Telephone Excise Tax Credit - Claim It or Lose It

How many of us would walk past a $20 bill on the ground and not pick it up? That's what 30% of tax filers have done to date. Out of 34 million tax returns filed, 10 million have not claimed the telephone excise tax credit, according to the IRS . About half of the returns that didn't claim the credit were done by tax professionals.



Here's what one needs to do to get the credit:

Everyone who has had long distance or bundled service qualifies for the tax credit, even if one does not file a tax return. Net, nearly every tax filer qualifies.

Here's how to take the standard credit: Use the number of exemptions on line 6d to calculate the credit. Go to Line 71 on the 1040 and enter the amount based on the claimed exemptions.

Exemptions on Line 6d	Tax Credit on line 71
One	$30
Two	$40
Three	$50
Four or more	$60

If you think you may have paid more taxes (due to high amounts of long distance calling or use of bundled services), Form 8913 can be used to calculate the exact credit amount. This method will require one to have copies of the billing statements from March, 2003 to July, 2006.

Personally, I am using the standard credit allowed by the IRS. I did a quick check of our current bills and we don't make enough long distance calls nor have enough bundled services that would cause the tax to exceed the standard credit.

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Photo Credit: morgueFile.com, Anita Patterson Peppers

This is not financial advice. Please consult a professional advisor.

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