Since 2006 was an election year, it's not surprising that
lawmakers spent much of it creating and adjusting tax laws. Now, as taxpayers
put these new measures into practical effect by filing their annual returns, many
will find changes that produce some nice tax savings.
Tax-law
winners range from environmentally conscious homeowners and motorists to teachers
and college students. Even folks who simply rang up long-distance friends and
family get a tax break this year.
Other taxpayers, however,
will find some of the changes costly. Americans who work abroad are likely to
end up with a larger tax bill this year. So are parents who opened investment
accounts in their children's names.
To help you determine whether
you'll be a winner or loser in this year's annual filing game, check out these
10 tax changes. Even if they don't apply to your 2006 return, they could give
you a head start in planning your 2007 tax-saving strategy.
| These major changes in the tax code can make a difference
for people filing their 2006 returns -- or doing their 2007 tax planning. |
| | Some will help you
save money, while a few could cost you, in paperwork as well as cash. |
|  |
|
1.
Telephone tax credit
One of the most welcome tax
changes comes not from Congress
but from the Internal Revenue
Service, which decided last
year to stop collecting the
3 percent federal telephone
excise tax. That charge on
long-distance calls originated
in 1898 to help pay for U.S
involvement in the Spanish-American
War. While that war ended
after just three years, the
tax continued to show up on
phone bills.
Unfortunately, despite the phone
tax's long history, the rebate is only for taxes paid on long-distance service
after Feb. 28, 2003, and before Aug. 1, 2006. Still, every taxpayer is eligible
to get cash back, without having to prove that they actually had phone service
during the applicable rebate months.
Even better, you don't
have to dig out your old phone bills, presuming you still have them, to come up
with the amount you paid years ago. The IRS has calculated average phone tax costs
based on the total number of taxpayer exemptions. If you claim one exemption you'll
get $30 back; the refund is $40 for two exemptions, $50 for three exemptions and
$60 for four or more exemptions.
To get the refund, simply
enter your applicable amount on the new line found on all three individual 1040
forms. If you don't have to file a return this year, the IRS has a special form
for you, the 1040EZ-T, that you can use to get back your phone tax money. And
if you do happen to have all your old phone bills and they show taxes greater
than the IRS-figured amount, you can get that larger refund by filing Form 8913.
