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Www freefillableforms com Publication 525 - Main Content Table of Contents Employee CompensationBabysitting. Www freefillableforms com Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Business and Investment IncomeRents From Personal Property Royalties Partnership Income S Corporation Income Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Miscellaneous IncomeBartering Canceled Debts Host or Hostess Life Insurance Proceeds Recoveries Survivor Benefits Unemployment Benefits Welfare and Other Public Assistance Benefits Other Income RepaymentsMethod 1. Www freefillableforms com Method 2. Www freefillableforms com How To Get Tax HelpLow Income Taxpayer Clinics Employee Compensation In most cases, you must include in gross income everything you receive in payment for personal services. Www freefillableforms com In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. Www freefillableforms com You should receive a Form W-2 from your employer or former employer showing the pay you received for your services. Www freefillableforms com Include all your pay on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ, even if you do not receive Form W-2, or you receive a Form W-2 that does not include all pay that should be included on the Form W-2. Www freefillableforms com If you performed services, other than as an independent contractor, and your employer did not withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040. Www freefillableforms com These wages must be included on line 7 of Form 1040. Www freefillableforms com See Form 8919 for more information. Www freefillableforms com Childcare providers. Www freefillableforms com   If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. Www freefillableforms com If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Www freefillableforms com You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it. Www freefillableforms com Babysitting. Www freefillableforms com   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. Www freefillableforms com Bankruptcy. Www freefillableforms com   If you filed for bankruptcy under Chapter 11 of the Bankruptcy Code, you must allocate your wages and withheld income tax. Www freefillableforms com Your W-2 will show your total wages and withheld income tax for the year. Www freefillableforms com On your tax return, you report the wages and withheld income tax for the period before you filed for bankruptcy. Www freefillableforms com Your bankruptcy estate reports the wages and withheld income tax for the period after you filed for bankruptcy. Www freefillableforms com If you receive other information returns (such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income) that report gross income to you, rather than to the bankruptcy estate, you must allocate that income. Www freefillableforms com   The only exception is for purposes of figuring your self-employment tax, if you are self-employed. Www freefillableforms com For that purpose, you must take into account all your self-employment income for the year from services performed both before and after the beginning of the case. Www freefillableforms com   You must file a statement with your income tax return stating you filed a Chapter 11 bankruptcy case. Www freefillableforms com The statement must show the allocation and describe the method used to make the allocation. Www freefillableforms com For a sample of this statement and other information, see Notice 2006-83, 2006-40 I. Www freefillableforms com R. Www freefillableforms com B. Www freefillableforms com 596, available at www. Www freefillableforms com irs. Www freefillableforms com gov/irb/2006-40_IRB/ar12. Www freefillableforms com html. Www freefillableforms com Miscellaneous Compensation This section discusses many types of employee compensation. Www freefillableforms com The subjects are arranged in alphabetical order. Www freefillableforms com Advance commissions and other earnings. Www freefillableforms com   If you receive advance commissions or other amounts for services to be performed in the future and you are a cash-method taxpayer, you must include these amounts in your income in the year you receive them. Www freefillableforms com    If you repay unearned commissions or other amounts in the same year you receive them, reduce the amount included in your income by the repayment. Www freefillableforms com If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), Itemized Deductions, or you may be able to take a credit for that year. Www freefillableforms com See Repayments , later. Www freefillableforms com Allowances and reimbursements. Www freefillableforms com    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Www freefillableforms com If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Www freefillableforms com Back pay awards. Www freefillableforms com   Include in income amounts you are awarded in a settlement or judgment for back pay. Www freefillableforms com These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Www freefillableforms com They should be reported to you by your employer on Form W-2. Www freefillableforms com Bonuses and awards. Www freefillableforms com    Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Www freefillableforms com These include prizes such as vacation trips for meeting sales goals. Www freefillableforms com If the prize or award you receive is goods or services, you must include the fair market value of the goods or services in your income. Www freefillableforms com However, if your employer merely promises to pay you a bonus or award at some future time, it is not taxable until you receive it or it is made available to you. Www freefillableforms com Employee achievement award. Www freefillableforms com   If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. Www freefillableforms com However, the amount you can exclude is limited to your employer's cost and cannot be more than $1,600 ($400 for awards that are not qualified plan awards) for all such awards you receive during the year. Www freefillableforms com Your employer can tell you whether your award is a qualified plan award. Www freefillableforms com Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. Www freefillableforms com   However, the exclusion does not apply to the following awards. Www freefillableforms com A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years. Www freefillableforms com A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year. Www freefillableforms com Example. Www freefillableforms com Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, and two qualified plan awards of a stereo valued at $1,000 and a set of golf clubs valued at $500. Www freefillableforms com Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Www freefillableforms com However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 − $1,600) in his income. Www freefillableforms com Differential wage payments. Www freefillableforms com   This is any payment made by an employer to an individual for any period during which the individual is, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages the individual would have received from the employer for that period. Www freefillableforms com These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Www freefillableforms com The payments are reported as wages on Form W-2. Www freefillableforms com Government cost-of-living allowances. Www freefillableforms com   Most payments received by U. Www freefillableforms com S. Www freefillableforms com Government civilian employees for working abroad are taxable. Www freefillableforms com However, certain cost-of-living allowances are tax free. Www freefillableforms com Publication 516, U. Www freefillableforms com S. Www freefillableforms com Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Www freefillableforms com Nonqualified deferred compensation plans. Www freefillableforms com   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Www freefillableforms com This amount is shown on Form W-2, box 12, using code Y. Www freefillableforms com This amount is not included in your income. Www freefillableforms com   However, if at any time during the tax year, the plan fails to meet certain requirements, or is not operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years are included in your income for the current year. Www freefillableforms com This amount is included in your wages shown on Form W-2, box 1. Www freefillableforms com It is also shown on Form W-2, box 12, using code Z. Www freefillableforms com Nonqualified deferred compensation plans of nonqualified entities. Www freefillableforms com   In most cases, any compensation deferred under a nonqualified deferred compensation plan of a nonqualified entity is included in gross income when there is no substantial risk of forfeiture of the rights to such compensation. Www freefillableforms com For this purpose, a nonqualified entity is: A foreign corporation unless substantially all of its income is: Effectively connected with the conduct of a trade or business in the United States, or Subject to a comprehensive foreign income tax. Www freefillableforms com A partnership unless substantially all of its income is allocated to persons other than: Foreign persons for whom the income is not subject to a comprehensive foreign income tax, and Tax-exempt organizations. Www freefillableforms com Note received for services. Www freefillableforms com   If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. Www freefillableforms com When you later receive payments on the note, a proportionate part of each payment is the recovery of the fair market value that you previously included in your income. Www freefillableforms com Do not include that part again in your income. Www freefillableforms com Include the rest of the payment in your income in the year of payment. Www freefillableforms com   If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensation income when you receive them. Www freefillableforms com Severance pay. Www freefillableforms com   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Www freefillableforms com Accrued leave payment. Www freefillableforms com   If you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2. Www freefillableforms com   If you resign from one agency and are reemployed by another agency, you may have to repay part of your lump-sum annual leave payment to the second agency. Www freefillableforms com You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Www freefillableforms com Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on your return and the wages on your Forms W-2. Www freefillableforms com Outplacement services. Www freefillableforms com   If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and interview techniques), you must include the unreduced amount of the severance pay in income. Www freefillableforms com    However, you can deduct the value of these outplacement services (up to the difference between the severance pay included in income and the amount actually received) as a miscellaneous deduction (subject to the 2%-of-adjusted-gross-income (AGI) limit) on Schedule A (Form 1040). Www freefillableforms com Sick pay. Www freefillableforms com   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Www freefillableforms com In addition, you must include in your income sick pay benefits received from any of the following payers. Www freefillableforms com A welfare fund. Www freefillableforms com A state sickness or disability fund. Www freefillableforms com An association of employers or employees. Www freefillableforms com An insurance company, if your employer paid for the plan. Www freefillableforms com However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Www freefillableforms com For more information, see Other Sickness and Injury Benefits under Sickness and Injury Benefits, later. Www freefillableforms com Social security and Medicare taxes paid by employer. Www freefillableforms com   If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. Www freefillableforms com The payment is also treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Www freefillableforms com However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Www freefillableforms com Stock appreciation rights. Www freefillableforms com   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Www freefillableforms com When you use the right, you are entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. Www freefillableforms com You include the cash payment in income in the year you use the right. Www freefillableforms com Fringe Benefits Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law. Www freefillableforms com Abstaining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules. Www freefillableforms com See Valuation of Fringe Benefits , later in this discussion, for information on how to determine the amount to include in income. Www freefillableforms com Recipient of fringe benefit. Www freefillableforms com   You are the recipient of a fringe benefit if you perform the services for which the fringe benefit is provided. Www freefillableforms com You are considered to be the recipient even if it is given to another person, such as a member of your family. Www freefillableforms com An example is a car your employer gives to your spouse for services you perform. Www freefillableforms com The car is considered to have been provided to you and not to your spouse. Www freefillableforms com   You do not have to be an employee of the provider to be a recipient of a fringe benefit. Www freefillableforms com If you are a partner, director, or independent contractor, you also can be the recipient of a fringe benefit. Www freefillableforms com Provider of benefit. Www freefillableforms com   Your employer or another person for whom you perform services is the provider of a fringe benefit regardless of whether that person actually provides the fringe benefit to you. Www freefillableforms com The provider can be a client or customer of an independent contractor. Www freefillableforms com Accounting period. Www freefillableforms com   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Www freefillableforms com Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Www freefillableforms com The general rule: benefits are reported for a full calendar year (January 1–December 31). Www freefillableforms com The special accounting period rule: benefits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calendar year. Www freefillableforms com For example, each year your employer reports the value of benefits provided during the last 2 months of the prior year and the first 10 months of the current year. Www freefillableforms com Your employer does not have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit. Www freefillableforms com   You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example). Www freefillableforms com Form W-2. Www freefillableforms com   Your employer must include all taxable fringe benefits in box 1 of Form W-2 as wages, tips and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. Www freefillableforms com Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Www freefillableforms com However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must separately report this value to you in box 14 (or on a separate statement). Www freefillableforms com Accident or Health Plan In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income. Www freefillableforms com Benefits you receive from the plan may be taxable, as explained, later, under Sickness and Injury Benefits . Www freefillableforms com For information on the items covered in this section, other than Long-term care coverage , see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Www freefillableforms com Long-term care coverage. Www freefillableforms com   Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Www freefillableforms com However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Www freefillableforms com This amount will be reported as wages in box 1 of your Form W-2. Www freefillableforms com Archer MSA contributions. Www freefillableforms com    Contributions by your employer to your Archer MSA generally are not included in your income. Www freefillableforms com Their total will be reported in box 12 of Form W-2, with code R. Www freefillableforms com You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Www freefillableforms com File the form with your return. Www freefillableforms com Health flexible spending arrangement (health FSA). Www freefillableforms com   If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduction, and reimbursements of your medical care expenses, in most cases, are not included in your income. Www freefillableforms com   Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Www freefillableforms com The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Www freefillableforms com For more information, see Notice 2012-40, 2012-26 I. Www freefillableforms com R. Www freefillableforms com B. Www freefillableforms com 1046, available at www. Www freefillableforms com irs. Www freefillableforms com gov/irb/2012-26 IRB/ar09. Www freefillableforms com html. Www freefillableforms com Health reimbursement arrangement (HRA). Www freefillableforms com   If your employer provides an HRA that qualifies as an accident or health plan, coverage and reimbursements of your medical care expenses generally are not included in your income. Www freefillableforms com Health savings accounts (HSA). Www