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1040 Ez Forms For 2012

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1040 Ez Forms For 2012

1040 ez forms for 2012 7. 1040 ez forms for 2012   Interest Income Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationSSN for joint account. 1040 ez forms for 2012 Custodian account for your child. 1040 ez forms for 2012 Penalty for failure to supply SSN. 1040 ez forms for 2012 Reporting backup withholding. 1040 ez forms for 2012 Savings account with parent as trustee. 1040 ez forms for 2012 Interest not reported on Form 1099-INT. 1040 ez forms for 2012 Nominees. 1040 ez forms for 2012 Incorrect amount. 1040 ez forms for 2012 Information reporting requirement. 1040 ez forms for 2012 Taxable InterestInterest subject to penalty for early withdrawal. 1040 ez forms for 2012 Money borrowed to invest in certificate of deposit. 1040 ez forms for 2012 U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Savings Bonds Education Savings Bond Program U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Original Issue Discount (OID) When To Report Interest IncomeConstructive receipt. 1040 ez forms for 2012 How To Report Interest IncomeSchedule B (Form 1040A or 1040). 1040 ez forms for 2012 Reporting tax-exempt interest. 1040 ez forms for 2012 U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond interest previously reported. 1040 ez forms for 2012 Reminder Foreign-source income. 1040 ez forms for 2012  If you are a U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 citizen with interest income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt by U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 law. 1040 ez forms for 2012 This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. 1040 ez forms for 2012 Introduction This chapter discusses the following topics. 1040 ez forms for 2012 Different types of interest income. 1040 ez forms for 2012 What interest is taxable and what interest is nontaxable. 1040 ez forms for 2012 When to report interest income. 1040 ez forms for 2012 How to report interest income on your tax return. 1040 ez forms for 2012 In general, any interest you receive or that is credited to your account and can be withdrawn is taxable income. 1040 ez forms for 2012 Exceptions to this rule are discussed later in this chapter. 1040 ez forms for 2012 You may be able to deduct expenses you have in earning this income on Schedule A (Form 1040) if you itemize your deductions. 1040 ez forms for 2012 See Money borrowed to invest in certificate of deposit , later, and chapter 28. 1040 ez forms for 2012 Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends 8815 Exclusion of Interest From Series EE and I U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Savings Bonds Issued After 1989 General Information A few items of general interest are covered here. 1040 ez forms for 2012 Recordkeeping. 1040 ez forms for 2012 You should keep a list showing sources and interest amounts received during the year. 1040 ez forms for 2012 Also, keep the forms you receive showing your interest income (Forms 1099-INT, for example) as an important part of your records. 1040 ez forms for 2012 Tax on unearned income of certain children. 1040 ez forms for 2012    Part of a child's 2013 unearned income may be taxed at the parent's tax rate. 1040 ez forms for 2012 If so, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. 1040 ez forms for 2012 If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. 1040 ez forms for 2012   Some parents can choose to include the child's interest and dividends on the parent's return. 1040 ez forms for 2012 If you can, use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. 1040 ez forms for 2012   For more information about the tax on unearned income of children and the parents' election, see chapter 31. 1040 ez forms for 2012 Beneficiary of an estate or trust. 1040 ez forms for 2012   Interest you receive as a beneficiary of an estate or trust is generally taxable income. 1040 ez forms for 2012 You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. 1040 ez forms for 2012 , from the fiduciary. 1040 ez forms for 2012 Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. 1040 ez forms for 2012 Social security number (SSN). 1040 ez forms for 2012   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. 1040 ez forms for 2012 This includes payers of interest. 1040 ez forms for 2012 If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. 1040 ez forms for 2012 SSN for joint account. 1040 ez forms for 2012   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. 1040 ez forms for 2012 (For information on who owns the funds in a joint account, see Joint accounts , later. 1040 ez forms for 2012 ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. 1040 ez forms for 2012 This is because only one name and SSN can be shown on Form 1099. 1040 ez forms for 2012   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. 1040 ez forms for 2012 For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. 1040 ez forms for 2012 Custodian account for your child. 1040 ez forms for 2012   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. 1040 ez forms for 2012 For example, you must give your child's SSN to the payer of interest on an account owned by your child, even though the interest is paid to you as custodian. 1040 ez forms for 2012 Penalty for failure to supply SSN. 1040 ez forms for 2012   If you do not give your SSN to the payer of interest, you may have to pay a penalty. 1040 ez forms for 2012 See Failure to supply SSN under Penalties in chapter 1. 1040 ez forms for 2012 Backup withholding also may apply. 1040 ez forms for 2012 Backup withholding. 1040 ez forms for 2012   Your interest income is generally not subject to regular withholding. 1040 ez forms for 2012 However, it may be subject to backup withholding to ensure that income tax is collected on the income. 1040 ez forms for 2012 Under backup withholding, the payer of interest must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. 1040 ez forms for 2012   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. 1040 ez forms for 2012 For more information, see Backup Withholding in chapter 4. 1040 ez forms for 2012 Reporting backup withholding. 1040 ez forms for 2012   If backup withholding is deducted from your interest income, the payer must give you a Form 1099-INT for the year indicating the amount withheld. 1040 ez forms for 2012 The Form 1099-INT will show any backup withholding as “Federal income tax withheld. 1040 ez forms for 2012 ” Joint accounts. 1040 ez forms for 2012   If two or more persons hold property (such as a savings account or bond) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest from the property is determined by local law. 1040 ez forms for 2012 Income from property given to a child. 1040 ez forms for 2012   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. 1040 ez forms for 2012   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. 1040 ez forms for 2012 Savings account with parent as trustee. 1040 ez forms for 2012   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. 1040 ez forms for 2012 The savings account legally belongs to the child. 1040 ez forms for 2012 The parents are not legally permitted to use any of the funds to support the child. 1040 ez forms for 2012 Form 1099-INT. 1040 ez forms for 2012   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. 1040 ez forms for 2012 This form shows you the interest you received during the year. 1040 ez forms for 2012 Keep this form for your records. 1040 ez forms for 2012 You do not have to attach it to your tax return. 1040 ez forms for 2012   Report on your tax return the total interest income you receive for the tax year. 1040 ez forms for 2012 Interest not reported on Form 1099-INT. 1040 ez forms for 2012   Even if you do not receive Form 1099-INT, you must still report all of your interest income. 1040 ez forms for 2012 For example, you may receive distributive shares of interest from partnerships or S corporations. 