To many, April 15 appears as the specter of tax seasons past, with all its procrastination. Practice following the scout adage to “Be Prepared”, and many of the problems, associated with filing tax returns, can be avoided.
Make certain to take advantage of changes offered by the Internal Revenue Service forthe2006 filing season. Depending on your personal or business circumstances, these changes can affect the tax amount to be paid, how the tax is distributed to you, if a refund is due, or where the return is to be sent.
Prior to completing the return, gather all appropriate forms, and supportingdocumentation, so they are available, as needed. The most requested forms, instructions and publications are available at many post offices and libraries. Forms and publications can also be ordered directly from the IRS by calling 1-800-TAX-FORM. Expect to receive the forms approximately 10 days after placing an order with the IRS.
Decide on your method of filing. E-file is hyped by the Internal Revenue Service as the fastest, easiest and most convenient way to file for those with ready access to a personal computer. Eligibility information for its Free File program, which includes free access to IRS approved (commercially available) online tax preparation software, can be viewed at www.irs.gov. For those ineligible for the Free File program, a list of IRS Partners, offering low-cost filing services, is located at www.irs.gov/efile.
Taxpayers have two choices for submitting returns by e-file, utilizing the services of a tax professional. The return can be prepared and transmitted electronically by a tax professional on behalf of the taxpayer, or the taxpayer can prepare the return and request an Authorized IRS e-file Provider to transmit it electronically.
Tax returns can also be mailed directly to the Internal Revenue Service. Since the IRS has changed filing locations for several areas, check the addresses to which returns should be directed. This information should be included with basic form instructions. Remember that separate addresses are provided for those enclosing a check and those who do not.
If enclosing a check, make sure not to abbreviate “Internal Revenue Service” as IRS. It is always possible for someone, other than the IRS, to change “IRS” to Mrs., fill in a name and cash the check.
Certain benefits have expired for 2006 and can not be used when filing a 2006 return. These include:
Deductions for expenses incurred by educators, which can not be used in figuring adjusted gross income.
Deductions for tuition and fees.
For residents of the District of Columbia: Elimination of the first-time homebuyer credit, for homes purchased after 2005.Other changes, new for the 2006 filing season, include:
If a credit or refund has not already been received, from a service provider, for federal telephone excise tax paid on long distance or bundled telephone service, billed after February 28, 2003 and prior to August 1, 2006, it may be possible to request a credit for the tax paid. See form 8913 for details.
If improvements, that meet certain requirements in performance and quality for energy efficiency, have been made to homes located in the U.S. in 2006, it may be possible to take a residential energy credit. This includes energy efficiency improvements for items such as exterior windows and doors, certain heat pumps and water heaters, central air conditioners, qualified furnaces and the air circulating fans used in them, certain insulation materials, and qualified photovoltaic and fuel cells. See form 5695 for details.
If clean renewable energy bonds or Gulf tax credit bonds were held during 2006, it may be possible to take a credit, based on their face amount. The credit may have to be included as interest income. See form 8912 for details.
If an alternative motor or fuel vehicle, including qualified hybrid vehicles, was placed in service in 2006, it may be possible to take a credit. Clean-fuel vehicles or refueling property is no longer eligible for a deduction. See forms 8910 and 8911 for details.
If a vehicle was used for business, to get medical care or to move, standard mileage rates for 2006 are: for business – 44.5 cents per mile, to get medical care or to move – 18 cents per mile.
If children under the age of 18 reside in the household, it may be possible to report a child’s income, and a child’s investment income, on a parent’s return. See forms 8615 and 6251 for details.The IRS is available Monday through Friday, from 7:00 A.M. to 10 P.M., local time, for questions from taxpayers. Call for assistance at 1-800-829-1040.
