2006 Tax Credit - Make note!

[Five4Fighting]

http://www.snopes.com/business/taxes/excise.asp


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.
When 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 above. 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.

[ifish4tuna]

5 - Thanks for the tip. I love easy money.

[AdamM]

Do you have to come up with those bills? Kinda sounds like a pain in the ass for $30-$60 if you do have to bring those bills. Does this apply for the whole US? Thanks for the tip.