deductible. Free tax calculator 2011 When you receive the $850 from the insurance company in 2014, do not report it as income. Free tax calculator 2011 Single Casualty on Multiple Properties Personal property. Free tax calculator 2011   Personal property is any property that is not real property. Free tax calculator 2011 If your personal property is stolen or is damaged or destroyed by a casualty, you must figure your loss separately for each item of property. Free tax calculator 2011 Then combine these separate losses to figure the total loss from that casualty or theft. Free tax calculator 2011 Example. Free tax calculator 2011 A fire in your home destroyed an upholstered chair, an oriental rug, and an antique table. Free tax calculator 2011 You did not have fire insurance to cover your loss. Free tax calculator 2011 (This was the only casualty or theft you had during the year. Free tax calculator 2011 ) You paid $750 for the chair and you established that it had an FMV of $500 just before the fire. Free tax calculator 2011 The rug cost $3,000 and had an FMV of $2,500 just before the fire. Free tax calculator 2011 You bought the table at an auction for $100 before discovering it was an antique. Free tax calculator 2011 It had been appraised at $900 before the fire. Free tax calculator 2011 You figure your loss on each of these items as follows:     Chair Rug Table 1) Basis (cost) $750 $3,000 $100 2) FMV before fire $500 $2,500 $900 3) FMV after fire –0– –0– –0– 4) Decrease in FMV $500 $2,500 $900 5) Loss (smaller of (1) or  (4)) $500 $2,500 $100           6) Total loss     $3,100 Real property. Free tax calculator 2011   In figuring a casualty loss on personal-use real property, treat the entire property (including any improvements, such as buildings, trees, and shrubs) as one item. Free tax calculator 2011 Figure the loss using the smaller of the adjusted basis or the decrease in FMV of the entire property. Free tax calculator 2011 Example. Free tax calculator 2011 You bought your home a few years ago. Free tax calculator 2011 You paid $160,000 ($20,000 for the land and $140,000 for the house). Free tax calculator 2011 You also spent $2,000 for landscaping. Free tax calculator 2011 This year a fire destroyed your home. Free tax calculator 2011 The fire also damaged the shrubbery and trees in your yard. Free tax calculator 2011 The fire was your only casualty or theft loss this year. Free tax calculator 2011 Competent appraisers valued the property as a whole at $200,000 before the fire, but only $30,000 after the fire. Free tax calculator 2011 (The loss to your household furnishings is not shown in this example. Free tax calculator 2011 It would be figured separately on each item, as explained earlier under Personal property . Free tax calculator 2011 ) Shortly after the fire, the insurance company paid you $155,000 for the loss. Free tax calculator 2011 You figure your casualty loss as follows: 1) Adjusted basis of the entire property (land, building, and landscaping) $162,000 2) FMV of entire property before fire $200,000 3) FMV of entire property after fire 30,000 4) Decrease in FMV of entire  property $170,000 5) Loss (smaller of (1) or (4)) $162,000 6) Subtract insurance 155,000 7) Amount of loss after reimbursement $7,000 Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. Free tax calculator 2011 If the loss was to property for your personal use or your family's use, there are two limits on the amount you can deduct for your casualty or theft loss. Free tax calculator 2011 You must reduce each casualty or theft loss by $100 ($100 rule). Free tax calculator 2011 You must further reduce the total of all your casualty or theft losses by 10% of your adjusted gross income (10% rule). Free tax calculator 2011 You make these reductions on Form 4684. Free tax calculator 2011 These rules are explained next and Table 25-1 summarizes how to apply the $100 rule and the 10% rule in various situations. Free tax calculator 2011 For more detailed explanations and examples, see Publication 547. Free tax calculator 2011 Table 25-1. Free tax calculator 2011 How To Apply the Deduction Limits for Personal-Use Property   $100 Rule 10% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. Free tax calculator 2011 Apply this rule after you have figured the amount of your loss. Free tax calculator 2011 You must reduce your total casualty or theft loss by 10% of your adjusted gross income. Free tax calculator 2011 Apply this rule after you reduce each loss by $100 (the $100 rule). Free tax calculator 2011 Single Event Apply this rule only once, even if many pieces of property are affected. Free tax calculator 2011 Apply this rule only once, even if many pieces of property are affected. Free tax calculator 2011 More Than One Event Apply to the loss from each event. Free tax calculator 2011 Apply to the total of all your losses from all events. Free tax calculator 2011 More Than One Person— With Loss From the Same Event (other than a married couple filing jointly) Apply separately to each person. Free tax calculator 2011 Apply separately to each person. Free tax calculator 2011 Married Couple—With Loss From the Same Event Filing Jointly Apply as if you were one person. Free tax calculator 2011 Apply as if you were one person. Free tax calculator 2011 Filing Separately Apply separately to each spouse. Free tax calculator 2011 Apply separately to each spouse. Free tax calculator 2011 More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. Free tax calculator 2011 Apply separately to each owner of jointly owned property. Free