2006 Federal Tax Law Changes

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When you file your taxes this year, there are some updates you’ll want to be aware of.

The 2006 federal income tax law has undergone several changes and many of them will affect you. Some of the biggest changes are:

  • If you’ve paid taxes on your long distance telephone service between February 2003 and July 2006, you will receive a tax credit.
  • Teachers can claim their “out of pocket expenses” for classroom purchases.
  • You must document all donations to charities.
  • And personal exemptions and standard deductions have increased.

    Senior tax preparer at H&R Block, Doug Schneider said to understand these changes before you file your taxes especially if you prepare your own. He said tax software may be capable of preparing your taxes for you but it can’t tell you what you’re eligible for.

    “In many instances they can help you with the easy stuff. If you qualify for tax credit, they will pick up the telephone excise tax. I have no problem with that,” Schneider said.

    Schneider also said one federal tax law change that will affect most people is regarding your long distance telephone service. You can get up to $60 back just for having a long distance plan. He said you don’t have to provide any documentation to the government unless you think you should get more money back.

    “If you don’t like the amount the IRS is giving you, get all of your old bills out, make a copy of them, submit them with the form,” Schneider said.

    Another major tax law change is in regards to deductions for teachers. Teachers can continue to claim their out of pocket expenses. Schneider said Congress was going to do away with classroom deductions but decided against it.

    “It’s great that we can do that. Many teachers ... People really don’t understand how much, especially elementary teachers, spend out of pocket ... Anything from treats to supplies. It helps a great deal,”

    This deduction is only worth about $38 but they can add up.

    “Every little bit will help,” Schneider added.

    “Even if they were to take it away, which they didn’t but if they had taken it away it still wouldn’t change what I spend in class because that’s for the students and its just something we do,” said Bo Yarbrough, a teacher a Bowling Green Junior High.

    With all of the changes to the federal tax law, Schneider said the best way to make sure you get back what you deserve, is to prepare for tax season year-round.

    “This is what I do, take a manila envelope, throw all of my receipts in there during the course of a year. When it gets to tax time, I take them out, put them in a groupings, make sure I got enough for the deductions and write it down and when I do my taxes. I’m ready for it,” Yarbrough said.

    Schneider said if you do prepare your own taxes, you can go to www.irs.gov for more information on what deductions you’re eligible for or you can call the IRS information line at 1-800-829-1040.

    To see a complete list of the 2006 federal income tax law changes, click here.