freefillableforms com   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Www freefillableforms com Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Www freefillableforms com Contributions made by your employer are not included in your income. Www freefillableforms com Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Www freefillableforms com Distributions not used for qualified medical expenses are included in your income. Www freefillableforms com See Publication 969 for the requirements of an HSA. Www freefillableforms com   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Www freefillableforms com The contributions are treated as a distribution of money and are not included in the partner's gross income. Www freefillableforms com Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. Www freefillableforms com In both situations, the partner can deduct the contribution made to the partner's HSA. Www freefillableforms com   Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. Www freefillableforms com The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Www freefillableforms com Qualified HSA funding distribution. Www freefillableforms com   You can make a one-time distribution from your individual retirement account (IRA) to an HSA and you generally will not include any of the distribution in your income. Www freefillableforms com See Publication 590, Individual Retirement Arrangements (IRAs), for the requirements for these qualified HSA funding distributions. Www freefillableforms com Failure to maintain eligibility. Www freefillableforms com   If your HSA received qualified HSA distributions from a health FSA or HRA (discussed earlier) or a qualified HSA funding distribution, you must be an eligible individual for HSA purposes for the period beginning with the month in which the qualified distribution was made and ending on the last day of the 12th month following that month. Www freefillableforms com If you fail to be an eligible individual during this period, other than because of death or disability, you must include the distribution in your income for the tax year in which you become ineligible. Www freefillableforms com This income is also subject to an additional 10% tax. Www freefillableforms com Adoption Assistance You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. Www freefillableforms com See Instructions for Form 8839, Qualified Adoption Expenses, for more information. Www freefillableforms com Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Www freefillableforms com They also are included as social security and Medicare wages in boxes 3 and 5. Www freefillableforms com However, they are not included as wages in box 1. Www freefillableforms com To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Www freefillableforms com File the form with your return. Www freefillableforms com Athletic Facilities If your employer provides you with the free or low-cost use of an employer-operated gym or other athletic club on your employer's premises, the value is not included in your compensation. Www freefillableforms com The gym must be used primarily by employees, their spouses, and their dependent children. Www freefillableforms com If your employer pays for a fitness program provided to you at an off-site resort hotel or athletic club, the value of the program is included in your compensation. Www freefillableforms com De Minimis (Minimal) Benefits If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, the value is not included in your income. Www freefillableforms com In most cases, the value of benefits such as discounts at company cafeterias, cab fares home when working overtime, and company picnics are not included in your income. Www freefillableforms com Also see Employee Discounts , later. Www freefillableforms com Holiday gifts. Www freefillableforms com   If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income. Www freefillableforms com However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved. Www freefillableforms com Dependent Care Benefits If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Www freefillableforms com Dependent care benefits include: Amounts your employer pays directly to either you or your care provider for the care of your qualifying person while you work, and The fair market value of care in a daycare facility provided or sponsored by your employer. Www freefillableforms com The amount you can exclude is limited to the lesser of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Www freefillableforms com Your employer must show the total amount of dependent care benefits provided to you during the year under a qualified plan in box 10 of your Form W-2. Www freefillableforms com Your employer also will include any dependent care benefits over $5,000 in your wages shown in box 1 of your Form W-2. Www freefillableforms com To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. Www freefillableforms com See the Instructions for Form 2441 for more information. Www freefillableforms com Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Www freefillableforms com For more information, see Publication 970. Www freefillableforms com Employee Discounts If your employer sells you property or services at a discount, you may be able to exclude the amount of the discount from your income. Www freefillableforms com The exclusion applies to discounts on property or services offered to customers in the ordinary course of the line of business in which you work. Www freefillableforms com However, it does not apply to discounts on real property or property commonly held for investment (such as stocks or bonds). Www freefillableforms com The exclusion is limited to the price charged nonemployee customers multiplied by the following percentage. Www freefillableforms com For a discount on property, your employer's gross profit percentage (gross profit divided by gross sales) on all property sold during the employer's previous tax year. Www freefillableforms com (Ask your employer for this percentage. Www freefillableforms com ) For a discount on services, 20%. Www freefillableforms com Financial Counseling Fees Financial counseling fees paid for you by your employer are included in your income and must be reported as part of wages. Www freefillableforms com If the fees are for tax or investment counseling, they can be deducted on Schedule A (Form 1040) as a miscellaneous deduction (subject to the 2%-of-AGI limit). Www freefillableforms com Qualified retirement planning services paid for you by your employer may be excluded from your income. Www freefillableforms com For more information, see Retirement Planning Services , later. Www freefillableforms com Group-Term Life Insurance In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) is not included in your income. Www freefillableforms com However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. Www freefillableforms com For exceptions to this rule, see Entire cost excluded , and Entire cost taxed , later. Www freefillableforms com If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. Www freefillableforms com Also, it is shown separately in box 12 with code C. Www freefillableforms com Group-term life insurance. Www freefillableforms com   This insurance is term life insurance protection (insurance for a fixed period of time) that: Provides a general death benefit, Is provided to a group of employees, Is provided under a policy carried by the employer, and Provides an amount of insurance to each employee based on a formula that prevents individual selection. Www freefillableforms com Permanent benefits. Www freefillableforms com   If your group-term life insurance policy includes permanent benefits, such as a paid-up or cash surrender value, you must include in your income, as wages, the cost of the permanent benefits minus the amount you pay for them. Www freefillableforms com Your employer should be able to tell you the amount to include in your income. Www freefillableforms com Accidental death benefits. Www freefillableforms com   Insurance that provides accidental or other death benefits but does not provide general death benefits (travel insurance, for example) is not group-term life insurance. Www freefillableforms com Former employer. Www freefillableforms com   If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2. Www freefillableforms com Also, it is shown separately in box 12 with code C. Www freefillableforms com Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Www freefillableforms com You must pay these taxes with your income tax return. Www freefillableforms com Include them on line 60, Form 1040, and follow the instructions forline 60. Www freefillableforms com For more information, see the Instructions for Form 1040. Www freefillableforms com Two or more employers. Www freefillableforms com   Your exclusion for employer-provided group-term life insurance coverage cannot exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers. Www freefillableforms com If two or more employers provide insurance coverage that totals more than $50,000, the amounts reported as wages on your Forms W-2 will not be correct. Www freefillableforms com You must figure how much to include in your income. Www freefillableforms com Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages reported in box 1, and report the total on your return. Www freefillableforms com Figuring the taxable cost. Www freefillableforms com    Use the following worksheet to figure the amount to include in your income. Www freefillableforms com   If you pay any part of the cost of the insurance, your entire payment reduces, dollar for dollar, the amount you otherwise would include in your income. Www freefillableforms com However, you cannot reduce the amount to include in your income by: Payments for coverage in a different tax year, Payments for coverage through a cafeteria plan, unless the payments are after-tax contributions, or Payments for coverage not taxed to you because of the exceptions discussed later under Entire cost excluded . Www freefillableforms com Worksheet 1. Www freefillableforms com Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Www freefillableforms com Enter the total amount of your insurance coverage from your employer(s) 1. Www freefillableforms com   2. Www freefillableforms com Limit on exclusion for employer-provided group-term life insurance coverage 2. Www freefillableforms com 50,000 3. Www freefillableforms com Subtract line 2 from line 1 3. Www freefillableforms com   4. Www freefillableforms com Divide line 3 by $1,000. Www freefillableforms com Figure to the nearest tenth 4. Www freefillableforms com   5. Www freefillableforms com Go to Table 1. Www freefillableforms com Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Www freefillableforms com   6. Www freefillableforms com Multiply line 4 by line 5 6. Www freefillableforms com     7. Www freefillableforms com Enter the number of full months of coverage at this cost 7. Www freefillableforms com   8. Www freefillableforms com Multiply line 6 by line 7 8. Www freefillableforms com   9. Www freefillableforms com Enter the premiums you paid per month 9. Www freefillableforms com       10. Www freefillableforms com Enter the number of months you paid the  premiums 10. Www freefillableforms com       11. Www freefillableforms com Multiply line 9 by line 10. Www freefillableforms com 11. Www freefillableforms com   12. Www freefillableforms com Subtract line 11 from line 8. Www freefillableforms com Include this amount in your income as wages 12. Www freefillableforms com   Table 1. Www freefillableforms com Cost of $1,000 of Group-Term Life Insurance for One Month   Age Cost     Under 25 $ . Www freefillableforms com 05     25 through 29 . Www freefillableforms com 06     30 through 34 . Www freefillableforms com 08     35 through 39 . Www freefillableforms com 09     40 through 44 . Www freefillableforms com 10     45 through 49 . Www freefillableforms com 15     50 through 54 . Www freefillableforms com 23     55 through 59 . Www freefillableforms com 43     60 through 64 . Www freefillableforms com 66     65 through 69 1. Www freefillableforms com 27     70 and older 2. Www freefillableforms com 06   Example. Www freefillableforms com You are 51 years old and work for employers A and B. Www freefillableforms com Both employers provide group-term life insurance coverage for you for the entire year. Www freefillableforms com Your coverage is $35,000 with employer A and $45,000 with employer B. Www freefillableforms com You pay premiums of $4. Www freefillableforms com 15 a month under the employer B group plan. Www freefillableforms com You figure the amount to include in your income as follows. Www freefillableforms com   Worksheet 1. Www freefillableforms com Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated 1. Www freefillableforms com Enter the total amount of your insurance coverage from your employer(s) 1. Www freefillableforms com 80,000 2. Www freefillableforms com Limit on exclusion for employer-provided group-term life insurance coverage 2. Www freefillableforms com 50,000 3. Www freefillableforms com Subtract line 2 from line 1 3. Www freefillableforms com 30,000 4. Www freefillableforms com Divide line 3 by $1,000. Www freefillableforms com Figure to the nearest tenth 4. Www freefillableforms com 30. Www freefillableforms com 0 5. Www freefillableforms com Go to Table 1. Www freefillableforms com Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Www freefillableforms com . Www freefillableforms com 23 6. Www freefillableforms com Multiply line 4 by line 5 6. Www freefillableforms com 6. Www freefillableforms com 90 7. Www freefillableforms com Enter the number of full months of coverage at this cost. Www freefillableforms com 7. Www freefillableforms com 12 8. Www freefillableforms com Multiply line 6 by line 7 8. Www freefillableforms com 82. Www freefillableforms com 80 9. Www freefillableforms com Enter the premiums you paid per month 9. Www freefillableforms com 4. Www freefillableforms com 15     10. Www freefillableforms com Enter the number of months you paid the premiums 10. Www freefillableforms com 12     11. Www freefillableforms com Multiply line 9 by line 10. Www freefillableforms com 11. Www freefillableforms com 49. Www freefillableforms com 80 12. Www freefillableforms com Subtract line 11 from line 8. Www freefillableforms com Include this amount in your income as wages 12. Www freefillableforms com 33. Www freefillableforms com 00 The total amount to include in income for the cost of excess group-term life insurance is $33. Www freefillableforms com Neither employer provided over $50,000 insurance coverage, so the wages shown on your Forms W-2 do not include any part of that $33. Www freefillableforms com You must add it to the wages shown on your Forms W-2 and include the total on your return. Www freefillableforms com Entire cost excluded. Www freefillableforms com   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Www freefillableforms com You are permanently and totally disabled and have ended your employment. Www freefillableforms com Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Www freefillableforms com A charitable organization to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. Www freefillableforms com (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Www freefillableforms com ) The plan existed on January 1, 1984, and: You retired before January 2, 1984, and were covered by the plan when you retired, or You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983. Www freefillableforms com Entire cost taxed. Www freefillableforms com   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply. Www freefillableforms com The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. Www freefillableforms com You are a key employee and your employer's plan discriminates in favor of key employees. Www freefillableforms com Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Www freefillableforms com The meals are: Furnished on the business premises of your employer, and Furnished for the convenience of your employer. Www freefillableforms com The lodging is: Furnished on the business premises of your employer, Furnished for the convenience of your employer, and A condition of your employment. Www freefillableforms com (You must accept it in order to be able to properly perform your duties. Www freefillableforms com ) You also do not include in your income the value of meals or meal money that qualifies as a de minimis fringe benefit. Www freefillableforms com See De Minimis (Minimal) Benefits , earlier. Www freefillableforms com Faculty lodging. Www freefillableforms com   If you are an employee of an educational institution or an academic health center and you are provided with lodging that does not meet the three conditions given earlier, you still may not have to include the value of the lodging in income. Www freefillableforms com However, the lodging must be qualified campus lodging, and you must pay an adequate rent. Www freefillableforms com Academic health center. Www freefillableforms com   This is an organization that meets the following conditions. Www freefillableforms com Its principal purpose or function is to provide medical or hospital care or medical education or research. Www freefillableforms com It receives payments for graduate medical education under the Social Security Act. Www freefillableforms com One of its principal purposes or functions is to provide and teach basic and clinical medical science