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michaelOfGeorgia -> FYI: Form 1040EZ-T (1/6/2007 3:18:29 PM)
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for those in the USA that are going to be filing income taxes for 2006, here's something you should know:
Directors Report, Dec. 2006
Get in all your tax deductions before year end!
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 1040 A. If you have friends or family 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 1040 EZ-T.
What is this all about?
Well, the Federal Excise Tax has been charged 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. When the 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 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 August 30, 2006. You will most likely see the tax on your September cut off statement, but it should not be on your October bill.
But the challenges of the old law also demanded restitution. So the IRS has announced that a one time credit will be available when you file the 2006 tax return. However, the IRS also established limits on how BIG a credit you can get. Here is how it works:
If you file your return as a single person with just you as a dependent, you get to claim $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 for one child, $60 for two children.
In all cases, the most you get to claim is $60, UNLESS you have all your phone bills starting AFTER February 28, 2003 through July 31, 2006 (do not use bills starting August 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 must complete a special form number 8913 and attach it to your tax return.
Individuals using the special form 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, depending on how may dependents are on your return.
This information for this article was provided by Edward Schneider, Human Resource Specialist, US SBA, Office of Human Capital Management, Personnel Services Division, 721 19th Street #392, Denver, CO 80202. (303) 844-7798
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