What is the Federal Excise Tax Refund Credit?
The Federal Excise Tax Refund Credit is a one-time credit for your 2006 federal income tax returns. Basically, you are entitled to a tax credit because there’s been a federal excise tax on your phone bill for a long time now - the federal excise tax actually goes all the way back to 1898 and the Spanish-American War. After several court challenges, the IRS relented and said it would discontinue the tax as of August 30, 2006.
The IRS also agreed to give a one-time credit for this tax which, as mentioned, will be part of your 2006 federal tax return. Now there are two ways you can claim this refund. The easiest way is to take the standard claim, which works as follows:
If you’re filing as single with no dependents (other than yourself), you can claim a $30 credit. If you’re filing single with a child or parent as a dependent, you can claim a $40 credit. If you’re filing as a married couple with no kids, you can also claim a $40 credit. And finally, if you’re filing as a married couple with children, you can claim a $50 credit (if you have one kid) or a $60 credit (if you have two or more kids).
If you’d like to get more money, you can claim the actual excise taxes you paid from March 1, 2003 through July 31, 2006. But you’ve got to have all your phone bills for that period. If you have them - congrats, you’ll probably get a bigger credit (and if you do go this route, you can’t just claim the credit on your 1040, but must use Form 8913).