1040 ez forms for 2012 This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deduction, Credits, etc. 1040 ez forms for 2012 , or Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. 1040 ez forms for 2012 Nominees. 1040 ez forms for 2012   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. 1040 ez forms for 2012   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on nominee distributions under How To Report Interest Income in chapter 1 of Publication 550, or Schedule B (Form 1040A or 1040) instructions. 1040 ez forms for 2012 Incorrect amount. 1040 ez forms for 2012   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. 1040 ez forms for 2012 The new Form 1099-INT you receive will be marked “Corrected. 1040 ez forms for 2012 ” Form 1099-OID. 1040 ez forms for 2012   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. 1040 ez forms for 2012 For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. 1040 ez forms for 2012 Exempt-interest dividends. 1040 ez forms for 2012   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. 1040 ez forms for 2012 (However, see Information reporting requirement , next. 1040 ez forms for 2012 ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. 1040 ez forms for 2012 You do not reduce your basis for distributions that are exempt-interest dividends. 1040 ez forms for 2012 Information reporting requirement. 1040 ez forms for 2012   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. 1040 ez forms for 2012 This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. 1040 ez forms for 2012 Note. 1040 ez forms for 2012 Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. 1040 ez forms for 2012 See Alternative Minimum Tax (AMT) in chapter 30 for more information. 1040 ez forms for 2012 Chapter 1 of Publication 550 contains a discussion on private activity bonds under State or Local Government Obligations. 1040 ez forms for 2012 Interest on VA dividends. 1040 ez forms for 2012   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. 1040 ez forms for 2012 This includes interest paid on dividends on converted United States Government Life Insurance and on National Service Life Insurance policies. 1040 ez forms for 2012 Individual retirement arrangements (IRAs). 1040 ez forms for 2012   Interest on a Roth IRA generally is not taxable. 1040 ez forms for 2012 Interest on a traditional IRA is tax deferred. 1040 ez forms for 2012 You generally do not include it in your income until you make withdrawals from the IRA. 1040 ez forms for 2012 See chapter 17. 1040 ez forms for 2012 Taxable Interest Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. 1040 ez forms for 2012 The following are some sources of taxable interest. 1040 ez forms for 2012 Dividends that are actually interest. 1040 ez forms for 2012   Certain distributions commonly called dividends are actually interest. 1040 ez forms for 2012 You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. 1040 ez forms for 2012  The “dividends” will be shown as interest income on Form 1099-INT. 1040 ez forms for 2012 Money market funds. 1040 ez forms for 2012   Money market funds pay dividends and are offered by nonbank financial institutions, such as mutual funds and stock brokerage houses. 1040 ez forms for 2012 Generally, amounts you receive from money market funds should be reported as dividends, not as interest. 1040 ez forms for 2012 Certificates of deposit and other deferred interest accounts. 1040 ez forms for 2012   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. 1040 ez forms for 2012 You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. 1040 ez forms for 2012 The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. 1040 ez forms for 2012 If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. 1040 ez forms for 2012 Interest subject to penalty for early withdrawal. 1040 ez forms for 2012   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. 1040 ez forms for 2012 You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. 1040 ez forms for 2012 See Penalty on early withdrawal of savings in chapter 1 of Publication 550 for more information on how to report the interest and deduct the penalty. 1040 ez forms for 2012 Money borrowed to invest in certificate of deposit. 1040 ez forms for 2012   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. 1040 ez forms for 2012 You must report the total interest you earn on the certificate in your income. 1040 ez forms for 2012 If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. 1040 ez forms for 2012 See Interest Expenses in chapter 3 of Publication 550. 1040 ez forms for 2012 Example. 1040 ez forms for 2012 You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. 1040 ez forms for 2012 The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. 1040 ez forms for 2012 The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. 1040 ez forms for 2012 The bank also gives you a statement showing that you paid $310 interest for 2013. 1040 ez forms for 2012 You must include the $575 in your income. 1040 ez forms for 2012 If you itemize your deductions on Schedule A (Form 1040), you can deduct $310, subject to the net investment income limit. 1040 ez forms for 2012 Gift for opening account. 1040 ez forms for 2012   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. 1040 ez forms for 2012   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. 1040 ez forms for 2012 For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. 1040 ez forms for 2012 The value is determined by the cost to the financial institution. 1040 ez forms for 2012 Example. 1040 ez forms for 2012 You open a savings account at your local bank and deposit $800. 1040 ez forms for 2012 The account earns $20 interest. 1040 ez forms for 2012 You also receive a $15 calculator. 1040 ez forms for 2012 If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. 1040 ez forms for 2012 You must report $35 interest income on your tax return. 1040 ez forms for 2012 Interest on insurance dividends. 1040 ez forms for 2012   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. 1040 ez forms for 2012 However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. 1040 ez forms for 2012 Prepaid insurance premiums. 1040 ez forms for 2012   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. 1040 ez forms for 2012 U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 obligations. 1040 ez forms for 2012   Interest on U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 obligations, such as U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. 1040 ez forms for 2012 Interest on tax refunds. 1040 ez forms for 2012   Interest you receive on tax refunds is taxable income. 1040 ez forms for 2012 Interest on condemnation award. 1040 ez forms for 2012   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. 1040 ez forms for 2012 Installment sale payments. 1040 ez forms for 2012   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. 1040 ez forms for 2012 That interest is taxable when you receive it. 1040 ez forms for 2012 If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. 1040 ez forms for 2012 See Unstated Interest and Original Issue Discount in Publication 537, Installment Sales. 1040 ez forms for 2012 Interest on annuity contract. 1040 ez forms for 2012   Accumulated interest on an annuity contract you sell before its maturity date is taxable. 1040 ez forms for 2012 Usurious interest. 1040 ez forms for 2012   Usurious interest is interest charged at an illegal rate. 1040 ez forms for 2012 This is taxable as interest unless state law automatically changes it to a payment on the principal. 1040 ez forms for 2012 Interest income on frozen deposits. 1040 ez forms for 2012   Exclude from your gross income interest on frozen deposits. 1040 ez forms for 2012 A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state where the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. 1040 ez forms for 2012   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). 1040 ez forms for 2012 If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income in chapter 1 of Publication 550, for information about reporting this interest income exclusion on your tax return. 