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Where To E- File 2012 Federal Tax Return For Free

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Where To E- File 2012 Federal Tax Return For Free

Where to e- file 2012 federal tax return for free Publication 15-B - Main Content Table of Contents 1. Where to e- file 2012 federal tax return for free Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. Where to e- file 2012 federal tax return for free Fringe Benefit Exclusion RulesAccident and Health Benefits Achievement Awards Adoption Assistance Athletic Facilities De Minimis (Minimal) Benefits Dependent Care Assistance Educational Assistance Employee Discounts Employee Stock Options Employer-Provided Cell Phones Group-Term Life Insurance Coverage Health Savings Accounts Lodging on Your Business Premises Meals Moving Expense Reimbursements No-Additional-Cost Services Retirement Planning Services Transportation (Commuting) Benefits Tuition Reduction Working Condition Benefits 3. Where to e- file 2012 federal tax return for free Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. Where to e- file 2012 federal tax return for free Rules for Withholding, Depositing, and ReportingTransfer of property. Where to e- file 2012 federal tax return for free Amount of deposit. Where to e- file 2012 federal tax return for free Limitation. Where to e- file 2012 federal tax return for free Conformity rules. Where to e- file 2012 federal tax return for free Election not to withhold income tax. Where to e- file 2012 federal tax return for free How To Get Tax Help 1. Where to e- file 2012 federal tax return for free Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. Where to e- file 2012 federal tax return for free For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. Where to e- file 2012 federal tax return for free Performance of services. Where to e- file 2012 federal tax return for free   A person who performs services for you does not have to be your employee. Where to e- file 2012 federal tax return for free A person may perform services for you as an independent contractor, partner, or director. Where to e- file 2012 federal tax return for free Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. Where to e- file 2012 federal tax return for free Provider of benefit. Where to e- file 2012 federal tax return for free   You are the provider of a fringe benefit if it is provided for services performed for you. Where to e- file 2012 federal tax return for free You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. Where to e- file 2012 federal tax return for free For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. Where to e- file 2012 federal tax return for free Recipient of benefit. Where to e- file 2012 federal tax return for free   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. Where to e- file 2012 federal tax return for free That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. Where to e- file 2012 federal tax return for free For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. Where to e- file 2012 federal tax return for free Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. Where to e- file 2012 federal tax return for free Section 2 discusses the exclusions that apply to certain fringe benefits. Where to e- file 2012 federal tax return for free Any benefit not excluded under the rules discussed in section 2 is taxable. Where to e- file 2012 federal tax return for free Including taxable benefits in pay. Where to e- file 2012 federal tax return for free   You must include in a recipient's pay the amount by which the value of a fringe benefit is more than the sum of the following amounts. Where to e- file 2012 federal tax return for free Any amount the law excludes from pay. Where to e- file 2012 federal tax return for free Any amount the recipient paid for the benefit. Where to e- file 2012 federal tax return for free The rules used to determine the value of a fringe benefit are discussed in section 3. Where to e- file 2012 federal tax return for free   If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. Where to e- file 2012 federal tax return for free However, you can use special rules to withhold, deposit, and report the employment taxes. Where to e- file 2012 federal tax return for free These rules are discussed in section 4. Where to e- file 2012 federal tax return for free   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. Where to e- file 2012 federal tax return for free However, you may have to report the benefit on one of the following information returns. Where to e- file 2012 federal tax return for free If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Where to e- file 2012 federal tax return for free For more information, see the instructions for the forms listed above. Where to e- file 2012 federal tax return for free Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. Where to e- file 2012 federal tax return for free If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. Where to e- file 2012 federal tax return for free Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. Where to e- file 2012 federal tax return for free However, a cafeteria plan can include a qualified 401(k) plan as a benefit. Where to e- file 2012 federal tax return for free Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. Where to e- file 2012 federal tax return for free Qualified benefits. Where to e- file 2012 federal tax return for free   A cafeteria plan can include the following benefits discussed in section 2. Where to e- file 2012 federal tax return for free Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). Where to e- file 2012 federal tax return for free Adoption assistance. Where to e- file 2012 federal tax return for free Dependent care assistance. Where to e- file 2012 federal tax return for free Group-term life insurance coverage (including costs that cannot be excluded from wages). Where to e- file 2012 federal tax return for free Health savings accounts (HSAs). Where to e- file 2012 federal tax return for free Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. Where to e- file 2012 federal tax return for free Benefits not allowed. Where to e- file 2012 federal tax return for free   A cafeteria plan cannot include the following benefits discussed in section 2. Where to e- file 2012 federal tax return for free Archer MSAs. Where to e- file 2012 federal tax return for free See Accident and Health Benefits in section 2. Where to e- file 2012 federal tax return for free Athletic facilities. Where to e- file 2012 federal tax return for free De minimis (minimal) benefits. Where to e- file 2012 federal tax return for free Educational assistance. Where to e- file 2012 federal tax return for free Employee discounts. Where to e- file 2012 federal tax return for free Employer-provided cell phones. Where to e- file 2012 federal tax return for free Lodging on your business premises. Where to e- file 2012 federal tax return for free Meals. Where to e- file 2012 federal tax return for free Moving expense reimbursements. Where to e- file 2012 federal tax return for free No-additional-cost services. Where to e- file 2012 federal tax return for free Transportation (commuting) benefits. Where to e- file 2012 federal tax return for free Tuition reduction. Where to e- file 2012 federal tax return for free Working condition benefits. Where to e- file 2012 federal tax return for free It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). Where to e- file 2012 federal tax return for free $2,500 limit on a health flexible spending arrangement (FSA). Where to e- file 2012 federal tax return for free   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. Where to e- file 2012 federal tax return for free For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. Where to e- file 2012 federal tax return for free   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). Where to e- file 2012 federal tax return for free While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. Where to e- file 2012 federal tax return for free A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. Where to e- file 2012 federal tax return for free   For more information, see Notice 2012-40, 2012-26 I. Where to e- file 2012 federal tax return for free R. Where to e- file 2012 federal tax return for free B. Where to e- file 2012 federal tax return for free 1046, available at www. Where to e- file 2012 federal tax return for free irs. Where to e- file 2012 federal tax return for free gov/irb/2012-26_IRB/ar09. Where to e- file 2012 federal tax return for free html. Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For these plans, treat the following individuals as employees. Where to e- file 2012 federal tax return for free A current common-law employee. Where to e- file 2012 federal tax return for free See section 2 in Publication 15 (Circular E) for more information. Where to e- file 2012 federal tax return for free A full-time life insurance agent who is a current statutory employee. Where to e- file 2012 federal tax return for free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Where to e- file 2012 federal tax return for free Exception for S corporation shareholders. Where to e- file 2012 federal tax return for free   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Where to e- file 2012 federal tax return for free A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Where to e- file 2012 federal tax return for free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Where to e- file 2012 federal tax return for free Plans that favor highly compensated employees. Where to e- file 2012 federal tax return for free   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. Where to e- file 2012 federal tax return for free A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. Where to e- file 2012 federal tax return for free   A highly compensated employee for this purpose is any of the following employees. Where to e- file 2012 federal tax return for free An officer. Where to e- file 2012 federal tax return for free A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. Where to e- file 2012 federal tax return for free An employee who is highly compensated based on the facts and circumstances. Where to e- file 2012 federal tax return for free A spouse or dependent of a person described in (1), (2), or (3). Where to e- file 2012 federal tax return for free Plans that favor key employees. Where to e- file 2012 federal tax return for free   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. Where to e- file 2012 federal tax return for free A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. Where to e- file 2012 federal tax return for free However, a plan you maintain under a collective bargaining agreement does not favor key employees. Where to e- file 2012 federal tax return for free   A key employee during 2014 is generally an employee who is either of the following. Where to e- file 2012 federal tax return for free An officer having annual pay of more than $170,000. Where to e- file 2012 federal tax return for free An employee who for 2014 is either of the following. Where to e- file 2012 federal tax return for free A 5% owner of your business. Where to e- file 2012 federal tax return for free A 1% owner of your business whose annual pay was more than $150,000. Where to e- file 2012 federal tax return for free Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. Where to e- file 2012 federal tax return for free Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. Where to e- file 2012 federal tax return for free Eligible employer. Where to e- file 2012 federal tax return for free   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. Where to e- file 2012 federal tax return for free If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. Where to e- file 2012 federal tax return for free If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. Where to e- file 2012 federal tax return for free Eligibility and participation requirements. Where to e- file 2012 federal tax return for free   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. Where to e- file 2012 federal tax return for free You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. Where to e- file 2012 federal tax return for free S. Where to e- file 2012 federal tax return for free source. Where to e- file 2012 federal tax return for free Contribution requirements. Where to e- file 2012 federal tax return for free   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. Where to e- file 2012 federal tax return for free If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. Where to e- file 2012 federal tax return for free More information. Where to e- file 2012 federal tax return for free   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. Where to e- file 2012 federal tax return for free 2. Where to e- file 2012 federal tax return for free Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. Where to e- file 2012 federal tax return for free These rules exclude all or part of the value of certain benefits from the recipient's pay. Where to e- file 2012 federal tax return for free The excluded benefits are not subject to federal income tax withholding. Where to e- file 2012 federal tax return for free Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. Where to e- file 2012 federal tax return for free This section discusses the exclusion rules for the following fringe benefits. Where to e- file 2012 federal tax return for free Accident and health benefits. Where to e- file 2012 federal tax return for free Achievement awards. Where to e- file 2012 federal tax return for free Adoption assistance. Where to e- file 2012 federal tax return for free Athletic facilities. Where to e- file 2012 federal tax return for free De minimis (minimal) benefits. Where to e- file 2012 federal tax return for free Dependent care assistance. Where to e- file 2012 federal tax return for free Educational assistance. Where to e- file 2012 federal tax return for free Employee discounts. Where to e- file 2012 federal tax return for free Employee stock options. Where to e- file 2012 federal tax return for free Employer-provided cell phones. Where to e- file 2012 federal tax return for free Group-term life insurance coverage. Where to e- file 2012 federal tax return for free Health savings accounts (HSAs). Where to e- file 2012 federal tax return for free Lodging on your business premises. Where to e- file 2012 federal tax return for free Meals. Where to e- file 2012 federal tax return for free Moving expense reimbursements. Where to e- file 2012 federal tax return for free No-additional-cost services. Where to e- file 2012 federal tax return for free Retirement planning services. Where to e- file 2012 federal tax return for free Transportation (commuting) benefits. Where to e- file 2012 federal tax return for free Tuition reduction. Where to e- file 2012 federal tax return for free Working condition benefits. Where to e- file 2012 federal tax return for free See Table 2-1, later, for an overview of the employment tax treatment of these benefits. Where to e- file 2012 federal tax return for free Table 2-1. Where to e- file 2012 federal tax return for free Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. Where to e- file 2012 federal tax return for free ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. Where to e- file 2012 federal tax return for free Exempt, except for certain payments to S corporation employees who are 2% shareholders. Where to e- file 2012 federal tax return for free Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). Where to e- file 2012 federal tax return for free Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. Where to e- file 2012 federal tax return for free De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). Where to e- file 2012 federal tax return for free Educational assistance Exempt up to $5,250 of benefits each year. Where to e- file 2012 federal tax return for free (See Educational Assistance , later in this section. Where to e- file 2012 federal tax return for free ) Employee discounts Exempt3 up to certain limits. Where to e- file 2012 federal tax return for free (See Employee Discounts , later in this