Tax Season: IRS Owes You $60 If You Own A Phone

The New York Times reports how our victory in the Spanish American War will save you $60 on this year’s taxes. Last year Congress realized that Cuba was no longer occupied by the Spanish Empire. The war, funded by a 3% tax on all long distance calls, is over. No more measly one or two dollar “Federal Excise Tax” on your monthly phone bill. With the empire unlikely to strike back, Congress decided to drop the tax and refund the excise taxes collected over the last three years.

Because most people do not keep phone bills for four years, the I.R.S. devised a formula: anyone who made long-distance calls would be entitled to a predetermined amount of up to $60, which would be calculated on the 2006 tax returns.

The credit is easy to get. It is claimed on Line 71 of Form 1040, Line 42 on the 1040A or Line 9 on the 1040-EZ. The cryptic description on all three forms is: “Credit for federal telephone excise tax paid. Attach Form 8913 if required.”

Yes, easy. Just hope the Spanish stay out of Cuba. If you want more than $60, Mr. Twist, the Times explains how to enjoy your Sunday with Form 8913. — CAREY GREENBERG-BERGER

Taking the Phone Credit: An Easy Way and a Hard Way [NYT]


Edit Your Comment

  1. Chad Cloman says:

    Actually, the standard rebate is up to $60, depending on your filing status. For ‘single’ it’s only $30.

    Alternatively, you can fill out form 8913 to specify the actual amount you paid in phone taxes, which could be more than the standard amount.

  2. Chad Cloman says:

    Oops. Correction—the amount is based on how many exemptions you claimed. It goes as follows:

    0 – $0
    1 – $30
    2 – $40
    3 – $50
    4 or more – $60

  3. mschlock says:

    Yep, $30 for singles.

    I actually *do* have four years’ worth of phone bills lying around, but just try figuring out which of those little extra charges is the Federal Excise Tax. I hope they didn’t make some money off me, but who knows.

  4. Paul D says:

    Yes, Chad. That jibes with what my tax guy told us last week. My wife and I claim 2, so we get $40.

    Apparently, there is a method for calculating the actual amount you’re owed back, but it’s based on your last 41 months of phone bills. My guy said he’s had to do it for two customers so far this tax season. It’s not pleasant, and it’s not guaranteed to generate a more significant refund.

  5. joyflop says:

    Forgive the silly question, but does this include cell phones? That’s the only kind of phone that I’ve had for 3 years :)

  6. cabinaero says:

    joyflop – from the article, “The refund applies to land-line and cellphone itemized long-distance charges and to bundled phone service plans that include local and long-distance calls, as well as to long-distance phone cards.”

  7. FLConsumer says:

    Hmm.. I wonder if I can claim it for VoIP… have 4 VoIP trunks coming into my home.

  8. LAGirl says:

    there was also an article about this in the LA Times today (Business section), talking about people screwing up the credit:

    “Only a few weeks into the tax-filing season, the Internal Revenue Service says consumer returns are already riddled with errors as the result of a new and tricky telephone-tax refund…

    But about a third of those eligible aren’t seeking a refund, the agency said. Other taxpayers are claiming it twice, some are claiming outrageous amounts, and still more fail to fill in the proper blanks.

    The IRS says it is investigating abuses, such as individuals claiming phone-tax refunds that exceed their annual income (??!!).

    But even simple errors can delay refunds and win the taxpayer the joy of an IRS audit…

    individuals who had large long-distance bills over this time frame might want to go the tougher but potentially more lucrative route. That requires taxpayers to collect 41 months of phone bills and add up the total amount of federal excise tax paid. Both land lines and cellphone bills qualify during the period from Feb. 28, 2003, to August 2006…

    For those with significant bills, gathering the phone bills and filing out the form can be well worth the trouble. Consider, for example, a single filer who spends $100 a month on cell and long-distance services. He could take the $30 safe harbor credit or calculate the real cost, which is likely to be $123 – a $93 difference.”

  9. Hmmmm…how do I go about getting my old cell phone bills from Nextel?? I have almost a year and a half of recent bills, but when I moved I tossed my old Nextel bills.

    I looked at some example amounts from last year, and it was about $2.30/month, which is approx $95, much better than the $30 they want to give me…

  10. SharkJumper says:

    If you’re on AT&T, you can login to your account online and they have a handy little link to archived images of the appropriate 41 months worth of bills.

  11. kimmie says:

    So… Turbotax just spit this out at me:
    You’re not eligible to claim the standard telephone tax refund because you claim no exemptions on your tax return.

    I claimed 0 because my previous company didn’t withhold enough. Regardless, doesn’t the IRS owe everyone? Interestingly, Taxcut let me take the deduction.