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File Free State Tax Return

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File Free State Tax Return

File free state tax return Publication 590 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. File free state tax return Tax questions. File free state tax return Useful Items - You may want to see: Note. File free state tax return After 2013, Publication 590 will be split into two separate publications as follows. File free state tax return Publication 590-A, will focus on contributions to traditional IRAs as well as Roth IRAs. File free state tax return This publication will include the rules for rollover and conversion contributions. File free state tax return Publication 590-B, will focus on distributions from traditional IRAs as well as Roth IRAs. File free state tax return This publication will include the rules for required minimum distributions and IRA beneficiaries. File free state tax return What's New for 2013 Traditional IRA contribution and deduction limit. File free state tax return  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. File free state tax return If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. File free state tax return For more information, see How Much Can Be Contributed? in chapter 1. File free state tax return Roth IRA contribution limit. File free state tax return  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. File free state tax return If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. File free state tax return However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. File free state tax return For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in chapter 2. File free state tax return Modified AGI limit for traditional IRA contributions increased. File free state tax return  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. File free state tax return If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. File free state tax return If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. File free state tax return See How Much Can You Deduct? in chapter 1. File free state tax return Modified AGI limit for Roth IRA contributions increased. File free state tax return  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. File free state tax return Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. File free state tax return You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. File free state tax return Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. File free state tax return You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. File free state tax return Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. File free state tax return You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. File free state tax return See Can You Contribute to a Roth IRA? in chapter 2. File free state tax return Net Investment Income Tax. File free state tax return  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). File free state tax return However, these distributions are taken into account when determining the modified adjusted gross income threshold. File free state tax return Distributions from a nonqualified retirement plan are included in net investment income. File free state tax return See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. File free state tax return Kay Bailey Hutchison Spousal IRA. File free state tax return . File free state tax return  In 2013, spousal IRAs were renamed to Kay Bailey Hutchison Spousal IRAs. File free state tax return There are no changes to the rules regarding these IRAs. File free state tax return See Kay Bailey Hutchison Spousal IRA Limit in chapter 1 for more information. File free state tax return What's New for 2014 Modified AGI limit for traditional IRA contributions increased. File free state tax return  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. File free state tax return If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. File free state tax return If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. File free state tax return Modified AGI limit for Roth IRA contributions increased. File free state tax return  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. File free state tax return Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. File free state tax return You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. File free state tax return Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. File free state tax return You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. File free state tax return Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. File free state tax return You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. File free state tax return Reminders Future developments. File free state tax return  For the latest information about developments related to Publication 590, such as legislation enacted after it was published, go to www. File free state tax return irs. File free state tax return gov/pub590. File free state tax return Simplified employee pension (SEP). File free state tax return  SEP IRAs are not covered in this publication. File free state tax return They are covered in Publication 560, Retirement Plans for Small Business. File free state tax return Deemed IRAs. File free state tax return  A qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. File free state tax return If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. File free state tax return An employee's account can be treated as a traditional IRA or a Roth IRA. File free state tax return For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. File free state tax return Contributions to both traditional and Roth IRAs. File free state tax return  For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in chapter 2. File free state tax