1040 ez forms for 2012   The interest you exclude is treated as credited to your account in the following year. 1040 ez forms for 2012 You must include it in income in the year you can withdraw it. 1040 ez forms for 2012 Example. 1040 ez forms for 2012 $100 of interest was credited on your frozen deposit during the year. 1040 ez forms for 2012 You withdrew $80 but could not withdraw any more as of the end of the year. 1040 ez forms for 2012 You must include $80 in your income and exclude $20 from your income for the year. 1040 ez forms for 2012 You must include the $20 in your income for the year you can withdraw it. 1040 ez forms for 2012 Bonds traded flat. 1040 ez forms for 2012   If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. 1040 ez forms for 2012 The defaulted or unpaid interest is not income and is not taxable as interest if paid later. 1040 ez forms for 2012 When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. 1040 ez forms for 2012 Interest that accrues after the date of purchase, however, is taxable interest income for the year it is received or accrued. 1040 ez forms for 2012 See Bonds Sold Between Interest Dates , later, for more information. 1040 ez forms for 2012 Below-market loans. 1040 ez forms for 2012   In general, a below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. 1040 ez forms for 2012 See Below-Market Loans in chapter 1 of Publication 550 for more information. 1040 ez forms for 2012 U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Savings Bonds This section provides tax information on U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds. 1040 ez forms for 2012 It explains how to report the interest income on these bonds and how to treat transfers of these bonds. 1040 ez forms for 2012 For other information on U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds, write to:  For series EE and I paper savings bonds: Bureau of the Public Debt Division of Customer Assistance P. 1040 ez forms for 2012 O. 1040 ez forms for 2012 Box 7012 Parkersburg, WV 26106-7012  For series EE and I electronic bonds: Bureau of the Public Debt Division of Customer Assistance P. 1040 ez forms for 2012 O. 1040 ez forms for 2012 Box 7015 Parkersburg, WV 26106–7015  For series HH/H: Bureau of the Public Debt Division of Customer Assistance P. 1040 ez forms for 2012 O. 1040 ez forms for 2012 Box 2186 Parkersburg, WV 26106-2186 Or, on the Internet, visit: www. 1040 ez forms for 2012 treasurydirect. 1040 ez forms for 2012 gov/indiv/indiv. 1040 ez forms for 2012 htm. 1040 ez forms for 2012 Accrual method taxpayers. 1040 ez forms for 2012   If you use an accrual method of accounting, you must report interest on U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds each year as it accrues. 1040 ez forms for 2012 You cannot postpone reporting interest until you receive it or until the bonds mature. 1040 ez forms for 2012 Accrual methods of accounting are explained in chapter 1 under Accounting Methods . 1040 ez forms for 2012 Cash method taxpayers. 1040 ez forms for 2012   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds when you receive it. 1040 ez forms for 2012 The cash method of accounting is explained in chapter 1 under Accounting Methods. 1040 ez forms for 2012 But see Reporting options for cash method taxpayers , later. 1040 ez forms for 2012 Series HH bonds. 1040 ez forms for 2012    These bonds were issued at face value. 1040 ez forms for 2012 Interest is paid twice a year by direct deposit to your bank account. 1040 ez forms for 2012 If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. 1040 ez forms for 2012   Series HH bonds were first offered in 1980 and last offered in August 2004. 1040 ez forms for 2012 Before 1980, series H bonds were issued. 1040 ez forms for 2012 Series H bonds are treated the same as series HH bonds. 1040 ez forms for 2012 If you are a cash method taxpayer, you must report the interest when you receive it. 1040 ez forms for 2012   Series H bonds have a maturity period of 30 years. 1040 ez forms for 2012 Series HH bonds mature in 20 years. 1040 ez forms for 2012 The last series H bonds matured in 2009. 1040 ez forms for 2012 Series EE and series I bonds. 1040 ez forms for 2012   Interest on these bonds is payable when you redeem the bonds. 1040 ez forms for 2012 The difference between the purchase price and the redemption value is taxable interest. 1040 ez forms for 2012 Series EE bonds. 1040 ez forms for 2012   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. 1040 ez forms for 2012   Before July 1980, series E bonds were issued. 1040 ez forms for 2012 The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. 1040 ez forms for 2012 Paper series EE and series E bonds are issued at a discount. 1040 ez forms for 2012 The face value is payable to you at maturity. 1040 ez forms for 2012 Electronic series EE bonds are issued at their face value. 1040 ez forms for 2012 The face value plus accrued interest is payable to you at maturity. 1040 ez forms for 2012 As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. 1040 ez forms for 2012   Owners of paper series EE bonds can convert them to electronic bonds. 1040 ez forms for 2012 These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). 1040 ez forms for 2012 Series I bonds. 1040 ez forms for 2012   Series I bonds were first offered in 1998. 1040 ez forms for 2012 These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. 1040 ez forms for 2012 The face value plus all accrued interest is payable to you at maturity. 1040 ez forms for 2012 Reporting options for cash method taxpayers. 1040 ez forms for 2012   If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways. 1040 ez forms for 2012 Method 1. 1040 ez forms for 2012 Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year they mature. 1040 ez forms for 2012 (However, see Savings bonds traded , later. 1040 ez forms for 2012 )  Note. 1040 ez forms for 2012 Series EE bonds issued in 1983 matured in 2013. 1040 ez forms for 2012 If you have used method 1, you generally must report the interest on these bonds on your 2013 return. 1040 ez forms for 2012 The last series E bonds were issued in 1980 and matured in 2010. 1040 ez forms for 2012 If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. 1040 ez forms for 2012 Method 2. 1040 ez forms for 2012 Choose to report the increase in redemption value as interest each year. 1040 ez forms for 2012 You must use the same method for all series EE, series E, and series I bonds you own. 1040 ez forms for 2012 If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. 1040 ez forms for 2012    If you plan to cash your bonds in the same year you will pay for higher education expenses, you may want to use method 1 because you may be able to exclude the interest from your income. 1040 ez forms for 2012 To learn how, see Education Savings Bond Program, later. 1040 ez forms for 2012 Change from method 1. 1040 ez forms for 2012   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. 1040 ez forms for 2012 In the year of change you must report all interest accrued to date and not previously reported for all your bonds. 1040 ez forms for 2012   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. 1040 ez forms for 2012 Change from method 2. 1040 ez forms for 2012   To change from method 2 to method 1, you must request permission from the IRS. 1040 ez forms for 2012 Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. 1040 ez forms for 2012 You have typed or printed the following number at the top: “131. 1040 ez forms for 2012 ” It includes your name and social security number under “131. 1040 ez forms for 2012 ” It includes the year of change (both the beginning and ending dates). 1040 ez forms for 2012 It identifies the savings bonds for which you are requesting this change. 1040 ez forms for 2012 It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. 1040 ez forms for 2012   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). 1040 ez forms for 2012   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. 1040 ez forms for 2012 On the statement, type or print “Filed pursuant to section 301. 