section. Where to e- file 2012 federal tax return for free ) Employee stock options See Employee Stock Options , later in this section. Where to e- file 2012 federal tax return for free Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. Where to e- file 2012 federal tax return for free Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. Where to e- file 2012 federal tax return for free (Special rules apply to former employees. Where to e- file 2012 federal tax return for free ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. Where to e- file 2012 federal tax return for free (See Health Savings Accounts , later in this section. Where to e- file 2012 federal tax return for free ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. Where to e- file 2012 federal tax return for free Meals Exempt if furnished on your business premises for your convenience. Where to e- file 2012 federal tax return for free Exempt if de minimis. Where to e- file 2012 federal tax return for free Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. Where to e- file 2012 federal tax return for free No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). Where to e- file 2012 federal tax return for free (See Transportation (Commuting) Benefits , later in this section. Where to e- file 2012 federal tax return for free ) Exempt if de minimis. Where to e- file 2012 federal tax return for free Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). Where to e- file 2012 federal tax return for free Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. Where to e- file 2012 federal tax return for free 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. Where to e- file 2012 federal tax return for free 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. Where to e- file 2012 federal tax return for free 4 Exemption does not apply to certain key employees under a plan that favors those employees. Where to e- file 2012 federal tax return for free 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. Where to e- file 2012 federal tax return for free 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. Where to e- file 2012 federal tax return for free 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Where to e- file 2012 federal tax return for free Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Where to e- file 2012 federal tax return for free Also, show it in box 12 with code “C. Where to e- file 2012 federal tax return for free ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Where to e- file 2012 federal tax return for free Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. Where to e- file 2012 federal tax return for free Contributions to the cost of accident or health insurance including qualified long-term care insurance. Where to e- file 2012 federal tax return for free Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. Where to e- file 2012 federal tax return for free Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). Where to e- file 2012 federal tax return for free This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. Where to e- file 2012 federal tax return for free Payments or reimbursements of medical expenses. Where to e- file 2012 federal tax return for free Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). Where to e- file 2012 federal tax return for free The payments must be figured without regard to any period of absence from work. Where to e- file 2012 federal tax return for free Accident or health plan. Where to e- file 2012 federal tax return for free   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. Where to e- file 2012 federal tax return for free The plan may be insured or noninsured and does not need to be in writing. Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For this exclusion, treat the following individuals as employees. Where to e- file 2012 federal tax return for free A current common-law employee. Where to e- file 2012 federal tax return for free A full-time life insurance agent who is a current statutory employee. Where to e- file 2012 federal tax return for free A retired employee. Where to e- file 2012 federal tax return for free A former employee you maintain coverage for based on the employment relationship. Where to e- file 2012 federal tax return for free A widow or widower of an individual who died while an employee. Where to e- file 2012 federal tax return for free A widow or widower of a retired employee. Where to e- file 2012 federal tax return for free For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Where to e- file 2012 federal tax return for free Special rule for certain government plans. Where to e- file 2012 federal tax return for free   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. Where to e- file 2012 federal tax return for free See section 105(j) for details. Where to e- file 2012 federal tax return for free Exception for S corporation shareholders. Where to e- file 2012 federal tax return for free   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Where to e- file 2012 federal tax return for free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Where to e- file 2012 federal tax return for free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Where to e- file 2012 federal tax return for free Exclusion from wages. Where to e- file 2012 federal tax return for free   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. Where to e- file 2012 federal tax return for free Exception for certain long-term care benefits. Where to e- file 2012 federal tax return for free   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. Where to e- file 2012 federal tax return for free This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. Where to e- file 2012 federal tax return for free However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Where to e- file 2012 federal tax return for free S corporation shareholders. Where to e- file 2012 federal tax return for free   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. Where to e- file 2012 federal tax return for free However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Where to e- file 2012 federal tax return for free Exception for highly compensated employees. Where to e- file 2012 federal tax return for free   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. Where to e- file 2012 federal tax return for free However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. Where to e- file 2012 federal tax return for free   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. Where to e- file 2012 federal tax return for free   A highly compensated employee for this exception is any of the following individuals. Where to e- file 2012 federal tax return for free One of the five highest paid officers. Where to e- file 2012 federal tax return for free An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. Where to e- file 2012 federal tax return for free An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). Where to e- file 2012 federal tax return for free   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. Where to e- file 2012 federal tax return for free COBRA premiums. Where to e- file 2012 federal tax return for free   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). Where to e- file 2012 federal tax return for free The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. Where to e- file 2012 federal tax return for free Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. Where to e- file 2012 federal tax return for free The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. Where to e- file 2012 federal tax return for free The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For this exclusion, treat the following individuals as employees. Where to e- file 2012 federal tax return for free A current employee. Where to e- file 2012 federal tax return for free A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. Where to e- file 2012 federal tax return for free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Where to e- file 2012 federal tax return for free Exception for S corporation shareholders. Where to e- file 2012 federal tax return for