return Statement of required minimum distribution (RMD). File free state tax return  If an RMD is required from your IRA, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the RMD to you, or offer to calculate it for you. File free state tax return The report or offer must include the date by which the amount must be distributed. File free state tax return The report is due January 31 of the year in which the minimum distribution is required. File free state tax return It can be provided with the year-end fair market value statement that you normally get each year. File free state tax return No report is required for section 403(b) contracts (generally tax-sheltered annuities) or for IRAs of owners who have died. File free state tax return IRA interest. File free state tax return  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. File free state tax return Tax on your traditional IRA is generally deferred until you take a distribution. File free state tax return Do not report this interest on your return as tax-exempt interest. File free state tax return For more information on tax-exempt interest, see the instructions for your tax return. File free state tax return Photographs of missing children. File free state tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. File free state tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. File free state tax return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. File free state tax return Introduction This publication discusses individual retirement arrangements (IRAs). File free state tax return An IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement. File free state tax return What are some tax advantages of an IRA?   Two tax advantages of an IRA are that: Contributions you make to an IRA may be fully or partially deductible, depending on which type of IRA you have and on your circumstances, and Generally, amounts in your IRA (including earnings and gains) are not taxed until distributed. File free state tax return In some cases, amounts are not taxed at all if distributed according to the rules. File free state tax return What's in this publication?   This publication discusses traditional, Roth, and SIMPLE IRAs. File free state tax return It explains the rules for: Setting up an IRA, Contributing to an IRA, Transferring money or property to and from an IRA, Handling an inherited IRA, Receiving distributions (making withdrawals) from an IRA, and Taking a credit for contributions to an IRA. File free state tax return   It also explains the penalties and additional taxes that apply when the rules are not followed. File free state tax return To assist you in complying with the tax rules for IRAs, this publication contains worksheets, sample forms, and tables, which can be found throughout the publication and in the appendices at the back of the publication. File free state tax return How to use this publication. File free state tax return   The rules that you must follow depend on which type of IRA you have. File free state tax return Use Table I-1 to help you determine which parts of this publication to read. File free state tax return Also use Table I-1 if you were referred to this publication from instructions to a form. File free state tax return Comments and suggestions. File free state tax return   We welcome your comments about this publication and your suggestions for future editions. File free state tax return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. File free state tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. File free state tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. File free state tax return   You can send your comments from www. File free state tax return irs. File free state tax return gov/formspubs/. File free state tax return Click on “More Information” and then on “Comment on Tax Forms and Publications”. File free state tax return   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. File free state tax return Ordering forms and publications. File free state tax return   Visit www. File free state tax return irs. File free state tax return gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. File free state tax return Internal Revenue Service 1201 N. File free state tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. File free state tax return   If you have a tax question, check the information available on IRS. File free state tax return gov or call 1-800-829-1040. File free state tax return We cannot answer tax questions sent to either of the above addresses. File free state tax return Useful Items - You may want to see: Publications 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 571 Tax-Sheltered Annuity Plans (403(b) Plans) 575 Pension and Annuity Income 939 General Rule for Pensions and Annuities Forms (and instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. File free state tax return 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-S SIMPLE Individual Retirement Trust Account 5305-SA SIMPLE Individual Retirement Custodial Account 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 5498 IRA Contribution Information 8606 Nondeductible IRAs 8815 Exclusion of Interest From Series EE and I U. File free state tax return S. File free state tax return Savings Bonds Issued After 1989 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions See chapter 5 for information about getting these publications and forms. File free state tax return Table I-1. File free state tax return Using This Publication IF you need information on . File free state tax return . File free state tax return . File free state tax return THEN see . File free state tax return . File free state tax return . File free state tax return traditional IRAs chapter 1. File free state tax return Roth IRAs chapter 2, and parts of  chapter 1. File free state tax