1040 ez forms for 2012 9100-2. 1040 ez forms for 2012 ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). 1040 ez forms for 2012    By the date you file the original statement with your return, you must also send a signed copy to the address below. 1040 ez forms for 2012   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. 1040 ez forms for 2012 O. 1040 ez forms for 2012 Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. 1040 ez forms for 2012   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW  Washington, DC 20224   Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115, Application for Change in Accounting Method. 1040 ez forms for 2012 In that case, follow the form instructions for an automatic change. 1040 ez forms for 2012 No user fee is required. 1040 ez forms for 2012 Co-owners. 1040 ez forms for 2012   If a U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. 1040 ez forms for 2012 One co-owner's funds used. 1040 ez forms for 2012    If you used your funds to buy the bond, you must pay the tax on the interest. 1040 ez forms for 2012 This is true even if you let the other co-owner redeem the bond and keep all the proceeds. 1040 ez forms for 2012 Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. 1040 ez forms for 2012 The co-owner who redeemed the bond is a “nominee. 1040 ez forms for 2012 ” See Nominee distributions under How To Report Interest Income in chapter 1 of Publication 550 for more information about how a person who is a nominee reports interest income belonging to another person. 1040 ez forms for 2012 Both co-owners' funds used. 1040 ez forms for 2012   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. 1040 ez forms for 2012 Community property. 1040 ez forms for 2012   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. 1040 ez forms for 2012 If you file separate returns, each of you generally must report one-half of the bond interest. 1040 ez forms for 2012 For more information about community property, see Publication 555. 1040 ez forms for 2012 Table 7-1. 1040 ez forms for 2012   These rules are also shown in Table 7-1. 1040 ez forms for 2012 Ownership transferred. 1040 ez forms for 2012   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. 1040 ez forms for 2012 But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. 1040 ez forms for 2012   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. 1040 ez forms for 2012 Purchased jointly. 1040 ez forms for 2012   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. 1040 ez forms for 2012 The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. 1040 ez forms for 2012 This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. 1040 ez forms for 2012   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. 1040 ez forms for 2012 But the new co-owner will report only his or her share of the interest earned after the transfer. 1040 ez forms for 2012   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. 1040 ez forms for 2012    Table 7-1. 1040 ez forms for 2012 Who Pays the Tax on U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Savings Bond Interest IF . 1040 ez forms for 2012 . 1040 ez forms for 2012 . 1040 ez forms for 2012 THEN the interest must be reported by . 1040 ez forms for 2012 . 1040 ez forms for 2012 . 1040 ez forms for 2012 you buy a bond in your name and the name of another person as co-owners, using only your own funds you. 1040 ez forms for 2012 you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. 1040 ez forms for 2012 you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. 1040 ez forms for 2012 you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. 1040 ez forms for 2012 If you file separate returns, both you and your spouse generally report one-half of the interest. 1040 ez forms for 2012 Example 1. 1040 ez forms for 2012 You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. 1040 ez forms for 2012 The bond was issued to you and your spouse as co-owners. 1040 ez forms for 2012 You both postpone reporting interest on the bond. 1040 ez forms for 2012 You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. 1040 ez forms for 2012 At that time neither you nor your spouse has to report the interest earned to the date of reissue. 1040 ez forms for 2012 Example 2. 1040 ez forms for 2012 You bought a $1,000 series EE savings bond entirely with your own funds. 1040 ez forms for 2012 The bond was issued to you and your spouse as co-owners. 1040 ez forms for 2012 You both postpone reporting interest on the bond. 1040 ez forms for 2012 You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. 1040 ez forms for 2012 You must report half the interest earned to the date of reissue. 1040 ez forms for 2012 Transfer to a trust. 1040 ez forms for 2012   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. 1040 ez forms for 2012 However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. 1040 ez forms for 2012 You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. 1040 ez forms for 2012   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. 1040 ez forms for 2012 See Savings bonds traded , later. 1040 ez forms for 2012 Decedents. 1040 ez forms for 2012   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. 1040 ez forms for 2012 This is explained in chapter 1 of Publication 550. 1040 ez forms for 2012 Savings bonds traded. 1040 ez forms for 2012   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. 1040 ez forms for 2012 (You cannot trade series I bonds for series HH bonds. 1040 ez forms for 2012 After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. 1040 ez forms for 2012 ) Any cash you received is income up to the amount of the interest earned on the bonds traded. 1040 ez forms for 2012 When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. 1040 ez forms for 2012 Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. 1040 ez forms for 2012 Example. 1040 ez forms for 2012 You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. 1040 ez forms for 2012 You reported the $223 as taxable income on your tax return. 1040 ez forms for 2012 At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. 1040 ez forms for 2012 You hold the series HH bonds until maturity, when you receive $2,500. 1040 ez forms for 2012 You must report $300 as interest income in the year of maturity. 1040 ez forms for 2012 This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). 1040 ez forms for 2012 (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. 1040 ez forms for 2012 ) Choice to report interest in year of trade. 1040 ez forms for 2012   You could have chosen to treat all of the previously unreported accrued interest on the series EE or series E bonds traded for series HH bonds as income in the year of the trade. 1040 ez forms for 2012 If you made this choice, it is treated as a change from method 1. 1040 ez forms for 2012 See Change from method 1 under Series EE and series I bonds, earlier. 1040 ez forms for 2012 Form 1099-INT for U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds interest. 1040 ez forms for 2012   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. 1040 ez forms for 2012 Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. 1040 ez forms for 2012 However, your Form 1099-INT may show more interest than you have to include on your income tax return. 1040 ez forms for 2012 For example, this may happen if any of the following are true. 1040 ez forms for 2012 You chose to report the increase in the redemption value of the bond each year. 1040 ez forms for 2012 The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. 1040 ez forms for 2012 You received the bond from a decedent. 1040 ez forms for 2012 The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. 1040 ez forms for 2012 Ownership of the bond was transferred. 1040 ez forms for 2012 The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. 1040 ez forms for 2012 You were named as a co-owner, and the other co-owner contributed funds to buy the bond. 1040 ez forms for 2012 The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. 