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February 27, 2007

Take a tax break with new deductions

Once you’ve gathered all the documents needed for filing taxes - W-2s, receipts and anything else - it’s time to see just what can and cannot be written off as a deduction.

This year, the government has a few surprises for taxpayers.

Through a new Telephone Excise Tax Refund, individuals, businesses and tax-exempt organizations are eligible for a one-time refund on long-distance phone taxes collected between March 2003 and July 2006. The service can be through landline, cell phone or Voice-over Internet Protocol, and is, according to the Internal Revenue Service, going to be the most wide-reaching refund in IRS history, with more than 160 million filers qualifying.

“It’s a credit issued due to overpayment of excise tax,” said H&R; Block Office Manager and Tax Associate Cynthia Holt.

The phone plan must have been in the taxpayer’s name, according to Holt.

According to the IRS, taxpayers have two options: A standard refund amount between $30 and $60, “based on the total number of exemptions claimed on their 2006 tax return,” which eliminates having to dig out old phone bills; or, “they can locate these [old] bills and use the actual amount.”

(For citizens who won’t be filing tax returns this year, the refund is still available through new form 1040 EZ-T.)

The TETR announcement came near the end of 2006, surprising some. Others, still yet, haven’t heard of the new deduction opportunity.

“That’s pretty good news; I hadn’t heard it,” said Tera Eubanks. “I’d like to know if we can go back before 2003.”

According to MSNBC.com, taxpayers are only eligible for three years’ worth of payments because of an IRS rule stipulating tax refunds go back only three years from the date the refund is announced.

Businesses and tax-exempt organizations can file through old phone bills for the past 41 months to base their telephone tax refund on the actual amount of tax paid.

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