and research using its own faculty. Www freefillableforms com Qualified campus lodging. Www freefillableforms com   Qualified campus lodging is lodging furnished to you, your spouse, or one of your dependents by, or on behalf of, the institution or center for use as a home. Www freefillableforms com The lodging must be located on or near a campus of the educational institution or academic health center. Www freefillableforms com Adequate rent. Www freefillableforms com   The amount of rent you pay for the year for qualified campus lodging is considered adequate if it is at least equal to the lesser of: 5% of the appraised value of the lodging, or The average of rentals paid by individuals (other than employees or students) for comparable lodging held for rent by the educational institution. Www freefillableforms com If the amount you pay is less than the lesser of these amounts, you must include the difference in your income. Www freefillableforms com   The lodging must be appraised by an independent appraiser and the appraisal must be reviewed on an annual basis. Www freefillableforms com Example. Www freefillableforms com Carl Johnson, a sociology professor for State University, rents a home from the university that is qualified campus lodging. Www freefillableforms com The house is appraised at $200,000. Www freefillableforms com The average rent paid for comparable university lodging by persons other than employees or students is $14,000 a year. Www freefillableforms com Carl pays an annual rent of $11,000. Www freefillableforms com Carl does not include in his income any rental value because the rent he pays equals at least 5% of the appraised value of the house (5% × $200,000 = $10,000). Www freefillableforms com If Carl paid annual rent of only $8,000, he would have to include $2,000 in his income ($10,000 − $8,000). Www freefillableforms com Moving Expense Reimbursements In most cases, if your employer pays for your moving expenses (either directly or indirectly) and the expenses would have been deductible if you paid them yourself, the value is not included in your income. Www freefillableforms com See Publication 521 for more information. Www freefillableforms com No-Additional-Cost Services The value of services you receive from your employer for free, at cost, or for a reduced price is not included in your income if your employer: Offers the same service for sale to customers in the ordinary course of the line of business in which you work, and Does not have a substantial additional cost (including any sales income given up) to provide you with the service (regardless of what you paid for the service). Www freefillableforms com In most cases, no-additional-cost services are excess capacity services, such as airline, bus, or train tickets, hotel rooms, and telephone services. Www freefillableforms com Example. Www freefillableforms com You are employed as a flight attendant for a company that owns both an airline and a hotel chain. Www freefillableforms com Your employer allows you to take personal flights (if there is an unoccupied seat) and stay in any one of their hotels (if there is an unoccupied room) at no cost to you. Www freefillableforms com The value of the personal flight is not included in your income. Www freefillableforms com However, the value of the hotel room is included in your income because you do not work in the hotel business. Www freefillableforms com Retirement Planning Services If your employer has a qualified retirement plan, qualified retirement planning services provided to you (and your spouse) by your employer are not included in your income. Www freefillableforms com Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. Www freefillableforms com You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Www freefillableforms com Also, see Financial Counseling Fees , earlier. Www freefillableforms com Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Www freefillableforms com A qualified transportation fringe benefit is: Transportation in a commuter highway vehicle (such as a van) between your home and work place, A transit pass, Qualified parking, or Qualified bicycle commuting reimbursement. Www freefillableforms com Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Www freefillableforms com However, cash reimbursement for a transit pass is excludable only if a voucher or similar item that can be exchanged only for a transit pass is not readily available for direct distribution to you. Www freefillableforms com Exclusion limit. Www freefillableforms com   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Www freefillableforms com   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Www freefillableforms com   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Www freefillableforms com   If the benefits have a value that is more than these limits, the excess must be included in your income. Www freefillableforms com You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Www freefillableforms com Commuter highway vehicle. Www freefillableforms com   This is a highway vehicle that seats at least six adults (not including the driver). Www freefillableforms com At least 80% of the vehicle's mileage must reasonably be expected to be: For transporting employees between their homes and work place, and On trips during which employees occupy at least half of the vehicle's adult seating capacity (not including the driver). Www freefillableforms com Transit pass. Www freefillableforms com   This is any pass, token, farecard, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a commuter highway vehicle operated by a person in the business of transporting persons for compensation. Www freefillableforms com Qualified parking. Www freefillableforms com   This is parking provided to an employee at or near the employer's place of business. Www freefillableforms com It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by carpool. Www freefillableforms com It does not include parking at or near the employee's home. Www freefillableforms com Qualified bicycle commuting. Www freefillableforms com   This is reimbursement based on the number of qualified bicycle commuting months for the year. Www freefillableforms com A qualified bicycle commuting month is any month you use the bicycle regularly for a substantial portion of the travel between your home and place of employment and you do not receive any of the other qualified transportation fringe benefits. Www freefillableforms com The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Www freefillableforms com Tuition Reduction You can exclude a qualified tuition reduction from your income. Www freefillableforms com This is the amount of a reduction in tuition: For education (below graduate level) furnished by an educational institution to an employee, former employee who retired or became disabled, or his or her spouse and dependent children. Www freefillableforms com For education furnished to a graduate student at an educational institution if the graduate student is engaged in teaching or research activities for that institution. Www freefillableforms com Representing payment for teaching, research, or other services if you receive the amount under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance program. Www freefillableforms com For more information, see Publication 970. Www freefillableforms com Working Condition Benefits If your employer provides you with a product or service and the cost of it would have been allowable as a business or depreciation deduction if you paid for it yourself, the cost is not included in your income. Www freefillableforms com Example. Www freefillableforms com You work as an engineer and your employer provides you with a subscription to an engineering trade magazine. Www freefillableforms com The cost of the subscription is not included in your income because the cost would have been allowable to you as a business deduction if you had paid for the subscription yourself. Www freefillableforms com Valuation of Fringe Benefits If a fringe benefit is included in your income, the amount included is generally its value determined under the general valuation rule or under the special valuation rules. Www freefillableforms com For an exception, see Group-Term Life Insurance , earlier. Www freefillableforms com General valuation rule. Www freefillableforms com   You must include in your income the amount by which the fair market value of the fringe benefit is more than the sum of: The amount, if any, you paid for the benefit, plus The amount, if any, specifically excluded from your income by law. Www freefillableforms com If you pay fair market value for a fringe benefit, no amount is included in your income. Www freefillableforms com Fair market value. Www freefillableforms com   The fair market value of a fringe benefit is determined by all the facts and circumstances. Www freefillableforms com It is the amount you would have to pay a third party to buy or lease the benefit. Www freefillableforms com This is determined without regard to: Your perceived value of the benefit, or The amount your employer paid for the benefit. Www freefillableforms com Employer-provided vehicles. Www freefillableforms com   If your employer provides a car (or other highway motor vehicle) to you, your personal use of the car is usually a taxable noncash fringe benefit. Www freefillableforms com   Under the general valuation rules, the value of an employer-provided vehicle is the amount you would have to pay a third party to lease the same or a similar vehicle on the same or comparable terms in the same geographic area where you use the vehicle. Www freefillableforms com An example of a comparable lease term is the amount of time the vehicle is available for your use, such as a 1-year period. Www freefillableforms com The value cannot be determined by multiplying a cents-per-mile rate times the number of miles driven unless you prove the vehicle could have been leased on a cents-per-mile basis. Www freefillableforms com Flights on employer-provided aircraft. Www freefillableforms com   Under the general valuation rules, if your flight on an employer-provided piloted aircraft is primarily personal and you control the use of the aircraft for the flight, the value is the amount it would cost to charter the flight from a third party. Www freefillableforms com   If there is more than one employee on the flight, the cost to charter the aircraft must be divided among those employees. Www freefillableforms com The division must be based on all the facts, including which employee or employees control the use of the aircraft. Www freefillableforms com Special valuation rules. Www freefillableforms com   You generally can use a special valuation rule for a fringe benefit only if your employer uses the rule. Www freefillableforms com If your employer uses a special valuation rule, you cannot use a different special rule to value that benefit. Www freefillableforms com You always can use the general valuation rule discussed earlier, based on facts and circumstances, even if your employer uses a special rule. Www freefillableforms com   If you and your employer use a special valuation rule, you must include in your income the amount your employer determines under the special rule minus the sum of: Any amount you repaid your employer, plus Any amount specifically excluded from income by law. Www freefillableforms com The special valuation rules are the following. Www freefillableforms com The automobile lease rule. Www freefillableforms com The vehicle cents-per-mile rule. Www freefillableforms com The commuting rule. Www freefillableforms com The unsafe conditions commuting rule. Www freefillableforms com The employer-operated eating-facility rule. Www freefillableforms com   For more information on these rules, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Www freefillableforms com    For information on the non-commercial flight and commercial flight valuation rules, see sections 1. Www freefillableforms com 61-21(g) and 1. Www freefillableforms com 61-21(h) of the regulations. Www freefillableforms com Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Www freefillableforms com (Your employer can tell you whether your retirement plan is qualified. Www freefillableforms com ) However, the cost of life insurance coverage included in the plan may have to be included. Www freefillableforms com See Group-Term Life Insurance , earlier, under Fringe Benefits. Www freefillableforms com If your employer pays into a nonqualified plan for you, you generally must include the contributions in your income as wages for the tax year in which the contributions are made. Www freefillableforms com However, if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you do not have to include the value of your interest in your income until it is transferable or is no longer subject to a substantial risk of forfeiture. Www freefillableforms com For information on distributions from retirement plans, see Publication 575 (or Publication 721, Tax Guide to U. Www freefillableforms com S. Www freefillableforms com Civil Service Retirement Benefits, if you are a federal employee or retiree). Www freefillableforms com Elective Deferrals If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. Www freefillableforms com The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Www freefillableforms com An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. Www freefillableforms com However, it is included in wages subject to social security and Medicare taxes. Www freefillableforms com Elective deferrals include elective contributions to the following retirement plans. Www freefillableforms com Cash or deferred arrangements (section 401(k) plans). Www freefillableforms com The Thrift Savings Plan for federal employees. Www freefillableforms com Salary reduction simplified employee pension plans (SARSEP). Www freefillableforms com Savings incentive match plans for employees (SIMPLE plans). Www freefillableforms com Tax-sheltered annuity plans (403(b) plans). Www freefillableforms com Section 501(c)(18)(D) plans. Www freefillableforms com (But see Reporting by employer , later. Www freefillableforms com ) Section 457 plans. Www freefillableforms com Qualified automatic contribution arrangements. Www freefillableforms com   Under a qualified automatic contribution arrangement, your employer can treat you as having elected to have a part of your compensation contributed to a section 401(k) plan. Www freefillableforms com You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Www freefillableforms com The notice must explain: Your rights to elect not to have elective contributions made, or to have contributions made at a different percentage, and How contributions made will be invested in the absence of any investment decision by you. Www freefillableforms com   You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions. Www freefillableforms com Overall limit on deferrals. Www freefillableforms com   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3), earlier. Www freefillableforms com The specific plan limits for the plans listed in (4) through (7), earlier, are discussed later. Www freefillableforms com Amounts deferred under specific plan limits are part of the overall limit on deferrals. Www freefillableforms com   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Www freefillableforms com However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Www freefillableforms com Catch-up contributions. Www freefillableforms com   You may be allowed catch-up contributions (additional elective deferrals) if you are age 50 or older by the end of your tax year. Www freefillableforms com For more information about catch-up contributions to 403(b) plans, see chapter 6 of Publication 571, Tax Sheltered Annuity Plans. Www freefillableforms com   For more information about additional elective deferrals to: SEPs (SARSEPs), see Salary Reduction Simplified Employee Pension in chapter 2 of Publication 560, Retirement Plans for Small Business. Www freefillableforms com SIMPLE plans, see How Much Can Be Contributed on Your Behalf? in chapter 3 of Publication 590. Www freefillableforms com Section 457 plans, see Limit for deferrals under section 457 plans , later. Www freefillableforms com Limit for deferrals under SIMPLE plans. Www freefillableforms com   If you are a participant in a SIMPLE plan, you generally should not have deferred more than $12,000 in 2013. Www freefillableforms com Amounts you defer under a SIMPLE plan count toward the overall limit ($17,500 for 2013) and may affect the amount you can defer under other elective deferral plans. Www freefillableforms com Limit for tax-sheltered annuities. Www freefillableforms com   If you are a participant in a tax-sheltered annuity plan (403(b) plan), the limit on elective deferrals for 2013 generally is $17,500. Www freefillableforms com However, if you have at least 15 years of service with a public school system, a hospital, a home health service agency, a health and welfare service agency, a church, or a convention or association of churches (or associated organization), the limit on elective deferrals is increased by the least of the following amounts. Www freefillableforms com $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in earlier years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior tax years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. Www freefillableforms com   If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013. Www