1040 ez forms for 2012 (See Co-owners , earlier in this chapter, for more information about the reporting requirements. 1040 ez forms for 2012 ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. 1040 ez forms for 2012 The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. 1040 ez forms for 2012 (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 1040 ez forms for 2012 , for the year of distribution. 1040 ez forms for 2012 )   For more information on including the correct amount of interest on your return, see How To Report Interest Income , later. 1040 ez forms for 2012 Publication 550 includes examples showing how to report these amounts. 1040 ez forms for 2012    Interest on U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds is exempt from state and local taxes. 1040 ez forms for 2012 The Form 1099-INT you receive will indicate the amount that is for U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond interest in box 3. 1040 ez forms for 2012 Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds during the year if you pay qualified higher educational expenses during the same year. 1040 ez forms for 2012 This exclusion is known as the Education Savings Bond Program. 1040 ez forms for 2012 You do not qualify for this exclusion if your filing status is married filing separately. 1040 ez forms for 2012 Form 8815. 1040 ez forms for 2012   Use Form 8815 to figure your exclusion. 1040 ez forms for 2012 Attach the form to your Form 1040 or Form 1040A. 1040 ez forms for 2012 Qualified U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds. 1040 ez forms for 2012   A qualified U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond is a series EE bond issued after 1989 or a series I bond. 1040 ez forms for 2012 The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). 1040 ez forms for 2012 You must be at least 24 years old before the bond's issue date. 1040 ez forms for 2012 For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. 1040 ez forms for 2012    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. 1040 ez forms for 2012 Beneficiary. 1040 ez forms for 2012   You can designate any individual (including a child) as a beneficiary of the bond. 1040 ez forms for 2012 Verification by IRS. 1040 ez forms for 2012   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of the Treasury. 1040 ez forms for 2012 Qualified expenses. 1040 ez forms for 2012   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. 1040 ez forms for 2012   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. 1040 ez forms for 2012   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. 1040 ez forms for 2012 Eligible educational institutions. 1040 ez forms for 2012   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Department of Education. 1040 ez forms for 2012 Reduction for certain benefits. 1040 ez forms for 2012   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. 1040 ez forms for 2012 Tax-free part of scholarships and fellowships (see Scholarships and fellowships in chapter 12). 1040 ez forms for 2012 Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. 1040 ez forms for 2012 Expenses used to figure the tax-free portion of distributions from a qualified tuition program. 1040 ez forms for 2012 Any tax-free payments (other than gifts or inheritances) received for educational expenses, such as Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. 1040 ez forms for 2012 Any expense used in figuring the American Opportunity and lifetime learning credits. 1040 ez forms for 2012 Amount excludable. 1040 ez forms for 2012   If the total proceeds (interest and principal) from the qualified U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. 1040 ez forms for 2012 If the proceeds are more than the expenses, you may be able to exclude only part of the interest. 1040 ez forms for 2012   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. 1040 ez forms for 2012 The numerator of the fraction is the qualified higher educational expenses you paid during the year. 1040 ez forms for 2012 The denominator of the fraction is the total proceeds you received during the year. 1040 ez forms for 2012 Example. 1040 ez forms for 2012 In February 2013, Mark and Joan, a married couple, cashed a qualified series EE U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond they bought in April 1997. 1040 ez forms for 2012 They received proceeds of $8,372 representing principal of $5,000 and interest of $3,372. 1040 ez forms for 2012 In 2013, they paid $4,000 of their daughter's college tuition. 1040 ez forms for 2012 They are not claiming an education credit for that amount, and their daughter does not have any tax-free educational assistance. 1040 ez forms for 2012 They can exclude $1,611 ($3,372 × ($4,000 ÷ $8,372)) of interest in 2013. 1040 ez forms for 2012 They must pay tax on the remaining $1,761 ($3,372 − $1,611) interest. 1040 ez forms for 2012 Modified adjusted gross income limit. 1040 ez forms for 2012   The interest exclusion is limited if your modified adjusted gross income (modified AGI) is: $74,700 to $89,700 for taxpayers filing single or head of household, and $112,050 to $142,050 for married taxpayers filing jointly or for a qualifying widow(er) with dependent child. 1040 ez forms for 2012 You do not qualify for the interest exclusion if your modified AGI is equal to or more than the upper limit for your filing status. 1040 ez forms for 2012   Modified AGI, for purposes of this exclusion, is adjusted gross income (Form 1040, line 37, or Form 1040A, line 21) figured before the interest exclusion, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion and deduction, Exclusion of income for bona fide residents of American Samoa, Exclusion for income from Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for tuition and fees, Deduction for student loan interest, and Deduction for domestic production activities. 1040 ez forms for 2012   Use the Line 9 Worksheet in the Form 8815 instructions to figure your modified AGI. 1040 ez forms for 2012 If you claim any of the exclusion or deduction items listed above (except items 6, 7, and 8), add the amount of the exclusion or deduction (except items 6, 7, and 8) to the amount on line 5 of the worksheet, and enter the total on Form 8815, line 9, as your modified AGI. 1040 ez forms for 2012   If you have investment interest expense incurred to earn royalties and other investment income, see Education Savings Bond Program in chapter 1 of Publication 550. 1040 ez forms for 2012 Recordkeeping. 1040 ez forms for 2012 If you claim the interest exclusion, you must keep a written record of the qualified U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds you redeem. 1040 ez forms for 2012 Your record must include the serial number, issue date, face value, and total redemption proceeds (principal and interest) of each bond. 1040 ez forms for 2012 You can use Form 8818 to record this information. 1040 ez forms for 2012 You should also keep bills, receipts, canceled checks, or other documentation that shows you paid qualified higher educational expenses during the year. 1040 ez forms for 2012 U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Treasury Bills, Notes, and Bonds Treasury bills, notes, and bonds are direct debts (obligations) of the U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Government. 1040 ez forms for 2012 Taxation of interest. 1040 ez forms for 2012   Interest income from Treasury bills, notes, and bonds is subject to federal income tax but is exempt from all state and local income taxes. 1040 ez forms for 2012 You should receive Form 1099-INT showing the interest (in box 3) paid to you for the year. 1040 ez forms for 2012   Payments of principal and interest generally will be credited to your designated checking or savings account by direct deposit through the TreasuryDirect® system. 1040 ez forms for 2012 Treasury bills. 1040 ez forms for 2012   These bills generally have a 4-week, 13-week, 26-week, or 52-week maturity period. 1040 ez forms for 2012 They are generally issued at a discount in the amount of $100 and multiples of $100. 