One of the huge advantages of investing in real estate is the special tax breaks you can take advantage of. Many people invest in real estate solely for those reasons and yet, they fail to take advantage of even the simplest tax saving strategies. For example, msnbc.com is carrying an Associated Press story about how roughly one-third of the early tax returns filed so far (over 10 million of 31.8 million) have failed to claim the telephone excise tax refund offered this year and a surprising number of those were returns filed by professional tax preparers. Granted, itemizing the bills might be a bit much for most people, but claiming the standard credit is as simple as filling in one additional line on your return. To me, there is no excuse for a tax professional to miss this deduction. If yours doesn't claim it for you, fire them.
The standard refund is between $30 to $60, depending on how many dependents you are claiming. If you have your phone bills from 2003 and later, you can itemize and get a refund of the actual amount you paid plus interest. I actually do have all those bills and spent an hour or two last weekend adding up amounts. My total: just over $250! And this is a tax refund, not a deduction, so it is a dollar for dollar reduction in your tax bill. I should state that the reason my credit was so high is because I have four phone lines, so your credit might be less. Use IRS form 8913 from the IRS to itemize the credits. The instructions for filing out the form are here. If you are taking the standard deduction, you do not need to use a special form. I should also note this credit is good for the 2006 tax year only.
Friday, February 23, 2007
Phone Excise Tax Refund Not Being Claimed
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2 comments:
I'm one of those early filers who didn't claim it. My reason was pretty simple - I no longer have the phone bills to prove I can claim it, and not all cell phone companies charged it. So even though I'm 99% sure I deserve it, I'm not willing to take the risk that if I get audited I won't be able to prove it, thereby making the auditor think there is blood in the water :)
You lost a minimum of $30, possibly as much as $60. Even if you don't itemize and don't have the phone bills, you are still allowed to claim the standard deduction, which varies depending on the number of dependents you claim. No documentation is required for the standard deduction.
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