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Money Saving Tips / Budgeting Discuss Tax Credit - 2006 (one time only) in the Vacation Planning forums; I read this on another board and wanted to share it with you here.... A SPECIAL ONE-TIME TAX CREDIT ON YOUR 2006 TAX RETURN When it comes time to prepare ...
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    MickeyBabe's Avatar
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    Tax Credit - 2006 (one time only)

    I read this on another board and wanted to share it with you here....



    A SPECIAL ONE-TIME TAX CREDIT ON YOUR 2006 TAX RETURN

    When it comes time to prepare and file your 2006 tax return, make sure you don't overlook the federal excise tax refund credit. You claim the credit on line 71 of your form 1040. A similar line will be available if you file the short form 1040A. If you have family or friends who no longer file a tax return AND they have their own land phone in their home and have been paying a phone bill for years, make sure they know about this form 1040EZ-T.

    What is this all about? Well the federal excise tax has been charge to you on your phone bill for years. It is an old tax that was assessed on your toll calls based on how far the call was being made and how much time you talked on that call. Whe n phone companies began to offer flat fee phone service, challenges to the excise tax ended up in federal courts in several districts of the country.

    The challenges pointed out that flat fee/rate phone service had nothing to do with the distance and the length of the phone call. Therefore, the excise tax should/could not be assessed.

    The IRS has now conceded this argument. Phone companies have been given notice to stop assessing the federal excise tax as of Aug 30, 2006. You will most likely see the tax on your September cutoff statement, but it should NOT be on your October bill.

    But the challengers of the old law also demanded restitution. So the IRS has announced that a one time credit will be available when you and I file our 2006 tax return as I explained abo ve. However, the IRS also established limits on how BIG a credit you can get. Here's how it works.

    If you file your return as a single person with just you as a dependent, you get to claim a $30 credit on line 71 of your 1040.

    If you file with a child or a parent as your dependent, you claim $40.

    If you file your return as a married couple with no children, you claim $40.

    If you file as married with children, you claim $50 if one child, $60 if two children.

    In all cases, the most you get to claim is $60 - UNLESS you have all your phone bills starting AFTER Feb 28, 2003 through July 31, 2006 (do not use any bills starting Aug 1, 2006.), then you can add up the ACTUAL TAX AS IT APPEARS ON YOUR BILLS AND CLAIM THAT FOR A CREDIT.

    Now if you have your actual phone bills and come up with an ACTUAL TAX AMOUNT, you cannot use line 71 on your tax return. You have to complete a special form number 8913 and attach it to your tax return.

    Individuals using the special from 1040EZ-T will have to attach this form 8913 also.

    One final point - this credit is a refundable credit. That means you get this money, no matter how your tax return works out. If you would end up owing the IRS a balance, the refund will reduce that balance you owe.

    If you end up getting a refund, the credit will be added and you get a bigger refund by that $30 to $60, depending on how many dependents are on your return.

    Feel free to pass this on or make copies for family and friends who don't have computers.

    Here is more information on it from the IRS website:

    http://www.irs.gov/newsroom/article/...161506,00.html






    I plan on confirming this with my Tax professional, I'll let you know what I find out.

    I can always use extra "Disney Money"

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    iwannabeminnie's Avatar
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    iwannabeminnie's Avatar
    iwannabeminnie is offline I'm old! I'm like the cryptkeeper!
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    An easier way to explain the amount of the credit is:

    $30 for one exemption
    $40 for two exemptions
    $50 for three exemptions
    $60 for four or more exemptions

    It doesn't matter who the exemptions are, just the number claimed on the tax return.
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    I was hoping you would weigh in on this subject T-Nina

    (I may actually have the last three years worth of Phone bills, If I do, I'll let you know if they balance out or if one way or another is a better deal.

    Quote Originally Posted by iwannabeminnie View Post
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    As long as you pick up the relocation costs, housing, a company car, benefits, stock options and six figure bonuses. I'm in!

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    JMSuperHeroTeam is offline Maura Colleen the Makeup Queen
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    oh please do my taxes and my fafsa... i am okay with taxes but not fafsa!!

    i'd rather eat a cookie.

    but thank you for the news, that $40 will buy me a day on the disney dining plan!

    KUNGALOOSH!!!




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    uratoon's Avatar
    uratoon is offline Going back for 5 free days at any Deluxe!!!
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    I had read this somewhere, but I forgot to ask the tax lady when I dropped mine off.

    T-nina, is this something that is just automatically done by the tax people?

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    somewhat related to save you some $$$- you can get Turbo Tax online services at a deep discount. simply go to Fidelity's website and access Turbo Tax through there, they have set up discounts for thier customers. but the part of the site with the passthrough is not secure, you dont have to log in or anything to acess it. its not crooked or illegal, they advertise on one part of thier site that its available for non-member visitors as well, but from that part of the site, they require you to provide personal info. the link below doesn't require anything, you just click and you are dumped onto TT's website.


    http://personal.fidelity.com/plannin..._content.shtml

    Click on "start or continue your taxes"
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    Shere_Khan is offline As the world falls down...
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    What do you do Iwannabeminnie?

    I just got a job at a tax and accounting service.


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    BryanFykes's Avatar
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    ummm... erased 'cause what i posted was wrong!!!
    Last edited by BryanFykes; 01-18-2007 at 02:18 PM. Reason: incorrect info
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    firemedic's Avatar
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    Does anyone know if TurboTax has that excise tax already programmed?



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    MickeyBabe's Avatar
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    I have no experience with TurboTax, so I can't answer your question. I would call thier support if it doesn't show up.

    I didn't get a chance to dig out all of my old phone bills but based on a couple I did look at, I definitely chose wisely in taking the standard deduction.

    Since the excise tax in question is based on long distance calls alone, I would say if your long distance was substantial it might be to your advantage to use the bills if you have them.

    We use our cell phones for long distance since we have the minutes to burn, therefore it didn't make sense for me.

    JMHO

    YMMV

    Last edited by MickeyBabe; 01-26-2007 at 03:42 PM.
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    thanks for the heads up!!

    http://wewantstheredhead.blogspot.com

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    BryanFykes's Avatar
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    the phone tax refund DOES show up on Turbo Tax, at least it does on line...

    Its under deductions. I took the $60, but you can itemize it too, if you want.
    Remember the most important Service guidline-


    "Always preserve the Magic"




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