2006 Telephone Tax Credit

Just got this over email ...Snopes said it is true!
http://www.snopes.com/business/taxes/excise.asp


A SPECIAL ONE TIME TAX CREDIT ON YOUR 2006 TAX RETURN
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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. If you have family or friends AND they have their
own
land phone in their home and have been paying a phone bill for years,
make
sure they know about 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 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 - UNLESS you have all
your
phone bills starting AFTER Feb 28, 2003 through July 31, 2006 (do not
use
any bills starting Aug 1, 2006.), then you can add up the ACTUAL TAX AS
IT
APPEARS ON YOUR BILLS AND CLAIM THAT FOR A CREDIT.



Now, if you have your actual phone bills and come up with an ACTUAL TAX
AMOUNT, you cannot use line 71 on your tax return. You have to complete
a
special form number 8913 and attach it to your tax return. Individuals
using
the special from 1040EZ-T will have to attach this form 8913 also.



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.



Pass this on or make copies for family and friends who don't have
computers

Re: 2006 Telephone Tax Credit

Thanks