Today's topic is a new tax credit available to everyone.
Today’s topic is a new tax credit available to everyone: the long-distance excise tax refund.
What is Federal Excise Tax?
This little tip will save you a quick and clean $30 to $60 on your 2006 tax return. The IRS is refunding more than $10 billion for a federal excise tax on long-distance telephone service. The tax started all the way back in 1898 to help fund the Spanish-American War and has helped fund wars since then.
The tax was repealed recently after the IRS lost a series of federal court cases that showed the tax no longer applies to long-distance service given the way it’s billed today.
How to Get the Federal Excise Tax Refund
Here’s how the credit works: The IRS will refund the 3% long-distance telephone excise tax you paid from March 1, 2003 to August 1, 2006 plus interest. The refund applies to anyone who had long-distance or bundled service (whether landline, wireless, or voice over IP).
You can either go through your old telephone bills from that period and add up the tax you paid plus interest and claim a refund for that amount. Or, take the easy path: simply claim the standard amount set by the IRS.
The standard amount depends on the number of exemptions you claim on your 2006 return. The more you claim, the bigger your credit. If you take one exemption, you get a $30 credit. If you take two, you get $40, if you take three, you get $50, and if you take four, you get a $60 credit.
For the standard amount, claim your refund on line 71 of Form 1040 or line 9 of Form 1040EZ. If you want to tally up the actual telephone excise tax you paid plus interest, use Form 8913 instead.
And if you don’t need to file a 2006 return, you’re not out of luck. You can still get this refund. To get it, you’ll want to complete Form 1040EZ-T – a simple form created just for this purpose. All the forms are available at the IRS website.
So take this quick tip and get this one-time tax credit for 2006.
Today, I’m giving away another book. If you’ve sent me an e-mail or posted to the blog, you’re automatically entered in the giveaway. And the winner is Courtney in Ellicottville, New York. Congratulations, Courtney! You’ve won a copy of The Ernst and Young Tax Guide. Please check your e-mail for instructions.
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