[StBernard] A SPECIAL ONE TIME TAX CREDIT ON YOUR 2006 TAX RETURN

[Westley Annis]

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 the long form 1040 and line 42 on the short form 1040A.

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.

The IRS has now conceded this is obsolete.  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.


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.

Feel free to pass this on or make copies for family and friends who don't
have computers.

See also:

http://www.irs.gov/newsroom/article/0,,id=161506,00.html
<http://www.irs.gov/newsroom/article/0,,id=161506,00.html>