tax calculator 2011 Property used partly for business and partly for personal purposes. Free tax calculator 2011   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use part and for the business or income-producing part. Free tax calculator 2011 You must figure each loss separately because the $100 rule and the 10% rule apply only to the loss on the personal-use part of the property. Free tax calculator 2011 $100 Rule After you have figured your casualty or theft loss on personal-use property, you must reduce that loss by $100. Free tax calculator 2011 This reduction applies to each total casualty or theft loss. Free tax calculator 2011 It does not matter how many pieces of property are involved in an event. Free tax calculator 2011 Only a single $100 reduction applies. Free tax calculator 2011 Example. Free tax calculator 2011 A hailstorm damages your home and your car. Free tax calculator 2011 Determine the amount of loss, as discussed earlier, for each of these items. Free tax calculator 2011 Since the losses are due to a single event, you combine the losses and reduce the combined amount by $100. Free tax calculator 2011 Single event. Free tax calculator 2011   Generally, events closely related in origin cause a single casualty. Free tax calculator 2011 It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. Free tax calculator 2011 10% Rule You must reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Free tax calculator 2011 Apply this rule after you reduce each loss by $100. Free tax calculator 2011 For more information, see the Form 4684 instructions. Free tax calculator 2011 If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. Free tax calculator 2011 Example 1. Free tax calculator 2011 In June, you discovered that your house had been burglarized. Free tax calculator 2011 Your loss after insurance reimbursement was $2,000. Free tax calculator 2011 Your adjusted gross income for the year you discovered the theft is $29,500. Free tax calculator 2011 You first apply the $100 rule and then the 10% rule. Free tax calculator 2011 Figure your theft loss deduction as follows. Free tax calculator 2011 1) Loss after insurance $2,000 2) Subtract $100 100 3) Loss after $100 rule $1,900 4) Subtract 10% × $29,500 AGI 2,950 5) Theft loss deduction –0– You do not have a theft loss deduction because your loss after you apply the $100 rule ($1,900) is less than 10% of your adjusted gross income ($2,950). Free tax calculator 2011 Example 2. Free tax calculator 2011 In March, you had a car accident that totally destroyed your car. Free tax calculator 2011 You did not have collision insurance on your car, so you did not receive any insurance reimbursement. Free tax calculator 2011 Your loss on the car was $1,800. Free tax calculator 2011 In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items stored there. Free tax calculator 2011 Your loss on the basement items after reimbursement was $2,100. Free tax calculator 2011 Your adjusted gross income for the year that the accident and fire occurred is $25,000. Free tax calculator 2011 You figure your casualty loss deduction as follows. Free tax calculator 2011       Base-     Car ment 1) Loss $1,800 $2,100 2) Subtract $100 per incident 100 100 3) Loss after $100 rule $1,700 $2,000 4) Total loss $3,700 5) Subtract 10% × $25,000 AGI 2,500 6) Casualty loss deduction $1,200 Gains and losses. Free tax calculator 2011   If you had both gains and losses from casualties or thefts to personal-use property, you must compare your total gains to your total losses. Free tax calculator 2011 Do this after you have reduced each loss by any reimbursements and by $100, but before you have reduced the losses by 10% of your adjusted gross income. Free tax calculator 2011 Casualty or theft gains do not include gains you choose to postpone. Free tax calculator 2011 See Publication 547 for information on the postponement of gain. Free tax calculator 2011 Losses more than gains. Free tax calculator 2011   If your losses are more than your recognized gains, subtract your gains from your losses and reduce the result by 10% of your adjusted gross income. Free tax calculator 2011 The rest, if any, is your deductible loss from personal-use property. Free tax calculator 2011 Gains more than losses. Free tax calculator 2011   If your recognized gains are more than your losses, subtract your losses from your gains. Free tax calculator 2011 The difference is treated as capital gain and must be reported on Schedule D (Form 1040). Free tax calculator 2011 The 10% rule does not apply to your gains. Free tax calculator 2011 When To Report Gains and Losses Gains. Free tax calculator 2011   If you receive an insurance or other reimbursement that is more than your adjusted basis in the destroyed or stolen property, you have a gain from the casualty or theft. Free tax calculator 2011 You must include this gain in your income in the year you receive the reimbursement, unless you choose to postpone reporting the gain as explained in Publication 547. Free tax calculator 2011 If you have a loss, see Table 25-2 . Free tax calculator 2011 Table 25-2. Free tax calculator 2011 When To Deduct a Loss IF you have a loss. Free tax calculator 2011 . Free tax calculator 2011 . Free tax calculator 2011 THEN deduct it in the year. Free tax calculator 2011 . Free tax calculator 2011 . Free tax calculator 2011 from a casualty, the loss occurred. Free tax calculator 2011 in a federally declared disaster area, the disaster occurred or the year immediately before the disaster. Free tax calculator 2011 from a theft, the