New Things To Know For Taxes This Year

Ladies and Gentlemen, Dependants and Deductions, it’s officially tax season! Yay! So, what’s new?

Telephone excise tax refund. The government stopped collecting the federal excise tax on long-distance service last August and plans to provide refunds for these taxes billed after Feb. 28, 2003 and before Aug. 1, 2006. You can dig out 41 months of phone bills, or take a standard deduction! “Under standard amounts a person filing a return with one exemption can claim $30, with the amount rising to $40 for those with two exemptions, $50 for three exemptions and $60 for four or more exemptions.” Want the actual amount you paid? No problem! Use Form 8913 (PDF)

But wait! There’s more! We’ve had tooooo much coffee!

•Split your refund! “Another change this year is that taxpayers can split refunds among up to three accounts held by U.S. financial institutions such as banks, mutual funds, brokerage firms or credit unions.”

• File for Free! “The tax agency also urged taxpayers who earn $52,000 or less to make use of Free File, a free electronic program that is a partnership between the IRS and private tax service providers.”

• Deduct Your State and Local Sales Tax! A law passed in December makes it possible for taxpayers to deduct their state and local sales tax, instead of state and local income tax. If you want to do this, you need to read about it on the internet because it was passed too late to print up the stuff to send you. Read about this deduction here!

Yay! Taxes! —MEGHANN MARCO
IRS Opens 2007 Filing Season [Chicago Tribune]

Comments

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  1. etinterrapax says:

    I’m annoyed. I was TurboTaxing last night and found that neither of the states in which I must file state returns has “finalized the forms” for TY2006. I have to wait until the end of January for Minnesota. The government has a great deal of my money this year, and I want it back before it makes them another dime.

  2. NeoteriX says:

    • File for Free! “The tax agency also urged taxpayers who earn $52,000 or less to make use of Free File, a free electronic program that is a partnership between the IRS and private tax service providers.”

    In addition, if you make around that much or less, look around your community. In many places, there are non-profit agencies where volunteers (like myself) will sit down with you and help you crunch the numbers. It’s nice for those that want to site face to face with someone instead of messing around online. In Boston for example, there is Community Tax Aid and VITA.

  3. TheCFC says:

    After clicking on the link to the IRS web site it says that this sales tax deduction option was only good for tax year 2005.

  4. rekoil says:

    For those who would ask “why would I record and deduct my sales taxes instead of my state income tax?”, remember that there are several states (Tennessee comes to mind) that have no state income tax, which the state offsets with higher-than-the-norm state sales taxes. Residents of those states can now claim a tax deduction where they couldn’t before. I think there’s a formula for estimating the deduction as well if you don’t feel like keeping every receipt you get throughout the year.

  5. parliboy says:

    TheCFC:

    http://www.irs.gov/newsroom/article/0,,id=165636,00.html

    “The American Jobs Creation Act of 2004 gave taxpayers the option to claim state and local sales taxes instead of state and local income taxes when they itemize deductions. Under the law the option was available for the 2004 and 2005 returns only, but recent legislation has extended the availability of this deduction through 2007.”

  6. bopo says:

    I tend to be a packrat when it comes to old bills and such, but after moving a year and change ago and going cell-only, I looked at the big stack of Ameritech/SBC/AT&T bills and though, “Jeez, when am I going to use those?” and got rid of them this past summer.

    I think the excise tax hullabaloo happened the next week or something.

    Sigh.

  7. TedOnion says:

    As for the sales tax, that is not new as the post suggests, but was carried over from previous years, and was supposed to be discontinued this year, but was extended at the last minute. If you have purchased large cost items, such as cars, then it might help out a little, however, it may increase your tax liability for next year, and forces you to file a 1040 next year, even if you may have otherwise been eligible to file a 1040ez.

    Good taxing everyone!

  8. Terrelowens says:

    Ted’s right, the credit isn’t new. It’s been around for at least one year. And it will potentially be extended quite a bit longer as I just read an article saying that newly sworn in Dems from the affected states are wanting to pass legislation to make this deduction permanent. For those of us who live in one of these affected states this deduction is nice little break. It’s well worth the “extra” paperwork.

    I’d be interested to find out why Ted feels that it increases your potential tax liability in future years???

  9. WedgeTalon says:

    As someone who lives in Tennessee and pays nearly 10% sales tax (9.25%), I am VERY glad to hear of this deduction! :)