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United way free tax preparation 5. United way free tax preparation   Ministers and Church Employees Table of Contents Alternative Limit for Church Employees Changes to Includible Compensation for Most Recent Year of ServiceChanges to Includible Compensation Changes to Years of Service Self-employed ministers and church employees who participate in 403(b) plans generally follow the same rules as other 403(b) plan participants. United way free tax preparation This means that if you are a self-employed minister or a church employee, your MAC generally is the lesser of: Your limit on annual additions, or Your limit on elective deferrals. United way free tax preparation For most ministers and church employees, the limit on annual additions is figured without any changes. United way free tax preparation This means that if you are a minister or church employee, your limit on annual additions generally is the lesser of: $51,000 for 2013 and $52,000 for 2014, or Your includible compensation for your most recent year of service. United way free tax preparation Although, in general, the same limit applies, church employees can choose an alternative limit and there are changes in how church employees, foreign missionaries, and self-employed ministers figure includible compensation for the most recent year of service. United way free tax preparation This chapter will explain the alternative limit and the changes. United way free tax preparation Who is a church employee?   A church employee is anyone who is an employee of a church or a convention or association of churches, including an employee of a tax-exempt organization controlled by or associated with a church or a convention or association of churches. United way free tax preparation Alternative Limit for Church Employees If you are a church employee, you can choose to use $10,000 a year as your limit on annual additions, even if your annual additions computed under the general rule is less. United way free tax preparation Total contributions over your lifetime under this choice cannot be more than $40,000. United way free tax preparation Changes to Includible Compensation for Most Recent Year of Service There are two types of changes in determining includible compensation for the most recent year of service. United way free tax preparation They are: Changes in how the includible compensation of foreign missionaries and self-employed ministers is figured, and A change to the years that are counted when figuring the most recent year of service for church employees and self-employed ministers. United way free tax preparation Changes to Includible Compensation Includible compensation is figured differently for foreign missionaries and self-employed ministers. United way free tax preparation Foreign missionary. United way free tax preparation   If you are a foreign missionary, your includible compensation includes foreign earned income that may otherwise be excludable from your gross income under section 911. United way free tax preparation   If you are a foreign missionary, and your adjusted gross income is $17,000 or less, contributions to your 403(b) account will not be treated as exceeding the limit on annual additions if the contributions are not in excess of $3,000. United way free tax preparation   You are a foreign missionary if you are either a layperson or a duly ordained, commissioned, or licensed minister of a church and you meet both of the following requirements. United way free tax preparation You are an employee of a church or convention or association of churches. United way free tax preparation You are performing services for the church outside the United States. United way free tax preparation Self-employed minister. United way free tax preparation   If you are a self-employed minister, you are treated as an employee of a tax-exempt organization that is a qualified employer. United way free tax preparation Your includible compensation is your net earnings from your ministry minus the contributions made to the retirement plan on your behalf and the deductible portion of your self-employment tax. United way free tax preparation Changes to Years of Service Generally, only service with the employer who maintains your 403(b) account can be counted when figuring your limit on annual additions. United way free tax preparation Church employees. United way free tax preparation   If you are a church employee, treat all of your years of service as an employee of a church or a convention or association of churches as years of service with one employer. United way free tax preparation Self-employed minister. United way free tax preparation   If you are a self-employed minister, your years of service include full and part years during which you were self-employed. United way free tax preparation Prev  Up  Next   Home   More Online Publications
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International Taxpayer

Taxpayer Identification Numbers (TIN)
A Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws.

Tax Treaties
Tax treaties may allow residents of foreign countries to be taxed at a reduced rate, or to be exempt from U.S. income taxes on certain items of income they receive from sources within the United States.

U.S. Citizens and Resident Aliens Abroad
This section covers tax topics for U.S. citizens or resident aliens living overseas.

Taxation of Nonresident Aliens
The U.S. source income of nonresident aliens is subject to U.S. taxation.

Contact My Local Office Internationally
If you are a taxpayer who resides outside of the United States, the IRS has staff in four U.S. embassies and consulates. These offices have tax forms and publications, can help you with account problems, and answer your questions about notices and bills.

Federal Unemployment Tax
Information about the Federal Unemployment Tax Act (FUTA), with state unemployment systems, which provides for payments of unemployment compensation to workers who have lost their jobs.

Foreign Earned Income Exclusion
If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction.

Foreign Students and Scholars
Aliens temporarily present in the United States as students, trainees, teachers, researchers, exchange visitors, and cultural exchange visitors are subject to special rules with respect to the taxation of their income.

Withholding Exemptions - Personal Exemptions - Form W-4
This page discusses the amount of wages subject to graduated withholding which may be reduced by the personal exemption amount.

Social Security Tax / Medicare Tax and Self-Employment
This section contatins information and links regarding Social Security Tax and Medicare Taxes.

Foreign Currency and Currency Exchange Rates
This section will give you useful information on foreign currency and where to go to research currency exchange rates.

Taxation of U.S. Resident Aliens
A resident alien's income is generally subject to tax in the same manner as a U.S. citizen.

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The United Way Free Tax Preparation

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