freefillableforms com   For more information, see Publication 571. Www freefillableforms com Limit for deferral under section 501(c)(18) plans. Www freefillableforms com   If you are a participant in a section 501(c)(18) plan (a trust created before June 25, 1959, funded only by employee contributions), you should have deferred no more than the lesser of $7,000 or 25% of your compensation. Www freefillableforms com Amounts you defer under a section 501(c)(18) plan count toward the overall limit ($17,500 in 2013) and may affect the amount you can defer under other elective deferral plans. Www freefillableforms com Limit for deferrals under section 457 plans. Www freefillableforms com   If you are a participant in a section 457 plan (a deferred compensation plan for employees of state or local governments or tax-exempt organizations), you should have deferred no more than the lesser of your includible compensation or $17,500 in 2013. Www freefillableforms com However, if you are within 3 years of normal retirement age, you may be allowed an increased limit if the plan allows it. Www freefillableforms com See Increased limit , later. Www freefillableforms com Includible compensation. Www freefillableforms com   This is the pay you received for the year from the employer who maintained the section 457 plan. Www freefillableforms com In most cases, it includes all the following payments. Www freefillableforms com Wages and salaries. Www freefillableforms com Fees for professional services. Www freefillableforms com The value of any employer-provided qualified transportation fringe benefit (defined under Transportation , earlier) that is not included in your income. Www freefillableforms com Other amounts received (cash or noncash) for personal services you performed, including, but not limited to, the following items. Www freefillableforms com Commissions and tips. Www freefillableforms com Fringe benefits. Www freefillableforms com Bonuses. Www freefillableforms com Employer contributions (elective deferrals) to: The section 457 plan. Www freefillableforms com Qualified cash or deferred arrangements (section 401(k) plans) that are not included in your income. Www freefillableforms com A salary reduction simplified employee pension (SARSEP). Www freefillableforms com A tax-sheltered annuity (section 403(b) plan). Www freefillableforms com A savings incentive match plan for employees (SIMPLE plan). Www freefillableforms com A section 125 cafeteria plan. Www freefillableforms com   Instead of using the amounts listed earlier to determine your includible compensation, your employer can use any of the following amounts. Www freefillableforms com Your wages as defined for income tax withholding purposes. Www freefillableforms com Your wages as reported in box 1 of Form W-2. Www freefillableforms com Your wages that are subject to social security withholding (including elective deferrals). Www freefillableforms com Increased limit. Www freefillableforms com   During any, or all, of the last 3 years ending before you reach normal retirement age under the plan, your plan may provide that your limit is the lesser of: Twice the annual limit ($35,000 for 2013), or The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions). Www freefillableforms com Catch-up contributions. Www freefillableforms com   You generally can have additional elective deferrals made to your governmental section 457 plan if: You reached age 50 by the end of the year, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions. Www freefillableforms com If you qualify, your limit can be the lesser of your includible compensation or $17,500, plus $5,500. Www freefillableforms com However, if you are within 3 years of retirement age and your plan provides the increased limit, discussed earlier, that limit may be higher. Www freefillableforms com Designated Roth contributions. Www freefillableforms com   Employers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designated as after-tax Roth contributions. Www freefillableforms com Designated Roth contributions are treated as elective deferrals, except that they are included in income. Www freefillableforms com Your retirement plan must maintain separate accounts and recordkeeping for the designated Roth contributions. Www freefillableforms com   Qualified distributions from a Roth plan are not included in income. Www freefillableforms com In most cases, a distribution made before the end of the 5-tax-year period beginning with the first tax year for which you made a designated Roth contribution to the plan is not a qualified distribution. Www freefillableforms com Reporting by employer. Www freefillableforms com   Your employer generally should not include elective deferrals in your wages in box 1 of Form W-2. Www freefillableforms com Instead, your employer should mark the Retirement plan checkbox in box 13 and show the total amount deferred in box 12. Www freefillableforms com Section 501(c)(18)(D) contributions. Www freefillableforms com   Wages shown in box 1 of your Form W-2 should not have been reduced for contributions you made to a section 501(c)(18)(D) retirement plan. Www freefillableforms com The amount you contributed should be identified with code “H” in box 12. Www freefillableforms com You may deduct the amount deferred subject to the limits that apply. Www freefillableforms com Include your deduction in the total on Form 1040, line 36. Www freefillableforms com Enter the amount and “501(c)(18)(D)” on the dotted line next to line 36. Www freefillableforms com Designated Roth contributions. Www freefillableforms com    These contributions are elective deferrals but are included in your wages in box 1 of Form W-2. Www freefillableforms com Designated Roth contributions to a section 401(k) plan are reported using code AA in box 12, or, for section 403(b) plans, code BB in box 12. Www freefillableforms com Excess deferrals. Www freefillableforms com   If your deferrals exceed the limit, you must notify your plan by the date required by the plan. Www freefillableforms com If the plan permits, the excess amount will be distributed to you. Www freefillableforms com If you participate in more than one plan, you can have the excess paid out of any of the plans that permit these distributions. Www freefillableforms com You must notify each plan by the date required by that plan of the amount to be paid from that particular plan. Www freefillableforms com The plan then must pay you the amount of the excess, along with any income earned on that amount, by April 15 of the following year. Www freefillableforms com   You must include the excess deferral in your income for the year of the deferral unless you have an excess deferral of a designated Roth contribution. Www freefillableforms com File Form 1040 to add the excess deferral amount to your wages on line 7. Www freefillableforms com Do not use Form 1040A or Form 1040EZ to report excess deferral amounts. Www freefillableforms com Excess not distributed. Www freefillableforms com   If you do not take out the excess amount, you cannot include it in the cost of the contract even though you included it in your income. Www freefillableforms com Therefore, you are taxed twice on the excess deferral left in the plan—once when you contribute it, and again when you receive it as a distribution. Www freefillableforms com Excess distributed to you. Www freefillableforms com   If you take out the excess after the year of the deferral and you receive the corrective distribution by April 15 of the following year, do not include it in income again in the year you receive it. Www freefillableforms com If you receive it later, you must include it in income in both the year of the deferral and the year you receive it. Www freefillableforms com Any income on the excess deferral taken out is taxable in the tax year in which you take it out. Www freefillableforms com If you take out part of the excess deferral and the income on it, allocate the distribution proportionately between the excess deferral and the income. Www freefillableforms com    You should receive a Form 1099-R for the year in which the excess deferral is distributed to you. Www freefillableforms com Use the following rules to report a corrective distribution shown on Form 1099-R for 2013. Www freefillableforms com If the distribution was for a 2013 excess deferral, your Form 1099-R should have the code “8” in box 7. Www freefillableforms com Add the excess deferral amount to your wages on your 2013 tax return. Www freefillableforms com If the distribution was for a 2013 excess deferral to a designated Roth account, your Form 1099-R should have code “B” in box 7. Www freefillableforms com Do not add this amount to your wages on your 2013 return. Www freefillableforms com If the distribution was for a 2012 excess deferral, your Form 1099-R should have the code “P” in box 7. Www freefillableforms com If you did not add the excess deferral amount to your wages on your 2012 tax return, you must file an amended return on Form 1040X, Amended U. Www freefillableforms com S. Www freefillableforms com Individual Income Tax Return. Www freefillableforms com If you did not receive the distribution by April 15, 2013, you also must add it to your wages on your 2013 tax return. Www freefillableforms com If the distribution was for the income earned on an excess deferral, your Form 1099-R should have the code “8” in box 7. Www freefillableforms com Add the income amount to your wages on your 2013 income tax return, regardless of when the excess deferral was made. Www freefillableforms com Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. Www freefillableforms com Include the loss as a negative amount on Form 1040, line 21 and identify it as “Loss on Excess Deferral Distribution. Www freefillableforms com ”    Even though a corrective distribution of excess deferrals is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Www freefillableforms com It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Www freefillableforms com Excess Contributions If you are a highly compensated employee, the total of your elective deferrals and other contributions made for you for any year under a section 401(k) plan or SARSEP can be, as a percentage of pay, no more than 125% of the average deferral percentage (ADP) of all eligible non-highly compensated employees. Www freefillableforms com If the total contributed to the plan is more than the amount allowed under the ADP test, the excess contributions must be either distributed to you or recharacterized as after-tax employee contributions by treating them as distributed to you and then contributed by you to the plan. Www freefillableforms com You must include the excess contributions in your income as wages on Form 1040, line 7. Www freefillableforms com You cannot use Form 1040A or Form 1040EZ to report excess contribution amounts. Www freefillableforms com If you receive a corrective distribution of excess contributions (and allocable income), it is included in your income in the year of the distribution. Www freefillableforms com The allocable income is the amount of gain or loss through the end of the plan year for which the contribution was made that is allocable to the excess contributions. Www freefillableforms com You should receive a Form 1099-R for the year the excess contributions are distributed to you. Www freefillableforms com Add the distribution to your wages for that year. Www freefillableforms com Even though a corrective distribution of excess contributions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Www freefillableforms com It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Www freefillableforms com Excess Annual Additions The amount contributed in 2013 to a defined contribution plan is generally limited to the lesser of 100% of your compensation or $51,000. Www freefillableforms com Under certain circumstances, contributions that exceed these limits (excess annual additions) may be corrected by a distribution of your elective deferrals or a return of your after-tax contributions and earnings from these contributions. Www freefillableforms com A corrective payment of excess annual additions consisting of elective deferrals or earnings from your after-tax contributions is fully taxable in the year paid. Www freefillableforms com A corrective payment consisting of your after-tax contributions is not taxable. Www freefillableforms com If you received a corrective payment of excess annual additions, you should receive a separate Form 1099-R for the year of the payment with the code “E” in box 7. Www freefillableforms com Report the total payment shown in box 1 of Form 1099-R on line 16a of Form 1040 or line 12a of Form 1040A. Www freefillableforms com Report the taxable amount shown in box 2a of Form 1099-R on line 16b of Form 1040 or line 12b of Form 1040A. Www freefillableforms com Even though a corrective distribution of excess annual additions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Www freefillableforms com It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Www freefillableforms com Stock Options If you receive an option to buy or sell stock or other property as payment for your services, you may have income when you receive the option (the grant), when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option or property acquired through exercise of the option. Www freefillableforms com The timing, type, and amount of income inclusion depend on whether you receive a nonstatutory stock option or a statutory stock option. Www freefillableforms com Your employer can tell you which kind of option you hold. Www freefillableforms com Nonstatutory Stock Options Grant of option. Www freefillableforms com   If you are granted a nonstatutory stock option, you may have income when you receive the option. Www freefillableforms com The amount of income to include and the time to include it depend on whether the fair market value of the option can be readily determined. Www freefillableforms com The fair market value of an option can be readily determined if it is actively traded on an established market. Www freefillableforms com    The fair market value of an option that is not traded on an established market can be readily determined only if all of the following conditions exist. Www freefillableforms com You can transfer the option. Www freefillableforms com You can exercise the option immediately in full. Www freefillableforms com The option or the property subject to the option is not subject to any condition or restriction (other than a condition to secure payment of the purchase price) that has a significant effect on the fair market value of the option. Www freefillableforms com The fair market value of the option privilege can be readily determined. Www freefillableforms com The option privilege for an option to buy is the opportunity to benefit during the option's exercise period from any increase in the value of property subject to the option without risking any capital. Www freefillableforms com For example, if during the exercise period the fair market value of stock subject to an option is greater than the option's exercise price, a profit may be realized by exercising the option and immediately selling the stock at its higher value. Www freefillableforms com The option privilege for an option to sell is the opportunity to benefit during the exercise period from a decrease in the value of the property subject to the option. Www freefillableforms com If you or a member of your family is an officer, director, or more-than-10% owner of an expatriated corporation, you may owe an excise tax on the value of nonstatutory options and other stock-based compensation from that corporation. Www freefillableforms com For more information on the excise tax, see Internal Revenue Code section 4985. Www freefillableforms com Option with readily determinable value. Www freefillableforms com   If you receive a nonstatutory stock option that has a readily determinable fair market value at the time it is granted to you, the option is treated like other property received as compensation. Www freefillableforms com See Restricted Property , later, for rules on how much income to include and when to include it. Www freefillableforms com However, the rule described in that discussion for choosing to include the value of property in your income for the year of the transfer does not apply to a nonstatutory option. Www freefillableforms com Option without readily determinable value. Www freefillableforms com   If the fair market value of the option is not readily determinable at the time it is granted to you (even if it is determined later), you do not have income until you exercise or transfer the option. Www freefillableforms com    Exercise or transfer of option. Www freefillableforms com   When you exercise a nonstatutory stock option, the amount to include in your income depends on whether the option had a readily determinable value. Www freefillableforms com Option with readily determinable value. Www freefillableforms com   When you exercise a nonstatutory stock option that had a readily determinable value at the time the option was granted, you do not have to include any amount in income. Www freefillableforms com Option without readily determinable value. Www freefillableforms com   When you exercise a nonstatutory stock option that did not have a readily determinable value at the time the option was granted, the restricted prope
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Consumer Protection Offices

