The Internal Revenue Service has begun a busy 2007 filing season that features telephone excise tax refunds, a new refund deposit feature and recently enacted tax breaks that may require extra attention from taxpayers.
“Taxpayers will have a number of new tax benefits and features available this year,” IRS Commissioner Mark W. Everson stated. “We encourage taxpayers to take a few minutes to review these changes, particularly those involving the recently enacted tax law provisions. The IRS will do everything it can to minimize the impact on taxpayers.”
Last week, the agency began sending 17 million 1040 tax packages for 2006 to taxpayers who have previously filed paper returns. The number of paper tax booklets being mailed to Americans continues to decline as more people opt for electronic filing. The IRS expects to process about 136 million individual tax returns for 2006, with more than half of those filed electronically.
Among the major changes taking place this year:
Telephone Excise Tax Refund
Individual taxpayers will be able to request a refund if they paid the federal excise tax on long-distance or bundled service. The government stopped collecting the federal excise tax on long-distance service in August and announced plans to provide refunds of these taxes billed after Feb. 28, 2003, and before Aug. 1, 2006. More than 146 million individual taxpayers are expected to request the refund.
New 1040EZ-T Form
For people who don’t need to file a regular tax return, the IRS has developed a special, shorter form to allow them to request the telephone refund. Copies of the Form 1040EZ-T will be available on IRS.gov, over the phone and at a variety of other locations. The IRS encourages people who qualify for the 1040EZ-T to file electronically through the Free File program, which will be available for free beginning later this month. More than 10 million taxpayers who aren’t normally required to file a tax return may be able to use this new form. Taxpayers can either request the standard amount on this form or attach a Form 8913 to request actual amounts.
Recent Tax Law Enactments
The IRS is taking a number of steps to help taxpayers get the information they need to take advantage of tax law provisions enacted in December after IRS forms went to print.
This new legislation affects a number of areas of tax law, but the most significant effect on individual taxpayers involves the deductions for state and local sales tax, higher education tuition and fees, and educator expenses.
Taxpayers can visit IRS.gov for updated information on the late legislation. The IRS will conduct a special mailing of Publication 600, which will include the state and local sales tax tables and instructions for claiming the sales tax deduction on Schedule A (Form 1040), to 6 million taxpayers who also receive the 2006 Form 1040 package this month.
For taxpayers using a paper Form 1040, they will have to follow special instructions if they are claiming any of the three deductions. The key paper 1040 Forms went to print in November, so taxpayers will have to make special notations to claim the deductions if they use these paper forms. Specific details are available on IRS.gov. For people using IRS e-file or Free File, tax software will be updated to include the three key tax provisions, and e-file will get the refunds to taxpayers faster than paper returns.
“As we always do, we encourage taxpayers who think they may claim these deductions to file electronically,” Everson said. “They will get their refunds faster through e-file. Even more importantly, e-file will greatly reduce the chances for making an error compared to claiming the deductions on the paper 1040.”
The IRS will not be able to process tax returns claiming any extender-related deductions until early February. All other returns can be filed and processed as normal. Whether claiming an extender provision or not, the IRS notes that using IRS e-file is the most accurate to file any return and the quickest way for taxpayers to receive their refunds. Based on filings last year, only about 930,000 tax returns claimed any of the three extender provisions by Feb. 1.
New Split Refund Option
For the first time, taxpayers can split their refunds among up to three accounts held by up to three different US financial institutions, such as banks, mutual funds, brokerage firms or credit unions. To split their direct-deposit refunds among two or three different accounts or financial institutions, taxpayers should complete the new Form 8888, Direct Deposit of Refund to More Than One Account. Taxpayers can also continue to use the direct deposit line on the Forms 1040 to electronically send their refunds to one account.
Free File Improvements
The free electronic filing program begins later this month featuring improvements to benefit the 93 million taxpayers — 70% of all taxpayers — who qualify for the program. Free File, a partnership between the IRS and the private sector Free File Alliance, is available for taxpayers who earn $52,000 or less. This year, the program features an agreement by private sector partners to remove Refund Anticipation Loans (RALs) as well as other ancillary offerings from the program.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment