Thompson & McCarty, P.C. CPA

There are two hot tax topics that are new for the 2006 filing season (that is right now). One biggie is the telephone excise tax refund which can only be claimed on your 2006 return. This is actually a refund of excise taxes that were charged on our phone bills on long distance telephone calls after February 28th, 2003. The IRS lost the right to charge this tax in Court then lost 5 different Federal Appeals before they gave up and quit charging us the tax on long distance phone services. The refund applies to individuals, businesses, and tax exempt organizations. The refund applies to any phone, including cell phones, and bundled services. There are different rules for each group so how you apply for it will vary.

For the individual there are two options. You can take the standard rebate which ranges from $30 to $60 and is based on the number of exemptions on your 2006 tax return. It is a one line option on form 1040, 1040A. Or 1040EZ. Also, even those who do not have to file returns can file form 1040EZ-T and get the refund. The second option is to take the actual tax by filling out form 8913. You will need your phone bills between February 28, 2003 and August 1 2006. Our analysis of this refund is this. The standard deduction will probably be best for most people. It will certainly be easier. However, if your average long distance phone charges are $20 or higher you will do better with actual expenses. For details on the excise tax rebate go to here.

Businesses have a whole different set of rules as usual. If you operate a business you will need at a minimum the April 2006 phone bill and the September 2006 phone bill. If however those bills do not fairly represent your long distance usage then you need to gather all phone bills starting February 28, 2003 through September 2006. There are special limits that apply to businesses. Any phone, including cell phones and bundled services are eligible and should considered to maximize the refund. Full details can be found here.

The second hot topic this year are the energy credits that are available for purchases made in 2006 and 2007. The following qualify for a 10% credit:

Insulation systems that reduce heat loss/gain
Exterior windows (including skylights)
Exterior doors
Metal roofs (meeting applicable Energy Star requirements).

In addition the following items are eligible:
$50 for each advanced main air circulating fan
$150 for each qualified natural gas, propane, or oil furnace or hot water boiler
$300 for each item of qualified energy efficient property.

The maximum credit for all taxable years is $500 – no more than $200 of the credit can be attributable to expenses for windows. There are additional credits available for solar related energy production. For complete details click here.