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

State Consumer Protection Offices

North Carolina Department of Agriculture and Consumer Services

Website: North Carolina Department of Agriculture and Consumer Services

Address: North Carolina Department of Agriculture and Consumer Services
1001 Mail Service Center
Raleigh, NC 27699-1001

Phone Number: 919-707-3000

North Carolina Office of the Attorney General

Website: North Carolina Office of the Attorney General

Address: North Carolina Office of the Attorney General
Consumer Protection Division
Mail Service Center 9001
Raleigh, NC 27699-9001

Phone Number: 919-716-6000 919-716-0058 (in Spanish)

Toll-free: 1-877-566-7226 (NC)

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Banking Authorities

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

Commissioner of Banks

Website: Commissioner of Banks

Address: Commissioner of Banks
4309 Mail Service Center
Raleigh, NC 27699-4309

Toll-free: 1-888-384-3811

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Insurance Regulators

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

Department of Insurance

Website: Department of Insurance

Address: Department of Insurance
Consumer Services Division
1201 Mail Service Center
Raleigh, NC 27699-1201

Phone Number: 919-807-6750

Toll-free: 1-800-546-5664 (NC)

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Securities Administrators

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

Secretary of State

Website: Secretary of State

Address: Secretary of State
Securities Division
PO Box 29622
Raleigh, NC 27626-0622

Phone Number: 919-733-3924

Toll-free: 1-800-688-4507 (Investor Hotline)

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Utility Commissions

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

Utilities Commission

Website: Utilities Commission

Address: Utilities Commission
Consumer Services
4325 Mail Service Center
Raleigh, NC 27699-4325

Phone Number: 919-733-9277

Toll-free: 1-866-380-9816

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The Www Freefillableforms Com