return SIMPLE IRAs chapter 3. File free state tax return the credit for qualified retirement savings contributions (the saver's credit) chapter 4. File free state tax return how to keep a record of your contributions to, and distributions from, your traditional IRA(s) appendix A. File free state tax return SEP IRAs and 401(k) plans Publication 560. File free state tax return Coverdell education savings accounts (formerly called education IRAs) Publication 970. File free state tax return IF for 2013, you received social security benefits, had taxable compensation, contributed to a traditional IRA, and you or your spouse was covered by an employer retirement plan, and you want to. File free state tax return . File free state tax return . File free state tax return THEN see . File free state tax return . File free state tax return . File free state tax return first figure your modified adjusted gross income (AGI) appendix B, worksheet 1. File free state tax return then figure how much of your traditional IRA contribution you can deduct appendix B, worksheet 2. File free state tax return and finally figure how much of your social security is taxable appendix B, worksheet 3. File free state tax return Table I-2. File free state tax return How Are a Traditional IRA and a Roth IRA Different? This table shows the differences between traditional and Roth IRAs. File free state tax return Answers in the middle column apply to traditional IRAs. File free state tax return Answers in the right column apply to Roth IRAs. File free state tax return Question Answer   Traditional IRA? Roth IRA? Is there an age limit on when I can open and contribute to a Yes. File free state tax return You must not have reached age  70½ by the end of the year. File free state tax return See Who Can Open a Traditional IRA? in chapter 1. File free state tax return No. File free state tax return You can be any age. File free state tax return See Can You Contribute to a Roth IRA? in chapter 2. File free state tax return If I earned more than $5,500 in 2013 ($6,500 if I was 50 or older by the end of 2013), is there a limit on how much I can contribute to a Yes. File free state tax return For 2013, you can contribute to a traditional IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013. File free state tax return  There is no upper limit on how much you can earn and still contribute. File free state tax return See How Much Can Be Contributed? in chapter 1. File free state tax return Yes. File free state tax return For 2013, you may be able to contribute to a Roth IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013,  but the amount you can contribute may be less than that depending on your income, filing status, and if you contribute to another IRA. File free state tax return See How Much Can Be Contributed? and Table 2-1 in chapter 2. File free state tax return Can I deduct contributions to a Yes. File free state tax return You may be able to deduct your contributions to a traditional IRA depending on your income, filing status, whether you are covered by a retirement plan at work, and whether you receive social security benefits. File free state tax return See How Much Can You Deduct? in chapter 1. File free state tax return No. File free state tax return You can never deduct contributions to a Roth IRA. File free state tax return See What Is a Roth IRA? in chapter 2. File free state tax return Do I have to file a form just because I contribute to a Not unless you make nondeductible contributions to your traditional IRA. File free state tax return In that case, you must file Form 8606. File free state tax return See Nondeductible Contributions in chapter 1. File free state tax return No. File free state tax return You do not have to file a form if you contribute to a Roth IRA. File free state tax return See Contributions not reported in chapter 2. File free state tax return Do I have to start taking distributions when I reach a certain age from a Yes. File free state tax return You must begin receiving required minimum distributions by April 1 of the year following the year you reach age 70½. File free state tax return See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. File free state tax return No. File free state tax return If you are the original owner of a Roth IRA, you do not have to take distributions regardless of your age. File free state tax return See Are Distributions Taxable? in chapter 2. File free state tax return However, if you are the beneficiary of a Roth IRA, you may have to take distributions. File free state tax return See Distributions After Owner's Death in chapter 2. File free state tax return How are distributions taxed from a Distributions from a traditional IRA are taxed as ordinary income, but if you made nondeductible contributions, not all of the distribution is taxable. File free state tax return See Are Distributions Taxable? in chapter 1. File free state tax return Distributions from a Roth IRA are not taxed as long as you meet certain criteria. File free state tax return See Are Distributions Taxable? in chapter 2. File free state tax return Do I have to file a form just because I receive distributions from a Not unless you have ever made a nondeductible contribution to a traditional IRA. File free state tax return If you have, file Form 8606. File free state tax return See Nondeductible Contributions in chapter 1. File free state tax return Yes. File free state tax return File Form 8606 if you received distributions from a Roth IRA (other than a rollover, qualified charitable distribution, one-time distribution to fund an HSA, recharacterization, certain qualified distributions, or a return of certain contributions). File free state tax return Prev  Up  Next   Home   More Online Publications
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Safeguards Program