free   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Where to e- file 2012 federal tax return for free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Where to e- file 2012 federal tax return for free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Where to e- file 2012 federal tax return for free Exclusion from wages. Where to e- file 2012 federal tax return for free   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. Where to e- file 2012 federal tax return for free The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). Where to e- file 2012 federal tax return for free See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. Where to e- file 2012 federal tax return for free    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. Where to e- file 2012 federal tax return for free   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. Where to e- file 2012 federal tax return for free The part of the cost that is more than your allowable deduction (up to the value of the awards). Where to e- file 2012 federal tax return for free The amount by which the value of the awards exceeds your allowable deduction. Where to e- file 2012 federal tax return for free Exclude the remaining value of the awards from the employee's wages. Where to e- file 2012 federal tax return for free Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. Where to e- file 2012 federal tax return for free It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. Where to e- file 2012 federal tax return for free To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. Where to e- file 2012 federal tax return for free It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). Where to e- file 2012 federal tax return for free A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Where to e- file 2012 federal tax return for free You give reasonable notice of the plan to eligible employees. Where to e- file 2012 federal tax return for free Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. Where to e- file 2012 federal tax return for free For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Where to e- file 2012 federal tax return for free The employee was a 5% owner at any time during the year or the preceding year. Where to e- file 2012 federal tax return for free The employee received more than $115,000 in pay for the preceding year. Where to e- file 2012 federal tax return for free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Where to e- file 2012 federal tax return for free You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. Where to e- file 2012 federal tax return for free However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. Where to e- file 2012 federal tax return for free For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. Where to e- file 2012 federal tax return for free You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. Where to e- file 2012 federal tax return for free Use code “T” to identify this amount. Where to e- file 2012 federal tax return for free Exception for S corporation shareholders. Where to e- file 2012 federal tax return for free   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Where to e- file 2012 federal tax return for free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Where to e- file 2012 federal tax return for free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. Where to e- file 2012 federal tax return for free Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. Where to e- file 2012 federal tax return for free For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. Where to e- file 2012 federal tax return for free On-premises facility. Where to e- file 2012 federal tax return for free   The athletic facility must be located on premises you own or lease. Where to e- file 2012 federal tax return for free It does not have to be located on your business premises. Where to e- file 2012 federal tax return for free However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For this exclusion, treat the following individuals as employees. Where to e- file 2012 federal tax return for free A current employee. Where to e- file 2012 federal tax return for free A former employee who retired or left on disability. Where to e- file 2012 federal tax return for free A widow or widower of an individual who died while an employee. Where to e- file 2012 federal tax return for free A widow or widower of a former employee who retired or left on disability. Where to e- file 2012 federal tax return for free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Where to e- file 2012 federal tax return for free A partner who performs services for a partnership. Where to e- file 2012 federal tax return for free De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. Where to e- file 2012 federal tax return for free A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. Where to e- file 2012 federal tax return for free Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. Where to e- file 2012 federal tax return for free Examples of de minimis benefits include the following. Where to e- file 2012 federal tax return for free Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. Where to e- file 2012 federal tax return for free See Employer-Provided Cell Phones , later in this section, for details. Where to e- file 2012 federal tax return for free Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. Where to e- file 2012 federal tax return for free Holiday gifts, other than cash, with a low fair market value. Where to e- file 2012 federal tax return for free Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. Where to e- file 2012 federal tax return for free Meals. Where to e- file 2012 federal tax return for free See Meals , later in this section, for details. Where to e- file 2012 federal tax return for free Occasional parties or picnics for employees and their guests. Where to e- file 2012 federal tax return for free Occasional tickets for theater or sporting events. Where to e- file 2012 federal tax return for free Transportation fare. Where to e- file 2012 federal tax return for free See Transportation (Commuting) Benefits , later in this section, for details. Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For this exclusion, treat any recipient of a de minimis benefit as an employee. Where to e- file 2012 federal tax return for free Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. Where to e- file 2012 federal tax return for free The services must be for a qualifying person's care and must be provided to allow the employee to work. Where to e- file 2012 federal tax return for free These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. Where to e- file 2012 federal tax return for free For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For this exclusion, treat the following individuals as employees. Where to e- file 2012 federal tax return for free A current employee. Where to e- file 2012 federal tax return for free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Where to e- file 2012 federal tax return for free Yourself (if you are a sole proprietor). Where to e- file 2012 federal tax return for free A partner who performs services for a partnership. Where to e- file 2012 federal tax return for free Exclusion from wages. Where to e- file 2012 federal tax return for free   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. Where to e- file 2012 federal tax return for free   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. Where to e- file 2012 federal tax return for free This limit is reduced to $2,500 for married employees filing separate returns. Where to e- file 2012 federal tax return for free   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. Where to e- file 2012 federal tax return for free Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. Where to e- file 2012 federal tax return for free For more information on the earned income limit, see Publication 503. Where to e- file 2012 federal tax return for free Exception for highly compensated employees. Where to e- file 2012 federal tax return for free   