The Chronically Ill and Taxes

You are defined Chronically Ill by IRS standards if you can't do two of the six normal daily tasks of eating, bathing, dressing, toileting, transferring, and continence without substantial assistance. Bathing and dressing are the two that usually apply first it seems. You are also chronically ill if you have Alzheimer's disease or similar dementia. If you are so classified, then all expenses including room, board, and personal care are deductible as  medical expenses. With nursing home and assisted living costs so high, you can quickly exceed the 7.5% of adjusted gross income threshold for medical expenses so you can get a benefit for the deduction. A licensed health care provider needs to certify your condition.

Great I got a tax refund!

No it is not such a great thing. You have just loaned the government your money interest free by having too much withholding or estimated tax payments. You are just getting your own money back. You should strive to break even with the government  at tax time.

The IRS Notice: What to Do and Not Do

Don't put it away unopened in a drawer and forget about it. It probably isn't as bad as you think it is going to be. Respond as soon as possible. It makes the IRS happy and  could keep you out of trouble. Keep in mind that sometimes you have to wait about 45 minutes before you can get someone on the phone at the IRS. If you don't respond , the IRS computer will keep mailing you more serious notices with consequences like more penalties and interest. Send a copy to your CPA if you want him to handle it. Also, the earlier the CPA sees it, the more help he can be. Your CPA will usually need a power of attorney to discuss your notice with the IRS. Don't procrastinate!

2011 Nonbusiness Energy Property Credit

The credit is still available for property placed in service in 2011 but in greatly reduced form. You can now get a maximum of $500 based on 10% of  qualified improvements. Qualified improvements include energy-efficient windows, doors, insulation, certain roofs, and heating and air conditioning systems. Installation costs only qualify in the case of heating and air conditioning systems. This $500 credit is reduced by the total of any credits taken on your return for 2006 through 2010 so it probably won't help many taxpayers.