Tuesday, March 6, 2007

Telephone Tax Refund

Something new that I noticed on 2006 tax forms is a credit for the federal telephone excise tax. You can get back $30 to $60 as a credit depending on your number of exemptions. This is only available in 2006 to taxpayers who paid for long-distance telephone service between March 2003 and July 2006.

Although it seems like you are getting free money, the refund is due to a court decision which found that the excise tax (which has been on the books since 1898 to fund the Spanish-American War) no longer applies to telephone service today.

If you choose to you can actually add up all the federal excise taxes that you paid based on your old phone records. But, most people will take a standard refund amount, based on the number of personal exemptions that you claim. On Form 1040, this credit is claimed on line 71.

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