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. Where to e- file 2012 federal tax return for free   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Where to e- file 2012 federal tax return for free The employee was a 5% owner at any time during the year or the preceding year. Where to e- file 2012 federal tax return for free The employee received more than $115,000 in pay for the preceding year. Where to e- file 2012 federal tax return for free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Where to e- file 2012 federal tax return for free Form W-2. Where to e- file 2012 federal tax return for free   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. Where to e- file 2012 federal tax return for free Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. Where to e- file 2012 federal tax return for free Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. Where to e- file 2012 federal tax return for free Example. Where to e- file 2012 federal tax return for free   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. Where to e- file 2012 federal tax return for free In addition, it provides occasional on-site dependent care to its employees at no cost. Where to e- file 2012 federal tax return for free Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. Where to e- file 2012 federal tax return for free In addition, Emily used the on-site dependent care several times. Where to e- file 2012 federal tax return for free The fair market value of the on-site care was $700. Where to e- file 2012 federal tax return for free Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). Where to e- file 2012 federal tax return for free Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. Where to e- file 2012 federal tax return for free Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. Where to e- file 2012 federal tax return for free The exclusion also applies to graduate level courses. Where to e- file 2012 federal tax return for free Educational assistance means amounts you pay or incur for your employees' education expenses. Where to e- file 2012 federal tax return for free These expenses generally include the cost of books, equipment, fees, supplies, and tuition. Where to e- file 2012 federal tax return for free However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. Where to e- file 2012 federal tax return for free Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. Where to e- file 2012 federal tax return for free Nor do they include the cost of lodging, meals, or transportation. Where to e- file 2012 federal tax return for free Educational assistance program. Where to e- file 2012 federal tax return for free   An educational assistance program is a separate written plan that provides educational assistance only to your employees. Where to e- file 2012 federal tax return for free The program qualifies only if all of the following tests are met. Where to e- file 2012 federal tax return for free The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. Where to e- file 2012 federal tax return for free To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. Where to e- file 2012 federal tax return for free The program does not provide more than 5% of its benefits during the year for shareholders or owners. Where to e- file 2012 federal tax return for free A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. Where to e- file 2012 federal tax return for free The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. Where to e- file 2012 federal tax return for free You give reasonable notice of the program to eligible employees. Where to e- file 2012 federal tax return for free Your program can cover former employees if their employment is the reason for the coverage. Where to e- file 2012 federal tax return for free   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Where to e- file 2012 federal tax return for free The employee was a 5% owner at any time during the year or the preceding year. Where to e- file 2012 federal tax return for free The employee received more than $115,000 in pay for the preceding year. Where to e- file 2012 federal tax return for free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For this exclusion, treat the following individuals as employees. Where to e- file 2012 federal tax return for free A current employee. Where to e- file 2012 federal tax return for free A former employee who retired, left on disability, or was laid off. Where to e- file 2012 federal tax return for free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Where to e- file 2012 federal tax return for free Yourself (if you are a sole proprietor). Where to e- file 2012 federal tax return for free A partner who performs services for a partnership. Where to e- file 2012 federal tax return for free Exclusion from wages. Where to e- file 2012 federal tax return for free   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. Where to e- file 2012 federal tax return for free Assistance over $5,250. Where to e- file 2012 federal tax return for free   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. Where to e- file 2012 federal tax return for free Working condition benefits may be excluded from wages. Where to e- file 2012 federal tax return for free Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. Where to e- file 2012 federal tax return for free See Working Condition Benefits , later, in this section. Where to e- file 2012 federal tax return for free Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. Where to e- file 2012 federal tax return for free However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For this exclusion, treat the following individuals as employees. Where to e- file 2012 federal tax return for free A current employee. Where to e- file 2012 federal tax return for free A former employee who retired or left on disability. Where to e- file 2012 federal tax return for free A widow or widower of an individual who died while an employee. Where to e- file 2012 federal tax return for free A widow or widower of an employee who retired or left on disability. Where to e- file 2012 federal tax return for free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Where to e- file 2012 federal tax return for free A partner who performs services for a partnership. Where to e- file 2012 federal tax return for free Exclusion from wages. Where to e- file 2012 federal tax return for free   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. Where to e- file 2012 federal tax return for free For a discount on services, 20% of the price you charge nonemployee customers for the service. Where to e- file 2012 federal tax return for free For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. Where to e- file 2012 federal tax return for free   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. Where to e- file 2012 federal tax return for free To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. Where to e- file 2012 federal tax return for free Exception for highly compensated employees. Where to e- file 2012 federal tax return for free   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. Where to e- file 2012 federal tax return for free All of your employees. Where to e- file 2012 federal tax return for free A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. Where to e- file 2012 federal tax return for free   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. Where to e- file 2012 federal tax return for free The employee was a 5% owner at any time during the year or the preceding year. Where to e- file 2012 federal tax return for free The employee received more than $115,000 in pay for the preceding year. Where to e- file 2012 federal tax return for free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Where to e- file 2012 federal tax return for free Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. Where to e- file 2012 federal tax return for free Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. Where to e- file 2012 federal tax return for free The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. Where to e- file 2012 federal tax return for free Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. Where