Www freefillableforms com Publication 502 - Main Content Table of Contents What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Www freefillableforms com How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Spouse Dependent Decedent What Medical Expenses Are Includible?Abortion Acupuncture Alcoholism Ambulance Annual Physical Examination Artificial Limb Artificial Teeth Bandages Birth Control Pills Body Scan Braille Books and Magazines Breast Pumps and Supplies Breast Reconstruction Surgery Capital Expenses Car Chiropractor Christian Science Practitioner Contact Lenses Crutches Dental Treatment Diagnostic Devices Disabled Dependent Care Expenses Drug Addiction Drugs Eye Exam Eyeglasses Eye Surgery Fertility Enhancement Founder's Fee Guide Dog or Other Service Animal Health Institute Health Maintenance Organization (HMO) Hearing Aids Home Care Home Improvements Hospital Services Insurance Premiums Intellectually and Developmentally Disabled, Special Home for Laboratory Fees Lactation Expenses Lead-Based Paint Removal Learning Disability Legal Fees Lifetime Care—Advance Payments Lodging Long-Term Care Meals Medical Conferences Medical Information Plan Medicines Nursing Home Nursing Services Operations Optometrist Organ Donors Osteopath Oxygen Physical Examination Pregnancy Test Kit Prosthesis Psychiatric Care Psychoanalysis Psychologist Special Education Sterilization Stop-Smoking Programs Surgery Telephone Television Therapy Transplants Transportation Trips Tuition Vasectomy Vision Correction Surgery Weight-Loss Program Wheelchair Wig X-ray What Expenses Are Not Includible?Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Controlled Substances Cosmetic Surgery Dancing Lessons Diaper Service Electrolysis or Hair Removal Flexible Spending Account Funeral Expenses Future Medical Care Hair Transplant Health Club Dues Health Coverage Tax Credit Health Savings Accounts Household Help Illegal Operations and Treatments Insurance Premiums Maternity Clothes Medical Savings Account (MSA) Medicines and Drugs From Other Countries Nonprescription Drugs and Medicines Nutritional Supplements Personal Use Items Swimming Lessons Teeth Whitening Veterinary Fees Weight-Loss Program How Do You Treat Reimbursements?Insurance Reimbursement How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Sale of Medical Equipment or Property Damages for Personal Injuries Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons COBRA Premium Assistance Health Coverage Tax CreditWho Can Take This Credit? Qualifying Family Member Qualified Health Insurance Nonqualified Health Insurance Eligible Coverage Month How To Take the Credit How To Get Tax HelpLow Income Taxpayer Clinics What Are Medical Expenses? Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Www freefillableforms com These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. Www freefillableforms com They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Www freefillableforms com Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Www freefillableforms com They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Www freefillableforms com Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Www freefillableforms com Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. Www freefillableforms com What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. Www freefillableforms com (But see Decedent under Whose Medical Expenses Can You Include, for an exception. Www freefillableforms com ) If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Www freefillableforms com If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. Www freefillableforms com If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. Www freefillableforms com If you did not claim a medical or dental expense that would have been deductible in an earlier year, you can file Form 1040X, Amended U. Www freefillableforms com S. Www freefillableforms com Individual Income Tax Return, for the year in which you overlooked the expense. Www freefillableforms com Do not claim the expense on this year's return. Www freefillableforms com Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Www freefillableforms com You cannot include medical expenses that were paid by insurance companies or other sources. Www freefillableforms com This is true whether the payments were made directly to you, to the patient, or to the provider of the medical services. Www freefillableforms com Separate returns. Www freefillableforms com   If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Www freefillableforms com Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise. Www freefillableforms com Community property states. Www freefillableforms com   If you and your spouse live in a community property state and file separate returns or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Www freefillableforms com Generally, each of you should include half the expenses. Www freefillableforms com If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. Www freefillableforms com If you live in a community property state and are not filing a joint return, see Publication 555, Community Property. Www freefillableforms com How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI. Www freefillableforms com But if either you or your spouse was born before January 2, 1949, you can deduct the amount of your medical and dental expenses that is more than 7. Www freefillableforms com 5% of your AGI. Www freefillableforms com Example. Www freefillableforms com You are unmarried and were born after January 2, 1949, and your AGI is $40,000, 10% of which is $4,000. Www freefillableforms com You paid medical expenses of $2,500. Www freefillableforms com You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. Www freefillableforms com Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. Www freefillableforms com There are different rules for decedents and for individuals who are the subject of multiple support agreements. Www freefillableforms com See Support claimed under a multiple support agreement , later under Qualifying Relative. Www freefillableforms com Spouse You can include medical expenses you paid for your spouse. Www freefillableforms com To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses. Www freefillableforms com Example 1. Www freefillableforms com Mary received medical treatment before she married Bill. Www freefillableforms com Bill paid for the treatment after they married. Www freefillableforms com Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. Www freefillableforms com If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. Www freefillableforms com Mary would include the amounts she paid during the year in her separate return. Www freefillableforms com If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. Www freefillableforms com Example 2. Www freefillableforms com This year, John paid medical expenses for his wife Louise, who died last year. Www freefillableforms com John married Belle this year and they file a joint return. Www freefillableforms com Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. Www freefillableforms com Dependent You can include medical expenses you paid for your dependent. Www freefillableforms com For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. Www freefillableforms com A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. Www freefillableforms com The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. Www freefillableforms com S. Www freefillableforms com citizen or national or a resident of the United States, Canada, or Mexico. Www freefillableforms com If your qualifying child was adopted, see Exception for adopted child , later. Www freefillableforms com You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Www freefillableforms com Exception for adopted child. Www freefillableforms com   If you are a U. Www freefillableforms com S. Www freefillableforms com citizen or national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. Www freefillableforms com S. Www freefillableforms com citizen or national, or a resident of the United States, Canada, or Mexico. Www freefillableforms com Qualifying Child A qualifying child is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, other than to claim a refund. Www freefillableforms com Adopted child. Www freefillableforms com   A legally adopted child is treated as your own child. Www freefillableforms com This child includes a child lawfully placed with you for legal adoption. Www freefillableforms com   You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid. Www freefillableforms com   If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. Www freefillableforms com   But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses. Www freefillableforms com    You may be able to take a credit for other expenses related to an adoption. Www freefillableforms com See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Www freefillableforms com Child of divorced or separated parents. Www freefillableforms com   For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. Www freefillableforms com Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child's dependency exemption, if: The child is in the custody of one or both parents for more than half the year, The child receives over half of his or her support during the year from his or her parents, and The child's parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Live apart at all times during the last 6 months of the year. Www freefillableforms com This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). Www freefillableforms com Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, or foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of any of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child, earlier) of any taxpayer for 2013, and For whom you provided over half of the support in 2013. Www freefillableforms com But see Child of divorced or separated parents , earlier, Support claimed under a multiple support agreement, next, and Kidnapped child under Qualifying Relative in Publication 501. Www freefillableforms com Support claimed under a multiple support agreement. Www freefillableforms com   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. Www freefillableforms com A multiple support agreement is used when two or more people provide more than half of a person's support, but no one alone provides more than half. Www freefillableforms com   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. Www freefillableforms com However, you can include the entire unreimbursed amount you paid for medical expenses. Www freefillableforms com Example. Www freefillableforms com You and your three brothers each provide one-fourth of your mother's total support. Www freefillableforms com Under a multiple support agreement, you treat your mother as your dependent. Www freefillableforms com You paid all of her medical expenses. Www freefillableforms com Your brothers repaid you for three-fourths of these expenses. Www freefillableforms com In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. Www freefillableforms com Your brothers cannot include any part of the expenses. Www freefillableforms com However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses. Www freefillableforms com Decedent Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. Www freefillableforms com This includes expenses for the decedent's spouse and dependents as well as for the decedent. Www freefillableforms com The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. Www freefillableforms com The expenses must be paid within the 1-year period beginning with the day after the date of death. Www freefillableforms com If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return. Www freefillableforms com Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. Www freefillableforms com What if the decedent's return had been filed and the medical expenses were not included?   Form 1040X can be filed for the year or years the expenses are treated as paid, unless the period for filing an amended return for that year has passed. Www freefillableforms com Generally, an amended return must be filed within 3 years of the date the original return was filed, or within 2 years from the time the tax was paid, whichever date is later. Www freefillableforms com Example. Www freefillableforms com John properly filed his 2012 income tax return. Www freefillableforms com He died in 2013 with unpaid medical expenses of $1,500 from 2012 and $1,800 in 2013. Www freefillableforms com If the expenses are paid within the 1-year period, his survivor or personal representative can file an amended return for 2012 claiming a deduction based on the $1,500 medical expenses. Www freefillableforms com The $1,800 of medical expenses from 2013 can be included on the decedent's final return for 2013. Www freefillableforms com What if you pay medical expenses of a deceased spouse or dependent?   If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Form 1040 in the year paid, whether they are paid before or after the decedent's death. Www freefillableforms com The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses. Www freefillableforms com What Medical Expenses Are Includible? Following is a list of items that you can include in figuring your medical expense deduction. Www freefillableforms com The items are listed in alphabetical order. Www freefillableforms com This list does not include all possible medical expenses. Www freefillableforms com To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. Www freefillableforms com Abortion You can include in medical expenses the amount you pay for a legal abortion. Www freefillableforms com Acupuncture You can include in medical expenses the amount you pay for acupuncture. Www freefillableforms com Alcoholism You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for alcohol addiction. Www freefillableforms com This includes meals and lodging provided by the center during treatment. Www freefillableforms com You can also include in medical expenses amounts you pay for transportation to and from Alcoholics Anonymous meetings in your community if the attendance is pursuant to medical advice that membership in Alcoholics Anonymous is necessary for the treatment of a disease involving the excessive use of alcoholic liquors. Www freefillableforms com Ambulance You can include in medical expenses amounts you pay for ambulance service. Www freefillableforms com Annual Physical Examination See Physical Examination , later. Www freefillableforms com Artificial Limb You can include in medical expenses the amount you pay for an artificial limb. Www freefillableforms com Artificial Teeth You can include in medical expenses the amount you pay for artificial teeth. Www freefillableforms com Bandages You can include in medical expenses the cost of medical supplies such as bandages. Www freefillableforms com Birth Control Pills You can include in medical expenses the amount you pay for birth control pills prescribed by a doctor. Www freefillableforms com Body Scan You can include in medical expenses the cost of an electronic body scan. Www freefillableforms com Braille Books and Magazines You can include in medical expenses the part of the cost of Braille books and magazines for use by a visually impaired person that is more than the cost of regular printed editions. Www freefillableforms com Breast Pumps and Supplies You can include in medical expenses the cost of breast pumps and supplies that assist lactation. Www freefillableforms com Breast Reconstruction Surgery You can include in medical expenses the amounts you pay for breast reconstruction surgery, as well as breast prosthesis, following a mastectomy for cancer. Www freefillableforms com See Cosmetic Surgery , later. Www freefillableforms com Capital Expenses You can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements, if their main purpose is medical care for you, your spouse, or your dependent. Www freefillableforms com The cost of permanent improvements that increase the value of your property may be partly included as a medical expense. Www freefillableforms com The cost of the improvement is reduced by the increase in the value of your property. Www freefillableforms com The difference is a medical expense. Www freefillableforms com If the value of your property is not increased by the improvement, the entire cost is included as a medical expense. Www freefillableforms com Certain improvements made to accommodate a home to your disabled condition, or that of your spouse or your dependents who live with you, do not usually increase the value of the home and the cost can be included in full as medical expenses. Www freefillableforms com These improvements include, but are not limited to, the following items. Www freefillableforms com Constructing entrance or exit ramps for your home. Www freefillableforms com Widening doorways at entrances or exits to your home. Www freefillableforms com Widening or otherwise modifying hallways and interior doorways. Www freefillableforms com Installing railings, support bars, or other modifications to bathrooms. Www freefillableforms com Lowering or modifying kitchen cabinets and equipment. Www freefillableforms com Moving or modifying electrical outlets and fixtures. Www freefillableforms com Installing porch lifts and other forms of lifts (but elevators generally add value to the house). Www freefillableforms com Modifying fire alarms, smoke detectors, and other warning systems. Www freefillableforms com Modifying stairways. Www freefillableforms com Adding handrails or grab bars anywhere (whether or not in bathrooms). Www freefillableforms com Modifying hardware on doors. Www freefillableforms com Modifying areas in front of entrance and exit doorways. Www freefillableforms com Grading the ground to provide access to the residence. Www freefillableforms com Only reasonable costs to accommodate a home to a disabled condition are considered medical care. Www freefillableforms com Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses. Www freefillableforms com Capital expense worksheet. Www freefillableforms com   Use Worksheet A to figure the amount of your capital expense to include in your medical expenses. Www freefillableforms com Worksheet A. Www freefillableforms com Capital Expense Worksheet Instructions: Use this worksheet to figure the amount, if any, of your medical expenses due to a home improvement. Www freefillableforms com 1. Www freefillableforms com Enter the amount you paid for the home improvement 1. Www freefillableforms com   2. Www freefillableforms com Enter the value of your home immediately after the improvement 2. Www freefillableforms com       3. Www freefillableforms com Enter the value of your home immediately before the improvement 3. Www freefillableforms com       4. Www freefillableforms com Subtract line 3 from line 2. Www freefillableforms com This is the increase in the value of your home due to the improvement 4. Www freefillableforms com     • If line 4 is more than or equal to line 1, you have no medical expenses due to the home improvement; stop here. Www freefillableforms com       • If line 4 is less than line 1, go to line 5. Www freefillableforms com     5. Www freefillableforms com Subtract line 4 from line 1. Www freefillableforms com These are your medical expenses due to the home improvement 5. Www freefillableforms com   Operation and upkeep. Www freefillableforms com   Amounts you pay for operation and upkeep of a capital asset qualify as medical expenses, as long as the main reason for them is medical care. Www freefillableforms com This rule applies even if none or only part of the original cost of the capital asset qualified as a medical care expense. Www freefillableforms com Improvements to property rented by a person with a disability. Www freefillableforms com   Amounts paid to buy and install special plumbing fixtures for a person with a disability, mainly for medical reasons, in a rented house are medical expenses. Www freefillableforms com Example. Www freefillableforms com John has arthritis and a heart condition. Www freefillableforms com He cannot climb stairs or get into a bathtub. Www freefillableforms com On his doctor's advice, he installs a bathroom with a shower stall on the first floor of his two-story rented house. Www freefillableforms com The landlord did not pay any of the cost of buying and installing the special plumbing and did not lower the rent. Www freefillableforms com John can include in medical expenses the entire amount he paid. Www freefillableforms com Car You can include in medical expenses the cost of special hand controls and other special equipment installed in a car for the use of a person with a disability. Www freefillableforms com Special design. Www freefillableforms com   You can include in medical expenses the difference between the cost of a regular car and a car specially designed to hold a wheelchair. Www freefillableforms com Cost of operation. Www freefillableforms com   The includible costs of using a car for medical reasons are explained under Transportation , later. Www freefillableforms com Chiropractor You can include in medical expenses fees you pay to a chiropractor for medical care. Www