Telephone Tax Credit for 2006 only

[ShainaT]

I checked this out on Snopes and it is the real deal.


http://www.snopes.com/business/taxes/excise.asp

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 your form 1040. A
similar line will be available if you file 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. 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 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 -

[Jennifer M.]

Our accountant sent us information on this. Quite interesting.