Getting Ready for Filing Season 2007 Questions and Answers - Individual
Posted: Thursday, December 28, 2006
by Maria E. Varela
Primo Public Services
New provisions effective for 2006 will affect most individual tax returns in some way, and the new Telephone Excise Tax Refund leads the way. Here are some important facts about the Telephone Excise Tax Refund, as well as other important changes and new options you need to be aware of before filing your 2006 individual federal tax return:
Q.
How do I know if I qualify for the Telephone Excise Tax Refund? Individuals who qualify for the Telephone Excise Tax Refund, a one-time refund that can be claimed for 2006, have paid a telephone excise tax on long distance or bundled telephone services any time between February 28, 2003 and July 31, 2006. Cell phones and Internet phone packages, as well as traditional land-line telephone services, can qualify. For the income tax return you are filing, you should see a line item for the credit for the Federal Telephone Excise Tax. Q.
How can I claim the Telephone Excise Tax Refund if I don’t have all of my old phone bills? A.
Because many people will not have access to all of their phone bills for the time period in question, the IRS has created standard refund amounts. These standard amounts are based on the number of exemptions the individual claims, as follows: $30 for one exemption, $40 for two, $50 for three, and $60 for four or more exemptions. Q.
I have all of my old phone bills for the time period that qualifies for the refund. How do I proceed? A.
If you have all of your bills and can identify the exact amounts of telephone excise tax paid over the qualifying time period, you can choose to file a Form 8913 instead of claiming the standard amounts. By choosing to file for the refund in this way, you can also claim interest on the amount that is due back to you. But remember – that interest counts as taxable income. Q.
What if I don’t have an income tax filing requirement? Can I still claim this refund? A.
Yes. You will need to file a Form 1040EZT, a simple form that basically asks you to provide your name, address, Social Security number, the amount you are claiming, and your signature. Q.
What is the split refund option? A.
For the first time, the IRS is now allowing taxpayers to divide their federal income tax refund among up to three different bank accounts. To take advantage of this split refund option, you need to check the appropriate box on your income tax return and attach a completed Form 8888. Be sure that you provide the correct routing numbers and account numbers, and that you understand the rules your financial institution has regarding which accounts can accept direct deposits. Problems with this information can result in the issuance of paper checks, which will probably delay your refund. Q.
Have any of the tax benefits that expired in 2005 been extended? A.
Both houses of Congress have passed an “extender package" to extend some expiring tax benefits, such as the tuition and fees deduction and the classroom teacher deduction. These extensions become official once the President signs them into law. For up-to-date information on all of the extended benefits, visit the IRS Website at www.irs.gov. Q.
How do I know if I qualify for the Earned Income Tax Credit? A.
The IRS provides a free online tool, called the EITC Assistant, which can help you determine whether you qualify for the Earned Income Tax Credit. Just visit the IRS Website at www.irs.gov and click on “More Online Tools". CONTACT US This Article has been viewed 476 times. (Not updated in real-time.)
Top-level comments on this article: (2 total)Yes very much so...THANK YOU
Thank you for your article. It help me a lot when I did my 2006 taxes. Easy to read and understand. Excellent job! I'm looking forward to read more of your articles. Thanks again
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