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1:16	Peggy Riley - Welcome to the IRS Tax Chat. I am the IRS Media Relations Specialist for the New England area and I look forward to answering your questions today!

1:25

[Comment From Rick]
I have recently inherited two IRAs (as a named beneficiary) from my late mother. I am getting a lot of confusing information about setting up an Inherited/Benficiary IRA, and whether I have to leave it where it is, or can transfer it to another provider and retain the tax benefits. Where is the best source of complete, unbiased and detailed information about the rules and my options?

1:27	Peggy Riley - Rick - IRS Publication 590 had a lot of information about IRAs and may have the best guidance for you. You may also want to seek professional assistance from an accountant.

1:35	[Comment From Frank] In regard to rollover IRA's converted to a Roth, when are estimated taxes due? On the conversion date (Jan. 13) or when taxes are due April 15.

1:36

Peggy Riley -

If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. See Publication 505, Tax Withholding and Estimated Tax. If you are making estimated tax payments, they are due quarterly - April 15, June 15, Spet 15 and January 15th.

1:41	[Comment From Eleanor Hogan] I would like to know why retired people cannot itemize deductions. I have very high medical prescriptions and pay a lot for my supplement insurance. My income is SS and a monthly amount from my 401K.

1:43

Peggy Riley -

Generally, you must decide whether to itemize deductions or to use the standard deduction. You should itemize deductions if your allowable itemized deductions are more than your standard deduction. There is an additional standard deduction for taxpayers age 65 or older, so the standard deduction may be larger than itemizing.

You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income. You do this calculation on Form 1040 Schedule A in computing the amount deductible.

1:43	[Comment From Amy] My husband and I both freelance while working part-time permanent jobs. We can't usually pay estimated quarterly taxes because we don't earn enough to let it go. At the end of year, we pay late fees as as result. Any way around this?

1:44	Peggy Riley - Amy, you may want to adjust your withholding from the part time permanent jobs, that way you can have more withheld and may reduce or eliminate a penalty at the end of the year.

1:49	[Comment From Rosemary] will energy efficient kitchen applicances purchased in 2009 be deductible - to any degree - on 2009 federal incomes taxes;

1:49	Peggy Riley - There are some new energy credits for windows and doors; insulation, roofs, hvac, water heaters and biomass stoves, as well as solar panels and solar water heaters.

1:53

[Comment From Andrew]
I have received notice from the IRS that I did not report proper amounts on 2007 taxes. I have an IRA MRD where I deducted a percentage based on taxes paid (Form 8606 submitted); and a Mass Teachers Retirement Pension with the taxable amount reported but not acknowledged by the IRS. What is happening?

1:53	Peggy Riley - Andrew, you should first contact the number on the notice that was sent to you. If you still cannot resolve the problem, contact the Taxpayer Advocate office at 1-877-777-4778.

1:54	[Comment From Paul] As a self employed person, what is the maximum I can contribute to a 401(K) age 50+, and are there various products available?

1:55	Peggy Riley - For 2008, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,000 ($6,000 if you are age 50 or older), or Your taxable compensation (defined earlier) for the year.

2:00	[Comment From Andrew] This is not a question - it is a thank you for this great service!

2:10	[Comment From Peter Holmes] Are Books and newsletters on medical subjects "a tax deductable medical expense"? Publication 502 doesn't say Yes or No. What about a book on Colon Cancer bought after being diagnosed with Colon Cancer?

2:10	[Comment From Peter Holmes] What about "Consumer Reports On-Health" or Havard's "Women's Health Newsletter" unrelated to a specific medical condition I currently have, as a deductable Medical Expense?

2:11

Peggy Riley - Here is the definition of what medical expenses are deductible:

What Are Medical Expenses?
Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. They also include dental expenses.

2:11	Peggy Riley - Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.

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