The Safeguards Program and staff are responsible for ensuring that federal, state and local agencies receiving federal tax information protect it as if the information remained in IRS’s hands.

These agencies and their contractors receiving federal tax information must protect the confidentiality of return information and are periodically reviewed by Safeguards personnel to ensure they meet the safeguarding requirements of IRC 6103(p)(4). These requirements include employee awareness programs, proper disposal, secure storage and computer security among others.

Publication 1075, Tax Information Security Guidelines for Federal, State and Local Agencies (PDF)
This document contains specific requirements for safeguarding federal tax information. This revision becomes effective on Jan. 1, 2014.

Publication 1075, Tax Information Security Guidelines for Federal, State and Local Agencies (PDF)
This revision of 1075 became effective on Aug. 24, 2010 and is superceded by the Jan. 1, 2014 version.

Comments and suggestions on the revised Publication 1075 can be forwarded to the safeguards mailbox at: safeguardreports@irs.gov.

Additional Requirements for Publication 1075
Safeguarding requirements may be supplemented or modified between editions of Publication 1075 by guidance issued by the Office of Safeguards.
 

ALERTS

See “Safeguards Alert Memorandums” below for trending security concerns.


Publication 1075

Recommendations on How to Become Compliant with the New Requirements
Given the significant changes in technical safeguards requirements found in Sections 4, 5 and 6, the IRS has some recommendations for agencies to become compliant with the new requirements.

Reporting Requirements
Publication 1075 requires agencies to use approved report templates and to transmit the reports electronically. These reports must be encrypted and submitted to the safeguardreports@irs.gov mailbox.

Reporting Unauthorized Accesses, Disclosures or Data Breaches
Local, state and federal agencies receiving federal tax information must follow the revised provisions of Section 10 of Publication 1075 (PDF) upon discovering a possible improper inspection or disclosure of FTI, including breaches and security incidents. Agencies must contact Treasury Inspector General for Tax Administration and the IRS Office of Safeguards immediately, but no later than 24-hours after identification of a possible issue involving federal tax information. Agencies are not to wait until after their own internal investigation as been conducted.

Contacting TIGTA is critical to expedite the recovery of compromised data and identify potential criminal acts. The IRS Office of Safeguards investigation focuses on identifying processes, procedures or systems within the agency with inadequate security controls which led to the incident.

Internal Inspections Reports
Section 6.3 of Publication 1075, Tax Information Security guidelines for Federal, State and Local Agencies and Entities, requires that agencies receiving federal tax information (FTI) establish a review cycle for internal inspections of headquarters offices and all local/field offices that receive FTI. The Internal Inspections Report – Headquarters Office and Internal Inspections Report – Field Office are for these inspections. 

In addition, these agencies must also include an internal inspection of IT operations, using the Internal Inspections Report – IT Operations. Internal inspections of contractors with access to FTI and any off-site storage facilities must also be completed. All scheduled and completed internal inspections should be provided to the IRS Office of Safeguards on the Internal Inspections Implementation Report.

Safeguards Technical Assistance by Topic
The IRS has recommendations and discussions on various Safeguards Program topics available for agencies to help stay in compliance. These documents may assist with preparation of reports, protecting federal tax information, and knowing the legalities of the Safeguards Program.

IRS Disclosure Awareness Videos
IRS Disclosure Awareness training videos are available for local, state and federal governmental agencies that receive federal tax information (FTI). The IRS Office of Safeguards created videos (with captions in English and Spanish) to help explain several key concepts in protecting the confidentiality of FTI.

References/Related Topics

Physical Security and Disclosure References/Related Topics
Publication 1075 requirements pertaining to the protection of FTI in a physical environment and the disclosure of FTI to other persons are available in the Safeguard Disclosure Security Evaluation Matrix.

Document

Version

Release Date

Safeguard Disclosure Security Evaluation Matrix (SDSEM) (XLS)

3.0

9/12/2012


Safeguards Alert Memorandums
The following resources address recent security trends regarding the protection of FTI.

