The IRS has issued Notice 2007-11 to provide additional guidance on the telephone excise tax refund.
· The standard credit amount available to individuals ($30.00 - $60.00 depending on the number of exemptions on the return) is per tax return and not per phone. If you have more than one phone line you still only get one standard amount.
If a taxpayer claiming only one exemption has one telephone line into his/her residence the standard credit amount is $30. If the same individual also has a second line in the residence for the computer the standard credit amount is still $30. If that individual also has an office with two additional lines (one regular and one for the fax) the standard credit amount is still $30.
The same logic also applies if an individual had a landline and a cell phone – the standard credit amount for a Single taxpayer with no dependents is $30.00.
· A dependent with a separate phone can request a refund. However, a dependent must claim his/her credit based on actual costs only. A standard credit amount is not allowed for a taxpayer who has no exemptions (a dependent is not permitted to claim himself/herself on the federal tax return).
· The standard credit amount available to individuals ($30.00 - $60.00 depending on the number of exemptions on the return) is per tax return and not per phone. If you have more than one phone line you still only get one standard amount.
If a taxpayer claiming only one exemption has one telephone line into his/her residence the standard credit amount is $30. If the same individual also has a second line in the residence for the computer the standard credit amount is still $30. If that individual also has an office with two additional lines (one regular and one for the fax) the standard credit amount is still $30.
The same logic also applies if an individual had a landline and a cell phone – the standard credit amount for a Single taxpayer with no dependents is $30.00.
· A dependent with a separate phone can request a refund. However, a dependent must claim his/her credit based on actual costs only. A standard credit amount is not allowed for a taxpayer who has no exemptions (a dependent is not permitted to claim himself/herself on the federal tax return).
In such a situation, the taxpayer who is claiming the dependent cannot count that dependent as an exemption when determining the standard credit amount. If a taxpayer’s return shows a total of 4 exemptions, 2 personal exemptions (husband and wife) and 2 dependency exemptions, and one of the dependents is claiming his/her own credit, the taxpayer is only allowed the standard credit based on 3 exemptions. The standard credit amount would be $50.00.
· The estate of a deceased individual can claim the credit for actual costs only on a Form 1041, even if the estate filed a final 1040 in a prior year. However, if the estate account has already been closed, or if there never was a separate bank account for the estate, Dave Mellem of Ashwaubenon Tax Professionals in Green Bay, WI, former director of the NATP Research Department, suggests “before spending the energy and time into filing this Form 1041, it may be wise to see if a financial institution will cash the refund check”.
· You will not get a credit on a purchased phone card. The credit for the tax on the phone cards belongs to the store that sold the card and not to the individual who purchased the card and used it for making phone calls.
The actual Notice is 18-pages long. If you wish, email me at rdftaxpro@mail.com with “IRS Telephone Tax Refund Notice” in the “Subject” line and I will send you a copy of the notice as a “pdf” email attachment.
TTFN
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