theft was discovered. Free tax calculator 2011 on a deposit treated as a:   • casualty or any ordinary loss, a reasonable estimate can be made. Free tax calculator 2011 • bad debt, deposits are totally worthless. Free tax calculator 2011 Losses. Free tax calculator 2011   Generally, you can deduct a casualty loss that is not reimbursable only in the tax year in which the casualty occurred. Free tax calculator 2011 This is true even if you do not repair or replace the damaged property until a later year. Free tax calculator 2011   You can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Free tax calculator 2011   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 tax calculator 2011 Loss on deposits. Free tax calculator 2011   If your loss is a loss on deposits in an insolvent or bankrupt financial institution, see Loss on Deposits , earlier. Free tax calculator 2011 Disaster Area Loss You generally must deduct a casualty loss in the year it occurred. Free tax calculator 2011 However, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct the loss on your tax return or amended return for either of the following years. Free tax calculator 2011 The year the disaster occurred. Free tax calculator 2011 The year immediately preceding the year the disaster occurred. Free tax calculator 2011 Gains. Free tax calculator 2011    Special rules apply if you choose to postpone reporting gain on property damaged or destroyed in a federally declared disaster area. Free tax calculator 2011 For those special rules, see Publication 547. Free tax calculator 2011 Postponed tax deadlines. Free tax calculator 2011   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Free tax calculator 2011 The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. Free tax calculator 2011   If any tax deadline is postponed, the IRS will publicize the postponement in your area by publishing a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Free tax calculator 2011 Go to www. Free tax calculator 2011 irs. Free tax calculator 2011 gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Free tax calculator 2011 Who is eligible. Free tax calculator 2011   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Free tax calculator 2011 Any individual whose main home is located in a covered disaster area (defined next). Free tax calculator 2011 Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Free tax calculator 2011 Any individual who is a relief worker affiliated with a recognized government or philanthropic organization who is assisting in a covered disaster area. Free tax calculator 2011 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 tax calculator 2011 The main home or principal place of business does not have to be located in the covered disaster area. Free tax calculator 2011 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 tax calculator 2011 The spouse on a joint return with a taxpayer who is eligible for postponements. Free tax calculator 2011 Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose records necessary to meet a postponed tax deadline are located in the covered disaster area. Free tax calculator 2011 Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Free tax calculator 2011 Any other person determined by the IRS to be affected by a federally declared disaster. Free tax calculator 2011 Covered disaster area. Free tax calculator 2011   This is an area of a federally declared disaster in which the IRS has decided to postpone tax deadlines for up to 1 year. Free tax calculator 2011 Abatement of interest and penalties. Free tax calculator 2011   The IRS may abate the interest and penalties on underpaid income tax for the length of any postponement of tax deadlines. Free tax calculator 2011 More information. Free tax calculator 2011   For more information, see Disaster Area Losses in Publication 547. Free tax calculator 2011 How To Report Gains and Losses Use Form 4684 to report a gain or a deductible loss from a casualty or theft. Free tax calculator 2011 If you have more than one casualty or theft, use a separate Form 4684 to determine your gain or loss for each event. Free tax calculator 2011 Combine the gains and losses on one Form 4684. Free tax calculator 2011 Follow the form instructions as to which lines to fill out. Free tax calculator 2011 In addition, you must use the appropriate schedule to report a gain or loss. Free tax calculator 2011 The schedule you use depends on whether you have a gain or loss. Free tax calculator 2011 If you have a: Report it on: Gain Schedule D (Form 1040) Loss Schedule A (Form 1040) Adjustments to basis. Free tax calculator 2011   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 tax calculator 2011 Amounts you spend to restore your property after a casualty increase your adjusted basis. Free tax calculator 2011 See Adjusted Basis in chapter 13 for more information. Free tax calculator 2011 Net operating loss (NOL). Free tax calculator 2011    If your casualty or theft loss deduction causes your deductions for the year to be more than your income for the year, you may have an NOL. Free tax calculator 2011 You can use an NOL to lower your tax in an earlier year, allowing you to get a refund for tax you have already paid. Free tax calculator 2011 Or, you can use it to lower your tax in a later year. Free tax calculator 2011 You do not have to be in business to have an NOL from a casualty or theft loss. Free tax calculator 2011 For more information, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Free tax calculator 2011 Prev  Up  Next   Home   More Online Publications