Document

Version

Release Date

Alert Memo – Multi-factor Authentication Implementation

N/A

6/17/2013

Alert Memo – Protecting FTI On Mainframes with Open Port 23

N/A

6/17/2013


Computer Security Compliance References/Related Topics
The following Computer Security Evaluation Matrix (SCSEM) downloads are available for use in preparing an IT environment that will receive, process, or store FTI.

Document

Version

Release Date

Application – Generic Application SCSEM (XLS)

1.3

9/26/2013

Application – GenTax SCSEM (XLS)

1.3

9/26/2013

Application – Internet Explorer SCSEM (XLS)

1.2

9/26/2013

Database – DB2 SCSEM (XLS)

1.2

2/12/2013

Database – Oracle 11g SCSEM (XLS)

1.1

9/26/2013

Database – Oracle 10g SCSEM (XLS)

1.3

9/26/2013

Database – Oracle 9i SCSEM (XLS)

1.2

2/12/2013

Database – SQL Server 2000 SCSEM (XLS)

1.2

2/12/2013

Database – SQL Server 2005 SCSEM (XLS)

1.2

2/12/2013

Mainframe – ACF2 SCSEM (XLS)

1.3

9/26/2013

Mainframe – i5 OS SCSEM (XLS)

1.3

9/26/2013

Mainframe – RACF SCSEM (XLS)

1.3

9/26/2013

Mainframe – Top Secret SCSEM (XLS)

1.3

9/26/2013

Mainframe – UNISYS SCSEM (XLS)

2.4

9/26/2013

Management, Operational and Technical (MOT) (XLS)

2.0

9/27/2013

MOT Appendix – Data Warehouse SCSEM (XLS)

1.3

2/12/2013

MOT Appendix – Multi-functional Device SCSEM (MFD) (XLS)

2.2

2/12/2013

Network – Cisco IOS SCSEM (XLS)

1.2

9/26/2013

Network – Firewall SCSEM (XLS)

1.2

9/26/2013

Network – Network Assessment SCSEM (XLS)

1.2

9/26/2013

Network – Storage Area Network SCSEM (SAN) (XLS)

1.2

9/26/2013

Network – Virtual Private Network (VPN) SCSEM (XLS)

1.2

9/26/2013

Network – Voice Over Internet Protocol (VoIP) SCSEM (XLS)

1.2

9/26/2013

Network – Wireless Local Area Network (LAN) SCSEM (XLS)

1.2

9/26/2013

Other – Cloud Computing SCSEM (XLS)

1.0

4/1/2013

Other - Oracle Public Sector Revenue Management (PSRM) (formerly Enterprise Taxation and Policy Management (ETPM))

1.1

2/5/2014

Other – Generic Operating System SCSEM (XLS)

1.3

2/12/2013

Other – Mobile Devices SCSEM (XLS)

1.0

4/1/2013

Other – OpenVMS SCSEM (XLS)

1.2

9/26/2013

Other - RSI Revenue Premier

1.0

9/23/2013

Other - Teradata

1.0

9/23/2013

Other – Web Server SCSEM (XLS)

1.3

9/26/2013

UNIX and Linux – Solaris, HP-UX, AIX, Red Hat, SuSE SCSEM (XLS)

1.4

2/12/2013

Virtualization – VMWare ESX 4.x SCSEM (XLS)

1.2

2/12/2013

Virtualization – VMWare ESXi 5.x SCSEM (XLS)

1.1

3/7/2013

Microsoft Windows 7 SCSEM (XLS)

1.2

2/12/2013

Microsoft Windows Server 2003 SCSEM (XLS)

1.2

2/12/2013

Microsoft Windows Server 2008 and 2008 R2 SCSEM (XLS)

1.2

2/12/2013

Microsoft Windows Vista SCSEM (XLS)

1.2

2/12/2013

Microsoft Windows XP SCSEM (XLS)

1.2

2/12/2013

 

Page Last Reviewed or Updated: 25-Mar-2014

The File Free State Tax Return

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