1040 ez forms for 2012 The difference between the discounted price you pay for the bills and the face value you receive at maturity is interest income. 1040 ez forms for 2012 Generally, you report this interest income when the bill is paid at maturity. 1040 ez forms for 2012 If you paid a premium for a bill (more than the face value), you generally report the premium as a section 171 deduction when the bill is paid at maturity. 1040 ez forms for 2012 Treasury notes and bonds. 1040 ez forms for 2012   Treasury notes have maturity periods of more than 1 year, ranging up to 10 years. 1040 ez forms for 2012 Maturity periods for Treasury bonds are longer than 10 years. 1040 ez forms for 2012 Both generally are issued in denominations of $100 to $1 million and generally pay interest every 6 months. 1040 ez forms for 2012 Generally, you report this interest for the year paid. 1040 ez forms for 2012 For more information, see U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Treasury Bills, Notes, and Bonds in chapter 1 of Publication 550. 1040 ez forms for 2012 For other information on Treasury notes or bonds, write to:  Bureau of the Public Debt P. 1040 ez forms for 2012 O. 1040 ez forms for 2012 Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. 1040 ez forms for 2012 treasurydirect. 1040 ez forms for 2012 gov/indiv/indiv. 1040 ez forms for 2012 htm. 1040 ez forms for 2012 For information on series EE, series I, and series HH savings bonds, see U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Savings Bonds , earlier. 1040 ez forms for 2012 Treasury inflation-protected securities (TIPS). 1040 ez forms for 2012   These securities pay interest twice a year at a fixed rate, based on a principal amount adjusted to take into account inflation and deflation. 1040 ez forms for 2012 For the tax treatment of these securities, see Inflation-Indexed Debt Instruments under Original Issue Discount (OID), in Publication 550. 1040 ez forms for 2012 Bonds Sold Between Interest Dates If you sell a bond between interest payment dates, part of the sales price represents interest accrued to the date of sale. 1040 ez forms for 2012 You must report that part of the sales price as interest income for the year of sale. 1040 ez forms for 2012 If you buy a bond between interest payment dates, part of the purchase price represents interest accrued before the date of purchase. 1040 ez forms for 2012 When that interest is paid to you, treat it as a return of your capital investment, rather than interest income, by reducing your basis in the bond. 1040 ez forms for 2012 See Accrued interest on bonds under How To Report Interest Income in chapter 1 of Publication 550 for information on reporting the payment. 1040 ez forms for 2012 Insurance Life insurance proceeds paid to you as beneficiary of the insured person are usually not taxable. 1040 ez forms for 2012 But if you receive the proceeds in installments, you must usually report a part of each installment payment as interest income. 1040 ez forms for 2012 For more information about insurance proceeds received in installments, see Publication 525, Taxable and Nontaxable Income. 1040 ez forms for 2012 Annuity. 1040 ez forms for 2012   If you buy an annuity with life insurance proceeds, the annuity payments you receive are taxed as pension and annuity income from a nonqualified plan, not as interest income. 1040 ez forms for 2012 See chapter 10 for information on pension and annuity income from nonqualified plans. 1040 ez forms for 2012 State or Local Government Obligations Interest on a bond used to finance government operations generally is not taxable if the bond is issued by a state, the District of Columbia, a possession of the United States, or any of their political subdivisions. 1040 ez forms for 2012 Bonds issued after 1982 (including tribal economic development bonds issued after February 17, 2009) by an Indian tribal government are treated as issued by a state. 1040 ez forms for 2012 Interest on these bonds is generally tax exempt if the bonds are part of an issue of which substantially all proceeds are to be used in the exercise of any essential government function. 1040 ez forms for 2012 For information on federally guaranteed bonds, mortgage revenue bonds, arbitrage bonds, private activity bonds, qualified tax credit bonds, and Build America bonds, see State or Local Government Obligations in chapter 1 of Publication 550. 1040 ez forms for 2012 Information reporting requirement. 1040 ez forms for 2012   If you must file a tax return, you are required to show any tax-exempt interest you received on your return. 1040 ez forms for 2012 This is an information reporting requirement only. 1040 ez forms for 2012 It does not change tax-exempt interest to taxable interest. 1040 ez forms for 2012 Original Issue Discount (OID) Original issue discount (OID) is a form of interest. 1040 ez forms for 2012 You generally include OID in your income as it accrues over the term of the debt instrument, whether or not you receive any payments from the issuer. 1040 ez forms for 2012 A debt instrument generally has OID when the instrument is issued for a price that is less than its stated redemption price at maturity. 1040 ez forms for 2012 OID is the difference between the stated redemption price at maturity and the issue price. 1040 ez forms for 2012 All debt instruments that pay no interest before maturity are presumed to be issued at a discount. 1040 ez forms for 2012 Zero coupon bonds are one example of these instruments. 1040 ez forms for 2012 The OID accrual rules generally do not apply to short-term obligations (those with a fixed maturity date of 1 year or less from date of issue). 1040 ez forms for 2012 See Discount on Short-Term Obligations in chapter 1 of Publication 550. 1040 ez forms for 2012 De minimis OID. 1040 ez forms for 2012   You can treat the discount as zero if it is less than one-fourth of 1% (. 1040 ez forms for 2012 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. 1040 ez forms for 2012 This small discount is known as “de minimis” OID. 1040 ez forms for 2012 Example 1. 1040 ez forms for 2012 You bought a 10-year bond with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. 1040 ez forms for 2012 One-fourth of 1% of $1,000 (stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. 1040 ez forms for 2012 Because the $20 discount is less than $25, the OID is treated as zero. 1040 ez forms for 2012 (If you hold the bond at maturity, you will recognize $20 ($1,000 − $980) of capital gain. 1040 ez forms for 2012 ) Example 2. 1040 ez forms for 2012 The facts are the same as in Example 1, except that the bond was issued at $950. 1040 ez forms for 2012 The OID is $50. 1040 ez forms for 2012 Because the $50 discount is more than the $25 figured in Example 1, you must include the OID in income as it accrues over the term of the bond. 1040 ez forms for 2012 Debt instrument bought after original issue. 1040 ez forms for 2012   If you buy a debt instrument with de minimis OID at a premium, the discount is not includible in income. 1040 ez forms for 2012 If you buy a debt instrument with de minimis OID at a discount, the discount is reported under the market discount rules. 1040 ez forms for 2012 See Market Discount Bonds in chapter 1 of Publication 550. 1040 ez forms for 2012 Exceptions to reporting OID. 1040 ez forms for 2012   The OID rules discussed in this chapter do not apply to the following debt instruments. 1040 ez forms for 2012 Tax-exempt obligations. 1040 ez forms for 2012 (However, see Stripped tax-exempt obligations under Stripped Bonds and Coupons in chapter 1 of Publication 550). 1040 ez forms for 2012 U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds. 1040 ez forms for 2012 Short-term debt instruments (those with a fixed maturity date of not more than 1 year from the date of issue). 1040 ez forms for 2012 Obligations issued by an individual before March 2, 1984. 1040 ez forms for 2012 Loans between individuals if all the following are true. 1040 ez forms for 2012 The lender is not in the business of lending money. 