Important Facts For Filing 2006 Tax Returns:
- The filing deadline is April 17, 2007. The usual deadline April 15 is on a Sunday, and the next day is Emancipation Day in the District of Columbia, a new legal city holiday in DC.
- Filing Extensions is an automatic six month extension to October 15, as long as Form 4868 is filed by the April 17 deadline.
- To check refund status, go the IRS Web site and click on the "Where's My Refund ?" link on the left side. When prompted, enter your Social Security number. Filing status and exact amount of the refund can be found there. Or call 800-829-1954.
- IRS Forms and Publications can be located and downloaded at the IRS website at ris.gov
by going to "Forms and Publications", or by calling the refund hotline at 800-829-3676.
- For taxpayers who itemize, there are stricter rules for charitable deduction of household goods. Items donated after August 17, 2006, must be in "good used condition or better" to qualify.
- Inflation related increases for all who qualify under personal and dependent exemptions, standard deductions, thresholds at which certain tax benefits begin to phase out, maximum income for claiming earned income credit, slight increase in income threshold for phase out of deduction for IRA contributions by joint filers already covered by a retirement plan at work.
- Age at which teens are subject to the "kiddie" tax on investment income is raised to under 18 years old; it had been for kids under the age of 14 years old.
- Telephone tax rebate is where taxpayers can claim a standard refund of $30 to $60, depending on the number of exemptions checked on the tax return (If you have records of actual taxes paid for service billed between March 2003 and July 2006, you may claim that amount; file using Form 8913.) Even if you aren't required to file a tax return, perhaps your income was too low, you can still get the refund; file using Form 1040 EZ-T.
- Extended tax breaks of several popular tax breaks that expired at the end of 2005 were restored by Congress in its final days last year. Among them are a deduction of up to $4,000 for qualifying higher education tuition and fees, and a deduction of up to $250 for teachers who pay for school supplies with their own money. Also extended was the deduction for stat and local sales taxes, which primarily benefits people living in states where there is now state income tax.
- Energy credits are available for certain energy saving home improvements and for hybrid and alternative fuel using vehicles.
- The IRS free e-filing alliance with tax software companies allows taxpayers with incomes of $52,000 or less to prepare and file returns online for free if they access the program through the IRS site, www.irs.gov.
- For the first time, the IRS will split a taxpayer's refund into three different financial accounts, such as checking, savings and retirement accounts if asked; file Form 8888.
- Refunds should take no more than two weeks to receive from a tax return filed electronically and no more than eight weeks on a paper filed return, this is for taxpayers that are receiving a paper check from the government.
- Online tax help can be found at www.irs.gov and has links to every tax topic. There are tools for calculating withholdings and earned income credit, along with interactive history lessons, games and "Tax Trivia."
There is a new tax angle afecting taxpayers who've hit the age 70 1/2, the age at which required minimum withdrawls from IRAs begin. They now can make a direct transfer of funds up to $100,000 from the IRA to a qualifying charity. The amount of that transfer of funds is excluded from taxable income. Though this may benefit primarily wealthy taxpayers who don't need the money, it also is a way for the less well off to avoid paying incomes taxes on their required IRA withdrawals and to put the money charitable use.
In another IRA related change, military personnel who received nontaxable combat pay in 2006 can include that a earned income when figuring IRA contributions. That gives them a higher IRA contribution, and if they put money into a traditional IRA, it also may mean a higher tax deduction. Contributions to Roth IRAs aren't tax deductible, though they have tax benefits later on.
To incorporate the changes, the IRS says that some lines on the form essentially will do double duty: For example, line 5 of the Schedule A itemized deductions form is for state and local income taxes, but taxpayers who choose to deduct state sales taxes instead will enter that figure there. The IRS says it will send updated instructions to taxpayers who are mailed tax packets. But with electronic tax preparation and filing skyrocketing, not many people receive such packets. All forms and instructions are posted on the IRS Web site at www.irs.gov.