freefillableforms com Christian Science Practitioner You can include in medical expenses fees you pay to Christian Science practitioners for medical care. Www freefillableforms com Contact Lenses You can include in medical expenses amounts you pay for contact lenses needed for medical reasons. Www freefillableforms com You can also include the cost of equipment and materials required for using contact lenses, such as saline solution and enzyme cleaner. Www freefillableforms com See Eyeglasses and Eye Surgery , later. Www freefillableforms com Crutches You can include in medical expenses the amount you pay to buy or rent crutches. Www freefillableforms com Dental Treatment You can include in medical expenses the amounts you pay for the prevention and alleviation of dental disease. Www freefillableforms com Preventive treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, the application of sealants, and fluoride treatments to prevent tooth decay. Www freefillableforms com Treatment to alleviate dental disease include services of a dentist for procedures such as X-rays, fillings, braces, extractions, dentures, and other dental ailments. Www freefillableforms com But see Teeth Whitening under What Expenses Are Not Includible, later. Www freefillableforms com Diagnostic Devices You can include in medical expenses the cost of devices used in diagnosing and treating illness and disease. Www freefillableforms com Example. Www freefillableforms com You have diabetes and use a blood sugar test kit to monitor your blood sugar level. Www freefillableforms com You can include the cost of the blood sugar test kit in your medical expenses. Www freefillableforms com Disabled Dependent Care Expenses Some disabled dependent care expenses may qualify as either: Medical expenses, or Work-related expenses for purposes of taking a credit for dependent care. Www freefillableforms com (See Publication 503, Child and Dependent Care Expenses. Www freefillableforms com ) You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction. Www freefillableforms com Drug Addiction You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for drug addiction. Www freefillableforms com This includes meals and lodging at the center during treatment. Www freefillableforms com Drugs See Medicines , later. Www freefillableforms com Eye Exam You can include in medical expenses the amount you pay for eye examinations. Www freefillableforms com Eyeglasses You can include in medical expenses amounts you pay for eyeglasses and contact lenses needed for medical reasons. Www freefillableforms com See Contact Lenses , earlier, for more information. Www freefillableforms com Eye Surgery You can include in medical expenses the amount you pay for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy. Www freefillableforms com Fertility Enhancement You can include in medical expenses the cost of the following procedures to overcome an inability to have children. Www freefillableforms com Procedures such as in vitro fertilization (including temporary storage of eggs or sperm). Www freefillableforms com Surgery, including an operation to reverse prior surgery that prevented the person operated on from having children. Www freefillableforms com Founder's Fee See Lifetime Care—Advance Payments , later. Www freefillableforms com Guide Dog or Other Service Animal You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities. Www freefillableforms com In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the health and vitality of the service animal so that it may perform its duties. Www freefillableforms com Health Institute You can include in medical expenses fees you pay for treatment at a health institute only if the treatment is prescribed by a physician and the physician issues a statement that the treatment is necessary to alleviate a physical or mental defect or illness of the individual receiving the treatment. Www freefillableforms com Health Maintenance Organization (HMO) You can include in medical expenses amounts you pay to entitle you, your spouse, or a dependent to receive medical care from an HMO. Www freefillableforms com These amounts are treated as medical insurance premiums. Www freefillableforms com See Insurance Premiums , later. Www freefillableforms com Hearing Aids You can include in medical expenses the cost of a hearing aid and batteries, repairs, and maintenance needed to operate it. Www freefillableforms com Home Care See Nursing Services , later. Www freefillableforms com Home Improvements See Capital Expenses , earlier. Www freefillableforms com Hospital Services You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. Www freefillableforms com This includes amounts paid for meals and lodging. Www freefillableforms com Also see Lodging , later. Www freefillableforms com Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Www freefillableforms com Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). Www freefillableforms com See Qualified Long-Term Care Insurance Contracts under Long-Term Care, later. Www freefillableforms com If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. Www freefillableforms com The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. Www freefillableforms com Health coverage tax credit. Www freefillableforms com   If, during 2013, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient, you must complete Form 8885 before completing Schedule A. Www freefillableforms com When figuring the amount of insurance premiums you can deduct on Schedule A, do not include: Any amounts you included on Form 8885, Any qualified health insurance premiums you paid to “U. Www freefillableforms com S. Www freefillableforms com Treasury–HCTC,” or Any health coverage tax credit advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Www freefillableforms com Employer-Sponsored Health Insurance Plan Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included on your Form W-2, Wage and Tax Statement. Www freefillableforms com Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included on your Form W-2. Www freefillableforms com Example. Www freefillableforms com You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Www freefillableforms com Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Www freefillableforms com Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money. Www freefillableforms com Long-term care services. Www freefillableforms com   Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. Www freefillableforms com This amount will be reported as wages on your Form W-2. Www freefillableforms com Retired public safety officers. Www freefillableforms com   If you are a retired public safety officer, do not include as medical expenses any health or long-term care insurance premiums that you elected to have paid with tax-free distributions from a retirement plan. Www freefillableforms com This applies only to distributions that would otherwise be included in income. Www freefillableforms com Health reimbursement arrangement (HRA). Www freefillableforms com   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. Www freefillableforms com This is because an HRA is funded solely by the employer. Www freefillableforms com Medicare A If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. Www freefillableforms com The payroll tax paid for Medicare A is not a medical expense. Www freefillableforms com If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. Www freefillableforms com In this situation you can include the premiums you paid for Medicare A as a medical expense. Www freefillableforms com Medicare B Medicare B is a supplemental medical insurance. Www freefillableforms com Premiums you pay for Medicare B are a medical expense. Www freefillableforms com Check the information you received from the Social Security Administration to find out your premium. Www freefillableforms com Medicare D Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. Www freefillableforms com You can include as a medical expense premiums you pay for Medicare D. Www freefillableforms com Prepaid Insurance Premiums Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). Www freefillableforms com Unused Sick Leave Used To Pay Premiums You must include in gross income cash payments you receive at the time of retirement for unused sick leave. Www freefillableforms com You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer's health plan after you retire. Www freefillableforms com You can include this cost of continuing participation in the health plan as a medical expense. Www freefillableforms com If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. Www freefillableforms com You cannot include this cost of continuing participation in that health plan as a medical expense. Www freefillableforms com Insurance Premiums You Cannot Include You cannot include premiums you pay for: Life insurance policies, Policies providing payment for loss of earnings, Policies for loss of life, limb, sight, etc. Www freefillableforms com , Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury, The part of your car insurance that provides medical insurance coverage for all persons injured in or by your car because the part of the premium providing insurance for you, your spouse, and your dependents is not stated separately from the part of the premium providing insurance for medical care for others, or Health or long-term care insurance if you elected to pay these premiums with tax-free distributions from a retirement plan made directly to the insurance provider and these distributions would otherwise have been included in income. Www freefillableforms com Taxes imposed by any governmental unit, such as Medicare taxes, are not insurance premiums. Www freefillableforms com Coverage for nondependents. Www freefillableforms com   Generally, you cannot deduct any additional premium you pay as the result of including on your policy someone who is not your spouse or dependent, even if that person is your child under age 27. Www freefillableforms com However, you can deduct the additional premium if that person is: Your child whom you do not claim as a dependent because of the rules for children of divorced or separated parents, Any person you could have claimed as a dependent on your return except that person received $3,900 or more of gross income or filed a joint return, or Any person you could have claimed as a dependent except that you, or your spouse if filing jointly, can be claimed as a dependent on someone else's 2013 return. Www freefillableforms com  Also, if you had family coverage when you added this individual to your policy and your premiums did not increase, you can enter on Schedule A (Form 1040) the full amount of your medical and dental insurance premiums. Www freefillableforms com Intellectually and Developmentally Disabled, Special Home for You can include in medical expenses the cost of keeping a person who is intellectually and developmentally disabled in a special home, not the home of a relative, on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living. Www freefillableforms com Laboratory Fees You can include in medical expenses the amounts you pay for laboratory fees that are part of medical care. Www freefillableforms com Lactation Expenses See Breast Pumps and Supplies , earlier. Www freefillableforms com Lead-Based Paint Removal You can include in medical expenses the cost of removing lead-based paints from surfaces in your home to prevent a child who has or had lead poisoning from eating the paint. Www freefillableforms com These surfaces must be in poor repair (peeling or cracking) or within the child's reach. Www freefillableforms com The cost of repainting the scraped area is not a medical expense. Www freefillableforms com If, instead of removing the paint, you cover the area with wallboard or paneling, treat these items as capital expenses. Www freefillableforms com See Capital Expenses , earlier. Www freefillableforms com Do not include the cost of painting the wallboard as a medical expense. Www freefillableforms com Learning Disability See Special Education , later. Www freefillableforms com Legal Fees You can include in medical expenses legal fees you paid that are necessary to authorize treatment for mental illness. Www freefillableforms com However, you cannot include in medical expenses fees for the management of a guardianship estate, fees for conducting the affairs of the person being treated, or other fees that are not necessary for medical care. Www freefillableforms com Lifetime Care—Advance Payments You can include in medical expenses a part of a life-care fee or “founder's fee” you pay either monthly or as a lump sum under an agreement with a retirement home. Www freefillableforms com The part of the payment you include is the amount properly allocable to medical care. Www freefillableforms com The agreement must require that you pay a specific fee as a condition for the home's promise to provide lifetime care that includes medical care. Www freefillableforms com You can use a statement from the retirement home to prove the amount properly allocable to medical care. Www freefillableforms com The statement must be based either on the home's prior experience or on information from a comparable home. Www freefillableforms com Dependents with disabilities. Www freefillableforms com   You can include in medical expenses advance payments to a private institution for lifetime care, treatment, and training of your physically or mentally impaired child upon your death or when you become unable to provide care. Www freefillableforms com The payments must be a condition for the institution's future acceptance of your child and must not be refundable. Www freefillableforms com Payments for future medical care. Www freefillableforms com   Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. Www freefillableforms com This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care of the type described earlier. Www freefillableforms com Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. Www freefillableforms com See Nursing Home , later. Www freefillableforms com You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. Www freefillableforms com You can include the cost of such lodging while away from home if all of the following requirements are met. Www freefillableforms com The lodging is primarily for and essential to medical care. Www freefillableforms com The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. Www freefillableforms com The lodging is not lavish or extravagant under the circumstances. Www freefillableforms com There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Www freefillableforms com The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. Www freefillableforms com You can include lodging for a person traveling with the person receiving the medical care. Www freefillableforms com For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Www freefillableforms com Meals are not included. Www freefillableforms com Do not include the cost of lodging while away from home for medical treatment if that treatment is not received from a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital or if that lodging is not primarily for or essential to the medical care received. Www freefillableforms com Long-Term Care You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts. Www freefillableforms com Qualified Long-Term Care Services Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are: Required by a chronically ill individual, and Provided pursuant to a plan of care prescribed by a licensed health care practitioner. Www freefillableforms com Chronically ill individual. Www freefillableforms com   An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions. Www freefillableforms com He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Www freefillableforms com Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Www freefillableforms com He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Www freefillableforms com Maintenance and personal care services. Www freefillableforms com    Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment). Www freefillableforms com Qualified Long-Term Care Insurance Contracts A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. Www freefillableforms com The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses. Www freefillableforms com The amount of qualified long-term care premiums you can include is limited. Www freefillableforms com You can include the following as medical expenses on Schedule A (Form 1040). Www freefillableforms com Qualified long-term care premiums up to the following amounts. Www freefillableforms com Age 40 or under – $360. Www freefillableforms com Age 41 to 50 – $680. Www freefillableforms com Age 51 to 60 – $1,360. Www freefillableforms com Age 61 to 70 – $3,640. Www freefillableforms com Age 71 or over – $4,550. Www freefillableforms com Unreimbursed expenses for qualified long-term care services. Www freefillableforms com Note. Www freefillableforms com The limit on premiums is for each person. Www freefillableforms com Also, if you are an eligible retired public safety officer, you cannot include premiums for long-term care insurance if you elected to pay these premiums with tax-free distributions from a qualified retirement plan made directly to the insurance provider and these distributions would otherwise have been included in your income. Www freefillableforms com Meals You can include in medical expenses the cost of meals at a hospital or similar institution if a principal reason for being there is to get medical care. Www freefillableforms com You cannot include in medical expenses the cost of meals that are not part of inpatient care. Www freefillableforms com Also see Weight-Loss Program and Nutritional Supplements , later. Www freefillableforms com Medical Conferences You can include in medical expenses amounts paid for admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent. Www freefillableforms com The costs of the medical conference must be primarily for and necessary to the medical care of you, your spouse, or your dependent. Www freefillableforms com The majority of the time spent at the conference must be spent attending sessions on medical information. Www freefillableforms com The cost of meals and lodging while attending the conference is not deductible as a medical expense. Www freefillableforms com Medical Information Plan You can include in medical expenses amounts paid to a plan that keeps medical information in a computer data bank and retrieves and furnishes the information upon request to an attending physician. Www freefillableforms com Medicines You can include in medical expenses amounts you pay for prescribed medicines and drugs. Www freefillableforms com A prescribed drug is one that requires a prescription by a doctor for its use by an individual. Www freefillableforms com You can also include amounts you pay for insulin. Www freefillableforms com Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Www freefillableforms com Imported medicines and drugs. Www freefillableforms com   If you imported medicines or drugs from other countries, see Medicines and Drugs From Other Countries , under What Expenses Are Not Includible, later. Www freefillableforms com Nursing Home You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. Www freefillableforms com This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Www freefillableforms com Do not include the cost of meals and lodging if the reason for being in the home is personal. Www freefillableforms com You can, however, include in medical expenses the part of the cost that is for medical or nursing care. Www freefillableforms com Nursing Services You can include in medical expenses wages and other amounts you pay for nursing services. Www freefillableforms com The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. Www freefillableforms com This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. Www freefillableforms com These services can be provided in your home or another care facility. Www freefillableforms com Generally, only the amount spent for nursing services is a medical expense. Www freefillableforms com If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services. Www freefillableforms com For example, because of your medical condition you pay a visiting nurse $300 per week for medical and household services. Www freefillableforms com She spends 10% of her time doing household services such as washing dishes and laundry. Www freefillableforms com You can include only $270 per week as medical expenses. Www freefillableforms com The $30 (10% × $300) allocated to household services cannot be included. Www freefillableforms com However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Www freefillableforms com See Maintenance and personal care services under Long-Term Care, earlier. Www freefillableforms com Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. Www freefillableforms com See Publication 503. Www freefillableforms com You can also include in medical expenses part of the amount you pay for that attendant's meals. Www freefillableforms com Divide the food expense among the household members to find the cost of the attendant's