It also decided not to apply the tax to wireless, voice over Internet Protocol service, prepaid telephone cards and other bundled services. The IRS also said it would allow taxpayers to claim a refund in 2007 for taxes collected on those services retroactive to February 2003
Print this and put in your 2006 tax return folder. It is an easy $30 to $60.
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 your form 1040 or line 42 on form 1040A. If you have family or friends who no longer file a tax return AND they have their own landline phone in their home and have been paying a phone bill for years, make sure they know about this form 1040EZ-T.
What is this all about? Well the federal excise tax has been charged 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. When phone companies began to offer flat fee phone service, challenges to the excise tax ended up in federal courts in several districts of the country.
The challenges pointed out that flat fee/rate phone service had nothing to do with the distance and the length of the phone call. Therefore, the excise tax should/could not be assessed.
The IRS has now conceded this argument. 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 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 file your 2006 tax return. However, the IRS also established limits on how the amount of the credit you can get.
Here’s how it works:
If you file your return as a single person with no dependents, 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 or more
Generally, the most you may claim is $60, UNLESS you have all your phone bills from February 28, 2003 through July 31, 2006, then you can add up the ACTUAL TAX AS IT APPEARS ON YOUR BILLS AND CLAIM THAT FOR A CREDIT. You may not use any bills starting Aug 1, 2006 or later.
If you have your actual phone bills and come up with an ACTUAL TAX AMOUNT, you cannot use line 71 on the 1040. You must complete a special form number 8913 and attach it to your tax return. Individuals using the special from 1040EZ-T will have to attach form 8913 also.
