Don’t Miss These Tax Deductions
As you may or may not know, Congress extended certain tax breaks late in 2006, but not in time for the IRS deadline for inclusion in 2006 tax forms. Thus, these deductions don’t appear on the IRS forms or in the instructions booklets. Here are the key changes:
Sales tax: You have the option of deducting state sales taxes you paid last year or the amount you shelled out in state and local income taxes. Congress re-instated this deduction for 2006 and 2007 after it had expired in 2005.
Classroom expenses: Teachers from kindergarten through high school may deduct the cost of school supplies they pay for with their own money. This deduction, worth as much as $250, has been revived for 2006 and 2007.
Higher education tuition and fees: This deduction, worth as much as $4,000 of tuition and fees paid to colleges or other post-secondary schools, is back for 2006 and 2007. The maximum deduction is available to single filers with adjusted gross income of $65,000 or less and joint filers with income of as much as $130,000.
While most tax prep software should be updated, people filing their returns on paper need to be extra careful not to miss out on these tax breaks. According to the IRS, they won’t start processing returns claiming these deductions until February 3rd. For additional details, check out the IRS press release.
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Filed under: Taxes
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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January 18th, 2007 at 1:58 am
Nice article. And don’t forget the cell phone tax deduction.
I’ve updated my blog and moved to my own domain. Could you please add me to your links.
Smarty
January 18th, 2007 at 2:02 am
Nice article. And don’t forget the cell phone tax deduction.
I’ve updated my blog and moved to my own domain. Could you please add me to your links.
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http://www.growingmoneyblog.com
February 3rd, 2007 at 8:08 am
This year the IRS is providing the most wide-reaching tax refund in U.S. history with the Telephone Excise Tax Refund. The IRS predicts that more than 159 million filers may request this refund; Department of Treasury economists estimate that the total amount refunded to individuals will be about $10 billion. Households may receive up to a $60 refund. Businesses and non-profits are also eligible for a refund.
Since many households do not keep their old phone bills, or do not want to go through the trouble of adding up how much they actually paid for the excise tax during the 41 month period (after Feb. 28, 2003 and before Aug. 1, 2006), the IRS has provided the following standard refund amounts:
* One exemption receives a $30 refund
* Two exemptions receive a $40 refund
* Three exemptions receive a $50 refund
* Four exemptions receive a $60 refund
If you are taking the standard refund, just claim the credit on line 71 of your 1040 form. If you add up the tax from your phone bills, fill out form 8913 and attach it to your tax return. If you do not file a tax return, you can submit the new 1040 EX-T form (you can submit this electronically).
Business and non-profits will not receive the standard amount. They must base their refund requests on the tax amount they paid. They can review their phone bills for the 41-month period for an actual amount, or they can review their bills from two months and estimate their return with a formula provided by the IRS. They must use form 8913 and attach it to their returns.