food. Www freefillableforms com Then divide that cost in the same manner as in the preceding paragraph. Www freefillableforms com If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. Www freefillableforms com This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant. Www freefillableforms com Employment taxes. Www freefillableforms com   You can include as a medical expense social security tax, FUTA, Medicare tax, and state employment taxes you pay for an attendant who provides medical care. Www freefillableforms com If the attendant also provides personal and household services, you can include as a medical expense only the amount of employment taxes paid for medical services as explained earlier. Www freefillableforms com For information on employment tax responsibilities of household employers, see Publication 926, Household Employer's Tax Guide. Www freefillableforms com Operations You can include in medical expenses amounts you pay for legal operations that are not for unnecessary cosmetic surgery. Www freefillableforms com See Cosmetic Surgery under What Expenses Are Not Includible, later. Www freefillableforms com Optometrist See Eyeglasses , earlier. Www freefillableforms com Organ Donors See Transplants , later. Www freefillableforms com Osteopath You can include in medical expenses amounts you pay to an osteopath for medical care. Www freefillableforms com Oxygen You can include in medical expenses amounts you pay for oxygen and oxygen equipment to relieve breathing problems caused by a medical condition. Www freefillableforms com Physical Examination You can include in medical expenses the amount you pay for an annual physical examination and diagnostic tests by a physician. Www freefillableforms com You do not have to be ill at the time of the examination. Www freefillableforms com Pregnancy Test Kit You can include in medical expenses the amount you pay to purchase a pregnancy test kit to determine if you are pregnant. Www freefillableforms com Prosthesis See Artificial Limb and Breast Reconstruction Surgery , earlier. Www freefillableforms com Psychiatric Care You can include in medical expenses amounts you pay for psychiatric care. Www freefillableforms com This includes the cost of supporting a mentally ill dependent at a specially equipped medical center where the dependent receives medical care. Www freefillableforms com See Psychoanalysis, next, and Transportation , later. Www freefillableforms com Psychoanalysis You can include in medical expenses payments for psychoanalysis. Www freefillableforms com However, you cannot include payments for psychoanalysis that is part of required training to be a psychoanalyst. Www freefillableforms com Psychologist You can include in medical expenses amounts you pay to a psychologist for medical care. Www freefillableforms com Special Education You can include in medical expenses fees you pay on a doctor's recommendation for a child's tutoring by a teacher who is specially trained and qualified to work with children who have learning disabilities caused by mental or physical impairments, including nervous system disorders. Www freefillableforms com You can include in medical expenses the cost (tuition, meals, and lodging) of attending a school that furnishes special education to help a child to overcome learning disabilities. Www freefillableforms com A doctor must recommend that the child attend the school. Www freefillableforms com Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided. Www freefillableforms com Special education includes: Teaching Braille to a visually impaired person, Teaching lip reading to a hearing disabled person, or Giving remedial language training to correct a condition caused by a birth defect. Www freefillableforms com Sterilization You can include in medical expenses the cost of a legal sterilization (a legally performed operation to make a person unable to have children). Www freefillableforms com Also see Vasectomy , later. Www freefillableforms com Stop-Smoking Programs You can include in medical expenses amounts you pay for a program to stop smoking. Www freefillableforms com However, you cannot include in medical expenses amounts you pay for drugs that do not require a prescription, such as nicotine gum or patches, that are designed to help stop smoking. Www freefillableforms com Surgery See Operations , earlier. Www freefillableforms com Telephone You can include in medical expenses the cost of special telephone equipment that lets a person who is deaf, hard of hearing or has a speech disability communicate over a regular telephone. Www freefillableforms com This includes teletypewriter (TTY) and telecommunications device for the deaf (TDD) equipment. Www freefillableforms com You can also include the cost of repairing the equipment. Www freefillableforms com Television You can include in medical expenses the cost of equipment that displays the audio part of television programs as subtitles for persons with a hearing disability. Www freefillableforms com This may be the cost of an adapter that attaches to a regular set. Www freefillableforms com It also may be the part of the cost of a specially equipped television that exceeds the cost of the same model regular television set. Www freefillableforms com Therapy You can include in medical expenses amounts you pay for therapy received as medical treatment. Www freefillableforms com Transplants You can include in medical expenses amounts paid for medical care you receive because you are a donor or a possible donor of a kidney or other organ. Www freefillableforms com This includes transportation. Www freefillableforms com You can include any expenses you pay for the medical care of a donor in connection with the donating of an organ. Www freefillableforms com This includes transportation. Www freefillableforms com Transportation You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Www freefillableforms com You can include:    Bus, taxi, train, or plane fares or ambulance service, Transportation expenses of a parent who must go with a child who needs medical care, Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment. Www freefillableforms com Car expenses. Www freefillableforms com   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use a car for medical reasons. Www freefillableforms com You cannot include depreciation, insurance, general repair, or maintenance expenses. Www freefillableforms com   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents a mile. Www freefillableforms com    You can also include parking fees and tolls. Www freefillableforms com You can add these fees and tolls to your medical expenses whether you use actual expenses or the standard mileage rate. Www freefillableforms com Example. Www freefillableforms com In 2013, Bill Jones drove 2,800 miles for medical reasons. Www freefillableforms com He spent $500 for gas, $30 for oil, and $100 for tolls and parking. Www freefillableforms com He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. Www freefillableforms com He figures the actual expenses first. Www freefillableforms com He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. Www freefillableforms com He then figures the standard mileage amount. Www freefillableforms com He multiplies 2,800 miles by 24 cents a mile for a total of $672. Www freefillableforms com He then adds the $100 tolls and parking for a total of $772. Www freefillableforms com Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. Www freefillableforms com Transportation expenses you cannot include. Www freefillableforms com    You cannot include in medical expenses the cost of transportation in the following situations. Www freefillableforms com Going to and from work, even if your condition requires an unusual means of transportation. Www freefillableforms com Travel for purely personal reasons to another city for an operation or other medical care. Www freefillableforms com Travel that is merely for the general improvement of one's health. Www freefillableforms com The costs of operating a specially equipped car for other than medical reasons. Www freefillableforms com Trips You can include in medical expenses amounts you pay for transportation to another city if the trip is primarily for, and essential to, receiving medical services. Www freefillableforms com You may be able to include up to $50 for each night for each person. Www freefillableforms com You can include lodging for a person traveling with the person receiving the medical care. Www freefillableforms com For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Www freefillableforms com Meals are not included. Www freefillableforms com See Lodging , earlier. Www freefillableforms com You cannot include in medical expenses a trip or vacation taken merely for a change in environment, improvement of morale, or general improvement of health, even if the trip is made on the advice of a doctor. Www freefillableforms com However, see Medical Conferences , earlier. Www freefillableforms com Tuition Under special circumstances, you can include charges for tuition in medical expenses. Www freefillableforms com See Special Education , earlier. Www freefillableforms com You can include charges for a health plan included in a lump-sum tuition fee if the charges are separately stated or can easily be obtained from the school. Www freefillableforms com Vasectomy You can include in medical expenses the amount you pay for a vasectomy. Www freefillableforms com Vision Correction Surgery See Eye Surgery , earlier. Www freefillableforms com Weight-Loss Program You can include in medical expenses amounts you pay to lose weight if it is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). Www freefillableforms com This includes fees you pay for membership in a weight reduction group as well as fees for attendance at periodic meetings. Www freefillableforms com You cannot include membership dues in a gym, health club, or spa as medical expenses, but you can include separate fees charged there for weight loss activities. Www freefillableforms com You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. Www freefillableforms com You can include the cost of special food in medical expenses only if: The food does not satisfy normal nutritional needs, The food alleviates or treats an illness, and The need for the food is substantiated by a physician. Www freefillableforms com The amount you can include in medical expenses is limited to the amount by which the cost of the special food exceeds the cost of a normal diet. Www freefillableforms com See also Weight-Loss Program under What Expenses Are Not Includible, later. Www freefillableforms com Wheelchair You can include in medical expenses amounts you pay for a wheelchair used mainly for the relief of sickness or disability, and not just to provide transportation to and from work. Www freefillableforms com The cost of operating and maintaining the wheelchair is also a medical expense. Www freefillableforms com Wig You can include in medical expenses the cost of a wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease. Www freefillableforms com X-ray You can include in medical expenses amounts you pay for X-rays for medical reasons. Www freefillableforms com What Expenses Are Not Includible? Following is a list of some items that you cannot include in figuring your medical expense deduction. Www freefillableforms com The items are listed in alphabetical order. Www freefillableforms com Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby You cannot include in medical expenses amounts you pay for the care of children, even if the expenses enable you, your spouse, or your dependent to get medical or dental treatment. Www freefillableforms com Also, any expense allowed as a childcare credit cannot be treated as an expense paid for medical care. Www freefillableforms com Controlled Substances You cannot include in medical expenses amounts you pay for controlled substances (such as marijuana, laetrile, etc. Www freefillableforms com ), even if such substances are legalized by state law. Www freefillableforms com Such substances are not legal under federal law and cannot be included in medical expenses. Www freefillableforms com Cosmetic Surgery Generally, you cannot include in medical expenses the amount you pay for unnecessary cosmetic surgery. Www freefillableforms com This includes any procedure that is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. Www freefillableforms com You generally cannot include in medical expenses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuction. Www freefillableforms com You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. Www freefillableforms com Example. Www freefillableforms com An individual undergoes surgery that removes a breast as part of treatment for cancer. Www freefillableforms com She pays a surgeon to reconstruct the breast. Www freefillableforms com The surgery to reconstruct the breast corrects a deformity directly related to the disease. Www freefillableforms com The cost of the surgery is includible in her medical expenses. Www freefillableforms com Dancing Lessons You cannot include in medical expenses the cost of dancing lessons, swimming lessons, etc. Www freefillableforms com , even if they are recommended by a doctor, if they are only for the improvement of general health. Www freefillableforms com Diaper Service You cannot include in medical expenses the amount you pay for diapers or diaper services, unless they are needed to relieve the effects of a particular disease. Www freefillableforms com Electrolysis or Hair Removal See Cosmetic Surgery , earlier. Www freefillableforms com Flexible Spending Account You cannot include in medical expenses amounts for which you are fully reimbursed by your flexible spending account if you contribute a part of your income on a pre-tax basis to pay for the qualified benefit. Www freefillableforms com Funeral Expenses You cannot include in medical expenses amounts you pay for funerals. Www freefillableforms com Future Medical Care Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. Www freefillableforms com This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care or long-term care of the type described at Lifetime Care—Advance Payments or Long-Term Care, earlier under What Medical Expenses Are Includible. Www freefillableforms com Hair Transplant See Cosmetic Surgery , earlier. Www freefillableforms com Health Club Dues You cannot include in medical expenses health club dues or amounts paid to improve one's general health or to relieve physical or mental discomfort not related to a particular medical condition. Www freefillableforms com You cannot include in medical expenses the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Www freefillableforms com Health Coverage Tax Credit You cannot include in medical expenses amounts you pay for health insurance that you use in figuring your health coverage tax credit. Www freefillableforms com For more information, see Health Coverage Tax Credit , later. Www freefillableforms com Health Savings Accounts You cannot include in medical expenses any payment or distribution for medical expenses out of a health savings account. Www freefillableforms com Contributions to health savings accounts are deducted separately. Www freefillableforms com See Publication 969. Www freefillableforms com Household Help You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. Www freefillableforms com This is a personal expense that is not deductible. Www freefillableforms com However, you may be able to include certain expenses paid to a person providing nursing-type services. Www freefillableforms com For more information, see Nursing Services , earlier under What Medical Expenses Are Includible. Www freefillableforms com Also, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Www freefillableforms com For more information, see Long-Term Care , earlier under What Medical Expenses Are Includible. Www freefillableforms com Illegal Operations and Treatments You cannot include in medical expenses amounts you pay for illegal operations, treatments, or controlled substances whether rendered or prescribed by licensed or unlicensed practitioners. Www freefillableforms com Insurance Premiums See Insurance Premiums under What Medical Expenses Are Includible, earlier. Www freefillableforms com Maternity Clothes You cannot include in medical expenses amounts you pay for maternity clothes. Www freefillableforms com Medical Savings Account (MSA) You cannot include in medical expenses amounts you contribute to an Archer MSA. Www freefillableforms com You cannot include expenses you pay for with a tax-free distribution from your Archer MSA. Www freefillableforms com You also cannot use other funds equal to the amount of the distribution and include the expenses. Www freefillableforms com For more information on Archer MSAs, see Publication 969. Www freefillableforms com Medicines and Drugs From Other Countries In general, you cannot include in your medical expenses the cost of a prescribed drug brought in (or ordered shipped) from another country. Www freefillableforms com You can only include the cost of a drug that was imported legally. Www freefillableforms com For example, you can include the cost of a prescribed drug the Food and Drug Administration announces can be legally imported by individuals. Www freefillableforms com You can include the cost of a prescribed drug you purchase and consume in another country if the drug is legal in both the other country and the United States. Www freefillableforms com Nonprescription Drugs and Medicines Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Www freefillableforms com Example. Www freefillableforms com Your doctor recommends that you take aspirin. Www freefillableforms com Because aspirin is a drug that does not require a physician's prescription, you cannot include its cost in your medical expenses. Www freefillableforms com Nutritional Supplements You cannot include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. Www freefillableforms com unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. Www freefillableforms com Otherwise, these items are taken to maintain your ordinary good health, and are not for medical care. Www freefillableforms com Personal Use Items You cannot include in medical expenses the cost of an item ordinarily used for personal, living, or family purposes unless it is used primarily to prevent or alleviate a physical or mental defect or illness. Www freefillableforms com For example, the cost of a toothbrush and toothpaste is a nondeductible personal expense. Www freefillableforms com In order to accommodate an individual with a physical defect, you may have to purchase an item ordinarily used as a personal, living, or family item in a special form. Www freefillableforms com You can include the excess of the cost of the item in a special form over the cost of the item in normal form as a medical expense. Www freefillableforms com (See Braille Books and Magazines under What Medical Expenses Are Includible, earlier. Www freefillableforms com ) Swimming Lessons See Dancing Lessons , earlier. Www freefillableforms com Teeth Whitening You cannot include in medical expenses amounts paid to whiten teeth. Www freefillableforms com See Cosmetic Surgery , earlier. Www freefillableforms com Veterinary Fees You generally cannot include veterinary fees in your medical expenses, but see Guide Dog or Other Service Animal under What Medical Expenses Are Includible, earlier. Www freefillableforms com Weight-Loss Program You cannot include in medical expenses the cost of a weight-loss program if the purpose of the weight loss is the improvement of appearance, general health, or sense of well-being. Www freefillableforms com You cannot include amounts you pay to lose weight unless the weight loss is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). Www freefillableforms com If the weight-loss treatment is not for a specific disease diagnosed by a physician, you cannot include either the fees you pay for membership in a weight reduction group or fees for attendance at periodic meetings. Www freefillableforms com Also, you cannot include membership dues in a gym, health club, or spa. Www freefillableforms com You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. Www freefillableforms com See Weight-Loss Program under What Medical Expenses Are Includible, earlier. Www freefillableforms com How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the tax year for which you received no insurance or other reimbursement. Www freefillableforms com Insurance Reimbursement You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. Www freefillableforms com This includes payments from Medicare. Www freefillableforms com Even if a policy provides reimbursement only for certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse. Www freefillableforms com Example. Www freefillableforms com You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. Www freefillableforms com The insurance you receive for the hospital and doctors' bills is more than their charges. Www freefillableforms com In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses. Www freefillableforms com Health reimbursement arrange