to e- file 2012 federal tax return for free The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. Where to e- file 2012 federal tax return for free However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. Where to e- file 2012 federal tax return for free An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. Where to e- file 2012 federal tax return for free ” See Regulations section 1. Where to e- file 2012 federal tax return for free 83-7. Where to e- file 2012 federal tax return for free An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. Where to e- file 2012 federal tax return for free The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. Where to e- file 2012 federal tax return for free See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. Where to e- file 2012 federal tax return for free You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. Where to e- file 2012 federal tax return for free irs. Where to e- file 2012 federal tax return for free gov/pub/irs-irbs/irb02-19. Where to e- file 2012 federal tax return for free pdf. Where to e- file 2012 federal tax return for free See Revenue Ruling 2004-60, 2004-24 I. Where to e- file 2012 federal tax return for free R. Where to e- file 2012 federal tax return for free B. Where to e- file 2012 federal tax return for free 1051, available at www. Where to e- file 2012 federal tax return for free irs. Where to e- file 2012 federal tax return for free gov/irb/2004-24_IRB/ar13. Where to e- file 2012 federal tax return for free html. Where to e- file 2012 federal tax return for free For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. Where to e- file 2012 federal tax return for free Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. Where to e- file 2012 federal tax return for free Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. Where to e- file 2012 federal tax return for free For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. Where to e- file 2012 federal tax return for free Noncompensatory business purposes. Where to e- file 2012 federal tax return for free   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. Where to e- file 2012 federal tax return for free Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. Where to e- file 2012 federal tax return for free Cell phones provided to promote goodwill, boost morale, or attract prospective employees. Where to e- file 2012 federal tax return for free   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. Where to e- file 2012 federal tax return for free Additional information. Where to e- file 2012 federal tax return for free   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. Where to e- file 2012 federal tax return for free R. Where to e- file 2012 federal tax return for free B. Where to e- file 2012 federal tax return for free 407, available at  www. Where to e- file 2012 federal tax return for free irs. Where to e- file 2012 federal tax return for free gov/irb/2011-38_IRB/ar07. Where to e- file 2012 federal tax return for free html. Where to e- file 2012 federal tax return for free Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. Where to e- file 2012 federal tax return for free It provides a general death benefit that is not included in income. Where to e- file 2012 federal tax return for free You provide it to a group of employees. Where to e- file 2012 federal tax return for free See The 10-employee rule , later. Where to e- file 2012 federal tax return for free It provides an amount of insurance to each employee based on a formula that prevents individual selection. Where to e- file 2012 federal tax return for free This formula must use factors such as the employee's age, years of service, pay, or position. Where to e- file 2012 federal tax return for free You provide it under a policy you directly or indirectly carry. Where to e- file 2012 federal tax return for free Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. Where to e- file 2012 federal tax return for free Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. Where to e- file 2012 federal tax return for free Group-term life insurance does not include the following insurance. Where to e- file 2012 federal tax return for free Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. Where to e- file 2012 federal tax return for free Life insurance on the life of your employee's spouse or dependent. Where to e- file 2012 federal tax return for free However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. Where to e- file 2012 federal tax return for free See De Minimis (Minimal) Benefits , earlier in this section. Where to e- file 2012 federal tax return for free Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. Where to e- file 2012 federal tax return for free See Regulations section 1. Where to e- file 2012 federal tax return for free 79-1 for details. Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For this exclusion, treat the following individuals as employees. Where to e- file 2012 federal tax return for free A current common-law employee. Where to e- file 2012 federal tax return for free A full-time life insurance agent who is a current statutory employee. Where to e- file 2012 federal tax return for free An individual who was formerly your employee under (1) or (2). Where to e- file 2012 federal tax return for free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. Where to e- file 2012 federal tax return for free Exception for S corporation shareholders. Where to e- file 2012 federal tax return for free   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. Where to e- file 2012 federal tax return for free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Where to e- file 2012 federal tax return for free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Where to e- file 2012 federal tax return for free The 10-employee rule. Where to e- file 2012 federal tax return for free   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. Where to e- file 2012 federal tax return for free   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. Where to e- file 2012 federal tax return for free For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. Where to e- file 2012 federal tax return for free However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. Where to e- file 2012 federal tax return for free A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. Where to e- file 2012 federal tax return for free Exceptions. Where to e- file 2012 federal tax return for free   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. Where to e- file 2012 federal tax return for free   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. Where to e- file 2012 federal tax return for free If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. Where to e- file 2012 federal tax return for free You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. Where to e- file 2012 federal tax return for free You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. Where to e- file 2012 federal tax return for free See Regulations section 1. Where to e- file 2012 federal tax return for free 79-1 for details. Where to e- file 2012 federal tax return for free   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. Where to e- file 2012 federal tax return for free You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. Where to e- file 2012 federal tax return for free The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. Where to e- file 2012 federal tax return for free Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. Where to e- file 2012 federal tax return for free   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. Where to e- file 2012 federal tax return for free They were 65 or older. Where to e- file 2012 federal tax return for free They customarily work 20 hours or less a week or 5 months or less in a calendar year. Where to e- file 2012 federal tax return for free They have not been employed for the waiting period given in the policy. Where to e- file 2012 federal tax return for free This waiting period cannot be more than 6 months. Where to e- file 2012 