1040 ez forms for 2012 The amount of the loan, plus the amount of any outstanding prior loans between the same individuals, is $10,000 or less. 1040 ez forms for 2012 Avoiding any federal tax is not one of the principal purposes of the loan. 1040 ez forms for 2012 Form 1099-OID. 1040 ez forms for 2012   The issuer of the debt instrument (or your broker if you held the instrument through a broker) should give you Form 1099-OID, or a similar statement, if the total OID for the calendar year is $10 or more. 1040 ez forms for 2012 Form 1099-OID will show, in box 1, the amount of OID for the part of the year that you held the bond. 1040 ez forms for 2012 It also will show, in box 2, the stated interest you must include in your income. 1040 ez forms for 2012 A copy of Form 1099-OID will be sent to the IRS. 1040 ez forms for 2012 Do not file your copy with your return. 1040 ez forms for 2012 Keep it for your records. 1040 ez forms for 2012   In most cases, you must report the entire amount in boxes 1 and 2 of Form 1099-OID as interest income. 1040 ez forms for 2012 But see Refiguring OID shown on Form 1099-OID, later in this discussion, for more information. 1040 ez forms for 2012 Form 1099-OID not received. 1040 ez forms for 2012   If you had OID for the year but did not receive a Form 1099-OID, you can find tables on IRS. 1040 ez forms for 2012 gov that list total OID on certain debt instruments and have information that will help you figure OID. 1040 ez forms for 2012 For the latest OID tables, go to www. 1040 ez forms for 2012 irs. 1040 ez forms for 2012 gov and enter “OID tables” in the Search box. 1040 ez forms for 2012 If your debt instrument is not listed, consult the issuer for further information about the accrued OID for the year. 1040 ez forms for 2012 Nominee. 1040 ez forms for 2012   If someone else is the holder of record (the registered owner) of an OID instrument belonging to you and receives a Form 1099-OID on your behalf, that person must give you a Form 1099-OID. 1040 ez forms for 2012 Refiguring OID shown on Form 1099-OID. 1040 ez forms for 2012   You must refigure the OID shown in box 1 or box 8 of Form 1099-OID if either of the following apply. 1040 ez forms for 2012 You bought the debt instrument after its original issue and paid a premium or an acquisition premium. 1040 ez forms for 2012 The debt instrument is a stripped bond or a stripped coupon (including certain zero coupon instruments). 1040 ez forms for 2012 For information about figuring the correct amount of OID to include in your income, see Figuring OID on Long-Term Debt Instruments in Publication 1212. 1040 ez forms for 2012 Refiguring periodic interest shown on Form 1099-OID. 1040 ez forms for 2012   If you disposed of a debt instrument or acquired it from another holder during the year, see Bonds Sold Between Interest Dates , earlier, for information about the treatment of periodic interest that may be shown in box 2 of Form 1099-OID for that instrument. 1040 ez forms for 2012 Certificates of deposit (CDs). 1040 ez forms for 2012   If you buy a CD with a maturity of more than 1 year, you must include in income each year a part of the total interest due and report it in the same manner as other OID. 1040 ez forms for 2012   This also applies to similar deposit arrangements with banks, building and loan associations, etc. 1040 ez forms for 2012 , including: Time deposits, Bonus plans, Savings certificates, Deferred income certificates, Bonus savings certificates, and Growth savings certificates. 1040 ez forms for 2012 Bearer CDs. 1040 ez forms for 2012   CDs issued after 1982 generally must be in registered form. 1040 ez forms for 2012 Bearer CDs are CDs not in registered form. 1040 ez forms for 2012 They are not issued in the depositor's name and are transferable from one individual to another. 1040 ez forms for 2012   Banks must provide the IRS and the person redeeming a bearer CD with a Form 1099-INT. 1040 ez forms for 2012 More information. 1040 ez forms for 2012   See chapter 1 of Publication 550 for more information about OID and related topics, such as market discount bonds. 1040 ez forms for 2012 When To Report Interest Income When to report your interest income depends on whether you use the cash method or an accrual method to report income. 1040 ez forms for 2012 Cash method. 1040 ez forms for 2012   Most individual taxpayers use the cash method. 1040 ez forms for 2012 If you use this method, you generally report your interest income in the year in which you actually or constructively receive it. 1040 ez forms for 2012 However, there are special rules for reporting the discount on certain debt instruments. 1040 ez forms for 2012 See U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Savings Bonds and Original Issue Discount (OID) , earlier. 1040 ez forms for 2012 Example. 1040 ez forms for 2012 On September 1, 2011, you loaned another individual $2,000 at 12%, compounded annually. 1040 ez forms for 2012 You are not in the business of lending money. 1040 ez forms for 2012 The note stated that principal and interest would be due on August 31, 2013. 1040 ez forms for 2012 In 2013, you received $2,508. 1040 ez forms for 2012 80 ($2,000 principal and $508. 1040 ez forms for 2012 80 interest). 1040 ez forms for 2012 If you use the cash method, you must include in income on your 2013 return the $508. 1040 ez forms for 2012 80 interest you received in that year. 1040 ez forms for 2012 Constructive receipt. 1040 ez forms for 2012   You constructively receive income when it is credited to your account or made available to you. 1040 ez forms for 2012 You do not need to have physical possession of it. 1040 ez forms for 2012 For example, you are considered to receive interest, dividends, or other earnings on any deposit or account in a bank, savings and loan, or similar financial institution, or interest on life insurance policy dividends left to accumulate, when they are credited to your account and subject to your withdrawal. 1040 ez forms for 2012 This is true even if they are not yet entered in your passbook. 1040 ez forms for 2012   You constructively receive income on the deposit or account even if you must: Make withdrawals in multiples of even amounts, Give a notice to withdraw before making the withdrawal, Withdraw all or part of the account to withdraw the earnings, or Pay a penalty on early withdrawals, unless the interest you are to receive on an early withdrawal or redemption is substantially less than the interest payable at maturity. 1040 ez forms for 2012 Accrual method. 1040 ez forms for 2012   If you use an accrual method, you report your interest income when you earn it, whether or not you have received it. 1040 ez forms for 2012 Interest is earned over the term of the debt instrument. 1040 ez forms for 2012 Example. 1040 ez forms for 2012 If, in the previous example, you use an accrual method, you must include the interest in your income as you earn it. 1040 ez forms for 2012 You would report the interest as follows: 2011, $80; 2012, $249. 1040 ez forms for 2012 60; and 2013, $179. 1040 ez forms for 2012 20. 1040 ez forms for 2012 Coupon bonds. 1040 ez forms for 2012   Interest on coupon bonds is taxable in the year the coupon becomes due and payable. 1040 ez forms for 2012 It does not matter when you mail the coupon for payment. 1040 ez forms for 2012 How To Report Interest Income Generally, you report all your taxable interest income on Form 1040, line 8a; Form 1040A, line 8a; or Form 1040EZ, line 2. 1040 ez forms for 2012 You cannot use Form 1040EZ if your taxable interest income is more than $1,500. 1040 ez forms for 2012 Instead, you must use Form 1040A or Form 1040. 1040 ez forms for 2012 Form 1040A. 1040 ez forms for 2012   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040A and any of the following are true. 1040 ez forms for 2012 Your taxable interest income is more than $1,500. 1040 ez forms for 2012 You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). 1040 ez forms for 2012 You received interest from a seller-financed mortgage, and the buyer used the property as a home. 1040 ez forms for 2012 You received a Form 1099-INT for U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond interest that includes amounts you reported before 2013. 