Deductions For Your Phone

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Don’t miss out on the Telephone Excise Tax Refund. It’s a one-time refund of the three percent federal excise taxes you paid for your cell phone’s long distance service from February 28, 2003 to August 1, 2006. It is available to anyone who paid such taxes on landline, wireless, or Voice over Internet Protocol (VoIP) service.

But it’s just the excise tax. Not the actual calls. And it’s only available on your 2006 tax return.

Apparently, the government stopped collecting this long distance excise tax last August, after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. But since we were all erroneously charged, a one-time refund of any tax collected during those previous 41 months was also authorized.

The average refund ranges from $30-$60, depending on your exemptions. So clearly this refund is not going to cover your next family vacation. Still, it’s your money so don’t forget it.

There are two ways you can claim this refund. The first, and easiest, way is to claim the "standard amount," $30-$60, which is based on your tax exemptions. The other option is to calculate your refund yourself. Go find all of your cell phone bills from that period and tally the actual amount of taxes paid based upon your telephone records. You’d then have to file Form 8913, Credit for Federal Telephone Excise Tax Paid, and attach to your tax return.

The IRS actually thinks most people will be better off just taking the standard deduction than slogging through their phone bills.

Also, pay attention to this year’s “homeless” deductions. As part of December’s last-minute tax package, Congress extended the sales tax deduction, the $250 educators’ expense deduction and the tuition and fees deduction for 2006.

But since these deductions weren’t extended until after the 2006 tax forms were printed, there are no lines for them on your return. So you either need to read the Form 1040 directions very carefully. Or use a tax preparation program, like TurboTax or TaxCut and let it put the numbers in the right place.

Tracy Byrnes is a New York Post business writer and a regular guest on The Cost of Freedom.

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Tracy Byrnes joined FOX Business Network (FBN) in October 2007 as a reporter.