federal tax return for free Exclusion from wages. Where to e- file 2012 federal tax return for free   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. Where to e- file 2012 federal tax return for free You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. Where to e- file 2012 federal tax return for free In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. Where to e- file 2012 federal tax return for free Coverage over the limit. Where to e- file 2012 federal tax return for free   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Where to e- file 2012 federal tax return for free Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. Where to e- file 2012 federal tax return for free Also, show it in box 12 with code “C. Where to e- file 2012 federal tax return for free ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. Where to e- file 2012 federal tax return for free   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. Where to e- file 2012 federal tax return for free For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. Where to e- file 2012 federal tax return for free You must prorate the cost from the table if less than a full month of coverage is involved. Where to e- file 2012 federal tax return for free Table 2-2. Where to e- file 2012 federal tax return for free Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . Where to e- file 2012 federal tax return for free 05 25 through 29 . Where to e- file 2012 federal tax return for free 06 30 through 34 . Where to e- file 2012 federal tax return for free 08 35 through 39 . Where to e- file 2012 federal tax return for free 09 40 through 44 . Where to e- file 2012 federal tax return for free 10 45 through 49 . Where to e- file 2012 federal tax return for free 15 50 through 54 . Where to e- file 2012 federal tax return for free 23 55 through 59 . Where to e- file 2012 federal tax return for free 43 60 through 64 . Where to e- file 2012 federal tax return for free 66 65 through 69 1. Where to e- file 2012 federal tax return for free 27 70 and older 2. Where to e- file 2012 federal tax return for free 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. Where to e- file 2012 federal tax return for free Example. Where to e- file 2012 federal tax return for free Tom's employer provides him with group-term life insurance coverage of $200,000. Where to e- file 2012 federal tax return for free Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. Where to e- file 2012 federal tax return for free Tom's employer must include $170 in his wages. Where to e- file 2012 federal tax return for free The $200,000 of insurance coverage is reduced by $50,000. Where to e- file 2012 federal tax return for free The yearly cost of $150,000 of coverage is $270 ($. Where to e- file 2012 federal tax return for free 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. Where to e- file 2012 federal tax return for free The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. Where to e- file 2012 federal tax return for free The employer also enters $170 in box 12 with code “C. Where to e- file 2012 federal tax return for free ” Coverage for dependents. Where to e- file 2012 federal tax return for free   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. Where to e- file 2012 federal tax return for free If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. Where to e- file 2012 federal tax return for free The cost of the insurance is determined by using Table 2-2. Where to e- file 2012 federal tax return for free Former employees. Where to e- file 2012 federal tax return for free   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. Where to e- file 2012 federal tax return for free You are not required to collect those taxes. Where to e- file 2012 federal tax return for free Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. Where to e- file 2012 federal tax return for free Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. Where to e- file 2012 federal tax return for free ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. Where to e- file 2012 federal tax return for free Exception for key employees. Where to e- file 2012 federal tax return for free   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. Where to e- file 2012 federal tax return for free This exception generally does not apply to church plans. Where to e- file 2012 federal tax return for free When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. Where to e- file 2012 federal tax return for free Include the cost in boxes 1, 3, and 5 of Form W-2. Where to e- file 2012 federal tax return for free However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. Where to e- file 2012 federal tax return for free   For this purpose, the cost of the insurance is the greater of the following amounts. Where to e- file 2012 federal tax return for free The premiums you pay for the employee's insurance. Where to e- file 2012 federal tax return for free See Regulations section 1. Where to e- file 2012 federal tax return for free 79-4T(Q&A 6) for more information. Where to e- file 2012 federal tax return for free The cost you figure using Table 2-2. Where to e- file 2012 federal tax return for free   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. Where to e- file 2012 federal tax return for free See section 416(i) of the Internal Revenue Code for more information. Where to e- file 2012 federal tax return for free An officer having annual pay of more than $170,000. Where to e- file 2012 federal tax return for free An individual who for 2014 was either of the following. Where to e- file 2012 federal tax return for free A 5% owner of your business. Where to e- file 2012 federal tax return for free A 1% owner of your business whose annual pay was more than $150,000. Where to e- file 2012 federal tax return for free   A former employee who was a key employee upon retirement or separation from service is also a key employee. Where to e- file 2012 federal tax return for free   Your plan does not favor key employees as to participation if at least one of the following is true. Where to e- file 2012 federal tax return for free It benefits at least 70% of your employees. Where to e- file 2012 federal tax return for free At least 85% of the participating employees are not key employees. Where to e- file 2012 federal tax return for free It benefits employees who qualify under a set of rules you set up that do not favor key employees. Where to e- file 2012 federal tax return for free   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. Where to e- file 2012 federal tax return for free   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. Where to e- file 2012 federal tax return for free S. Where to e- file 2012 federal tax return for free source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. Where to e- file 2012 federal tax return for free   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. Where to e- file 2012 federal tax return for free Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. Where to e- file 2012 federal tax return for free S corporation shareholders. Where to e- file 2012 federal tax return for free   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. Where to e- file 2012 federal tax return for free When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. Where to e- file 2012 federal tax return for free Include the cost in boxes 1, 3, and 5 of Form W-2. Where to e- file 2012 federal tax return for free However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. Where to e- file 2012 federal tax return for free Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. Where to e- file 2012 federal tax return for free Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. Where to e- file 2012 federal tax return for free Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. Where to e- file 2012 federal tax return for free The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. Where to e- file 2012 federal tax return for free For more information about HSAs, visit the Department of Treasury's website at www. Where to e- file 2012 federal tax return for free treasury. Where to e- file 2012 federal tax return for free gov and enter “HSA” in the search box. Where to e- file 2012 federal tax return for free Eligibility. Where to e- file 2012 federal tax return for free   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. Where to e- file 2012 federal tax return for free For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. Where to e- file 2012 federal tax return for free   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. Where to e- file 2012 federal tax return for free Exceptions. Where to e- file 2012 federal tax return for free   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. Where to e- file 2012 federal tax return for free Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. Where to e- file 2012 federal tax return for free However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. Where to e- file 2012 federal tax return for free For more information, see Other employee health plans in Publication 969. Where to e- file 2012 federal tax return for free Employer contributions. Where to e- file 2012 federal tax return for free   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. Where to e- file 2012 federal tax return for free For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. Where to e- file 2012 federal tax return for free   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. Where to e- file 2012 federal tax return for free For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. Where to e- file 2012 federal tax return for free No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. Where to e- file 2012 federal tax return for free Nondiscrimination rules. Where to e- file 2012 federal tax return for free    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. Where to e- file 2012 federal tax return for free Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. Where to e- file 2012 federal tax return for free   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. Where to e- file 2012 federal tax return for free 4980G-4. Where to e- file 2012 federal tax return for free Exception. Where to e- file 2012 federal tax return for free   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. Where to e- file 2012 federal tax return for free A highly compensated employee for 2014 is an employee who meets either of the following tests. Where to e- file 2012 federal tax return for free The employee was a 5% owner at any time during the year or the preceding year. Where to e- file 2012 federal tax return for free The employee received more than $115,000 in pay for the preceding year. Where to e- file 2012 federal tax return for free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. Where to e- file 2012 federal tax return for free Partnerships and S corporations. Where to e- file 2012 federal tax return for free   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. Where to e- file 2012 federal tax return for free Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. Where to e- file 2012 federal tax return for free Cafeteria plans. Where to e- file 2012 federal tax return for free   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. Where to e- file 2012 federal tax return for free However, cafeteria plan nondiscrimination rules still apply. Where to e- file 2012 federal tax return for free For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. Where to e- file 2012 federal tax return for free Contributions that favor lower-paid employees are not prohibited. Where to e- file 2012 federal tax return for free Reporting requirements. Where to e- file 2012 federal tax return for free   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. Where to e- file 2012 federal tax return for free ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Where to e- file 2012 federal tax return for free Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. Where to e- file 2012 federal tax return for free It is furnished on your business premises. Where to e- file 2012 federal tax return for free It is furnished for your convenience. Where to e- file 2012 federal tax return for free The employee must accept it as a condition of employment. Where to e- file 2012 federal tax return for free Different tests may apply to lodging furnished by educational institutions. Where to e- file 2012 federal tax return for free See section 119(d) of the Internal Revenue Code for details. Where to e- file 2012 federal tax return for free The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. Where to e- file 2012 federal tax return for free On your business premises. Where to e- file 2012 federal tax return for free   For this exclusion, your business premises is generally your employee's place of work. Where to e- file 2012 federal tax return for free For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. Where to e- file 2012 federal tax return for free For your convenience. Where to e- file 2012 federal tax return for free   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. Where to e- file 2012 federal tax return for free You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. Where to e- file 2012 federal tax return for free This is true even if a law or an employment contract provides that the lodging is furnished as pay. Where to e- file 2012 federal tax return for free However, a written statement that the lodging is furnished for your convenience is not sufficient. Where to e- file 2012 federal tax return for free Condition of employment. Where to e- file 2012 federal tax return for free   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. Where to e- file 2012 federal tax return for free Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. Where to e- file 2012 federal tax return for free   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. Where to e- file 2012 federal tax return for free Example. Where to e- file 2012 federal tax return for free A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. Where to e- file 2012 federal tax return for free If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. Where to e- file 2012 federal tax return for free S corporation shareholders. Where to e- file 2012 federal tax return for free   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. Where to e- file 2012 federal tax return for free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Where to e- file 2012 federal tax return for free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Where to e- file 2012 federal tax return for free Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. Where to e- file 2012 federal tax return for free De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. Where to e- file 2012 federal tax return for free The exclusion applies, for example, to the following items. Where to e- file 2012 federal tax return for free Coffee, doughnuts, or soft drinks. Where to e- file 2012 federal tax return for free Occasional meals or meal money provided to enable an employee to work overtime. Where to e- file 2012 federal tax return for free However, the exclusion does not apply to meal money figured on the basis of hours worked. Where to e- file 2012 federal tax return for free Occasional parties or picnics for employees and their guests. Where to e- file 2012 federal tax return for free This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. Where to e- file 2012 federal tax return for free For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. Where to e- file 2012 federal tax return for free If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. Where to e- file 2012 federal tax return for free The 50% limit on deductions for the cost of meals does not apply. Where to e- file 2012 federal tax return for free The deduction limit on meals is discussed in chapter 2 of Publication 535. Where to e- file 2012 federal tax return for free Employee. Where to e- file 2012 federal tax return for free   For this exclusion, treat any recipient of a de minimis meal as
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The Where To E- File 2012 Federal Tax Return For Free

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