1040 ez forms for 2012 You received, as a nominee, interest that actually belongs to someone else. 1040 ez forms for 2012 You received a Form 1099-INT for interest on frozen deposits. 1040 ez forms for 2012 You are reporting OID in an amount less than the amount shown on Form 1099-OID. 1040 ez forms for 2012 You received a Form 1099-INT for interest on a bond you bought between interest payment dates. 1040 ez forms for 2012 You acquired taxable bonds after 1987 and choose to reduce interest income from the bonds by any amortizable bond premium (see Bond Premium Amortization in chapter 3 of Publication 550). 1040 ez forms for 2012 List each payer's name and the amount of interest income received from each payer on line 1. 1040 ez forms for 2012 If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. 1040 ez forms for 2012   You cannot use Form 1040A if you must use Form 1040, as described next. 1040 ez forms for 2012 Form 1040. 1040 ez forms for 2012   You must use Form 1040 instead of Form 1040A or Form 1040EZ if: You forfeited interest income because of the early withdrawal of a time deposit; You acquired taxable bonds after 1987, you choose to reduce interest income from the bonds by any amortizable bond premium, and you are deducting the excess of bond premium amortization for the accrual period over the qualified stated interest for the period (see Bond Premium Amortization in chapter 3 of Publication 550); or You received tax-exempt interest from private activity bonds issued after August 7, 1986. 1040 ez forms for 2012 Schedule B (Form 1040A or 1040). 1040 ez forms for 2012   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040 and any of the following apply. 1040 ez forms for 2012 Your taxable interest income is more than $1,500. 1040 ez forms for 2012 You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). 1040 ez forms for 2012 You received interest from a seller-financed mortgage, and the buyer used the property as a home. 1040 ez forms for 2012 You received a Form 1099-INT for U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond interest that includes amounts you reported before 2013. 1040 ez forms for 2012 You received, as a nominee, interest that actually belongs to someone else. 1040 ez forms for 2012 You received a Form 1099-INT for interest on frozen deposits. 1040 ez forms for 2012 You received a Form 1099-INT for interest on a bond you bought between interest payment dates. 1040 ez forms for 2012 You are reporting OID in an amount less than the amount shown on Form 1099-OID. 1040 ez forms for 2012 Statement (2) in the preceding list under Form 1040 is true. 1040 ez forms for 2012 In Part I, line 1, list each payer's name and the amount received from each. 1040 ez forms for 2012 If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. 1040 ez forms for 2012 Reporting tax-exempt interest. 1040 ez forms for 2012   Total your tax-exempt interest (such as interest or accrued OID on certain state and municipal bonds, including tax-exempt interest on zero coupon municipal bonds) and exempt-interest dividends from a mutual fund as shown on Form 1099-INT, box 8, and on Form 1099-DIV, box 10. 1040 ez forms for 2012 Add these amounts to any other tax-exempt interest you received. 1040 ez forms for 2012 Report the total on line 8b of Form 1040A or 1040. 1040 ez forms for 2012   If you file Form 1040EZ, enter “TEI” and the amount in the space to the left of line 2. 1040 ez forms for 2012 Do not add tax-exempt interest in the total on Form 1040EZ, line 2. 1040 ez forms for 2012   Form 1099-INT, box 9, and Form 1099-DIV, box 11, show the tax-exempt interest subject to the alternative minimum tax on Form 6251. 1040 ez forms for 2012 These amounts are already included in the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. 1040 ez forms for 2012 Do not add the amounts in Form 1099-INT, box 9 and Form 1099-DIV, box 11 to, or subtract them from, the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. 1040 ez forms for 2012    Do not report interest from an individual retirement account (IRA) as tax-exempt interest. 1040 ez forms for 2012 Form 1099-INT. 1040 ez forms for 2012   Your taxable interest income, except for interest from U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds and Treasury obligations, is shown in box 1 of Form 1099-INT. 1040 ez forms for 2012 Add this amount to any other taxable interest income you received. 1040 ez forms for 2012 You must report all of your taxable interest income even if you do not receive a Form 1099-INT. 1040 ez forms for 2012 Generally, contact your financial institution if you do not receive a Form 1099-INT by February 15. 1040 ez forms for 2012 Your identifying number may be truncated on any paper Form 1099-INT you receive. 1040 ez forms for 2012   If you forfeited interest income because of the early withdrawal of a time deposit, the deductible amount will be shown on Form 1099-INT in box 2. 1040 ez forms for 2012 See Penalty on early withdrawal of savings in chapter 1 of Publication 550. 1040 ez forms for 2012   Box 3 of Form 1099-INT shows the interest income you received from U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds, Treasury bills, Treasury notes, and Treasury bonds. 1040 ez forms for 2012 Add the amount shown in box 3 to any other taxable interest income you received, unless part of the amount in box 3 was previously included in your interest income. 1040 ez forms for 2012 If part of the amount shown in box 3 was previously included in your interest income, see U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond interest previously reported , later. 1040 ez forms for 2012   Box 4 of Form 1099-INT will contain an amount if you were subject to backup withholding. 1040 ez forms for 2012 Report the amount from box 4 on Form 1040EZ, line 7; on Form 1040A, line 36; or Form 1040, line 62 (federal income tax withheld). 1040 ez forms for 2012   Box 5 of Form 1099-INT shows investment expenses you may be able to deduct as an itemized deduction. 1040 ez forms for 2012 See chapter 28 for more information about investment expenses. 1040 ez forms for 2012   If there are entries in boxes 6 and 7 of Form 1099-INT, you must file Form 1040. 1040 ez forms for 2012 You may be able to take a credit for the amount shown in box 6 unless you deduct this amount on line 8 of Schedule A (Form 1040). 1040 ez forms for 2012 To take the credit, you may have to file Form 1116, Foreign Tax Credit. 1040 ez forms for 2012 For more information, see Publication 514, Foreign Tax Credit for Individuals. 1040 ez forms for 2012 U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond interest previously reported. 1040 ez forms for 2012   If you received a Form 1099-INT for U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bond interest, the form may show interest you do not have to report. 1040 ez forms for 2012 See Form 1099-INT for U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 savings bonds interest , earlier, under U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Savings Bonds. 1040 ez forms for 2012   On Schedule B (Form 1040A or 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. 1040 ez forms for 2012 Then follow these steps. 1040 ez forms for 2012 Several lines above line 2, enter a subtotal of all interest listed on line 1. 1040 ez forms for 2012 Below the subtotal enter “U. 1040 ez forms for 2012 S. 1040 ez forms for 2012 Savings Bond Interest Previously Reported” and enter amounts previously reported or interest accrued before you received the bond. 1040 ez forms for 2012 Subtract these amounts from the subtotal and enter the result on line 2. 1040 ez forms for 2012 More information. 1040 ez forms for 2012   For more information about how to report interest income, see chapter 1 of Publication 550 or the instructions for the form you must file. 1040 ez forms for 2012 Prev  Up  Next   Home   More Online Publications
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The 1040 Ez Forms For 2012

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