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Late last year, the IRS sent notices to approximately 2,000 taxpayers as part of its Employment Tax National Research Project. In February 2010, the IRS will begin examining employers specifically targeting employment taxes: FICA, Social Security, Medicare, and federal income tax withholding.

Employment Tax Audit & What to do?

Question: What are the normal and customery fee’s charged by a Tax Preparer during an IRS Tax Audit? Insurance was paid.

IRS determination was a no deficiency in income tax due but now we have to pay just about as much in Tax-Examination audit preparation & representation fees for professional services rendered. Originally we paid the tax preparer an Insurance fee to represent us in the event of an Audit.

Answer: If you purchased insurance to cover representation in an audit, the insurance contract should spell out what fees if any you are required to pay. Without knowing more about the audit and the original contract, your question can’t be answered.

How to Prepare for an Audit

You got that dreaded Internal Revenue Service letter? Don’t panic, just prepare.

Surviving an IRS Tax Audit : IRS Audit: Finding Representation

Question: U.S. Taxes- Medical deduction?

IRS Publication 502 states that orthopedic shoes are allowable medical deduction, but only for the cost ‘above normal shoes.’ It does not specify how much regular shoes should cost. Does anyone know if the IRS has a standard cost of regular shoes they use for this?

Answer: Find similar shoes, then compare them to the orthopedic ones. The difference is obviously medical. (by similar, I mean don’t compare orthopedic dress shoes with sneakers, etc.)

Unless you have a lot of other medical expenses, you may not get a tax benefit from this. Your total medical expenses are only deductible to the extent they exceed 7.5% of your Adjusted Gross Income (AGI). That is if you have income of $40,000 and medical expenses of $4,500, you can only deduct $1,500 ($40,000 * 7.5% = $3,000).

If you work at a place that has a medical flexible spending account (FSA) available, you should set aside an amount that you believe you will spend in 2008 on covered expenses. Check with your Human Resources department for more information.

Health Insurance & Income Tax: eHealthInsurance Releases Tips for ‘Accidental Entrepreneurs’ and the Self-Employed

MOUNTAIN VIEW, CA–(Marketwire – 02/25/10) – eHealthInsurance (NASDAQ: EHTH – News ), the leading online source of health insurance for individuals, families and small businesses, today released a series of health insurance tax tips especially useful for those doing their federal taxes for the first time as self-employed professionals. According to the Bureau of Labor Statistics, as of December …

Question: To determine if an organiztion is a charity, look for pub. 78 on the IRS Web site.?

In addition, you may verify an organization’s tax-exempt status and eligibility to receive tax-deductible charitable contributions by asking to see an organization’s IRS letter recognizing it as tax-exempt. You may also confirm an organization’s status by calling the IRS (toll-free) at 1-877-829-5500.

You may download the electronic version of Publication 78. The download file is a large compressed file, from which you may extract a very large delimited text file. Opening the file using word processing software may prevent formatting/appearance issues that may be present if the file is viewed with a text editing program.

Answer: If we’re just sharing info,,,, CIR 230 is finally out of back order… get ‘em while they’re hot and keep your nose clean and shinny!

Five tax season tips for New Jerseyans

While the tax filing deadline is about three months away, it always seems to be here before you know it. Here are the Internal Revenue Service’s top five tips that will help your tax filing process run smoother than ever this year.

Calendar

Submissions for “Community Calendar” are required two weeks preceding the date of publication. Send to: Mary Ann Bottari, Pioneer Press, 3701 W. Lake Ave., Glenview IL 60026; mbottari@pioneerlocal.com. Information may be faxed to (847) 486-7495.

The Gift of the Gun (Harry)