What do I do if I receive a notice
from the IRS about my taxes?
Don’t panic! the first thing to do is carefully read the
notice—to determine why it was sent, what the IRS is
requesting, and what they want you to do. It may be nothing of
importance; it may even be a notice in your favor. After
reading it you should bring it to our attention.
What is the difference between a C and an S
A C Corporation and an S Corporation are exactly the same in
respect to liability protection. The difference is in how you
are taxed. A C Corporation has what is referred to as a double
taxation. First the corporation is taxed, and secondly the
dividends are taxed on the shareholders’ tax returns. An
S Corporation is not taxed at the corporate level, only at the
shareholder level. Most small businesses are eligible to file
as S corporations. But the appropriate election must be
What do I need to bring when I am having my taxes
Following is a list of the more common items you should bring
if you have them.
- Wage statements (Form W-2)
- Pension, or retirement income (Forms 1099-R)
- Dependents' Social Security numbers and dates of birth
- Last year's tax return
- Information on education expenses
- Information on the sales of stocks and/or bonds
- Self-employed business income and expenses
- Lottery and/or gambling winnings and losses
- State refund amount
- Social Security and/or unemployment income
- Income and expenses from rentals
- Record of purchase or sale of real estate
- Medical and dental expenses
- Real estate and personal property taxes
- Estimated taxes or foreign taxes paid
- Cash and non-cash charitable donations
- Mortgage or home equity loan interest paid (Form 1098)
- Unreimbursed employment-related expenses
- Job-related educational expenses
- Child care expenses and provider information And any other
items that you think may be necessary for your taxes.
How do I find out about my refund?
The best way is to use the Check Your Refund link from the
Resources pages of our website! To look up the status of your
federal or state refund, you will need your social security
number, filing status, and exact amount you’re
What are the consequences of early withdrawals from my
If you withdraw money from a 401(k) or an IRA before age 59
½, the distribution is taxable and there is a 10%
penalty on the taxable amount. The main exceptions
that let you withdraw money early without penalty are as
What is a 529 plan?
Qualified retirement plan distributions if you separated
from service in or after the year you reach age 55 (does
not apply to IRAs).
Distributions made as a part of a series of substantially
equal periodic payments (made at least annually) for your
life or the joint lives of you and your designated
Distributions due to total and permanent disability.
Distributions due to death (does not apply to modified
Qualified retirement plan distributions up to (1) the
amount you paid for unreimbursed medical expenses during
the year minus (2) 7.5% of your adjusted gross income for
IRA distributions made to unemployed individuals for health
IRA distributions made for higher education expenses.
IRA distributions made for the purchase of
a first home (up to $10,000).
Distributions due to an IRS levy on the qualified
Qualified distributions to reservists while serving on
active duty for at least 180 days.
A Qualified Tuition Program (QTP), also called a "529 plan," is
established and maintained to let you either prepay or
contribute to an account established for paying a student's
qualified higher education expenses at an eligible institution.
States and eligible educational institutions can establish and
maintain a QTP. You do not get any federal deductions for the
account, but any income earned in it is tax-free. One of the
big advantages of a 529 plan is that many states allow you to
deduct some contributions to the plan from your state tax
What medical expenses are deductible?
A deduction is allowed only for expenses paid for the
prevention or alleviation of a physical or mental defect or
illness. Medical care expenses include payments for the
diagnosis, cure, mitigation, treatment, or prevention of
disease, or treatment affecting any structure or function of
the body. Except for insulin, only prescription drugs are
deductible. The cost of health insurance is deductible. You may
also deduct the cost of traveling to and from the care
provider. You can deduct only the part of your medical and
dental expenses that exceeds 7.5% of your adjusted gross
If I donate my vehicle to charity, how much can I
deduct on my tax return?
In the past there were a lot of charities asking you to donate
your car, and there were a lot overinflated appraisals of the
fair market value for these vehicles. But recently the IRS has
gotten stricter on the way you determine the value of your car.
Now you must claim the actual amount the charity received at an
auction to sell the car, and the charity should give you timely
acknowledgment to claim the deduction. If the vehicle is
actually used by the charity instead of sold at auction, then
you may claim the vehicle's fair market value.
Raymond J. Harting, CPA
Providing Accounting, Tax, & Small Business
634 Old Post Road, Route 22 ● Bedford, NY
Phone: (914) 234-9721 ● Fax: (914) 234-9724