With the Tax Relief and Health Care Act of 2006 now signed into law, the Internal Revenue Service has rolled out guidance to help taxpayers filing in 2007 claim the extended deductions and other tax advantages contained in the act.
As previously announced, because Congress waited until its lame-duck session to pass the bill, the IRS will not be able to process a small percentage of individual tax returns until early February, primarily involving three deductions -- the state and local sales tax (claimed on approximately 11.2 million tax returns for the 2005 tax year), the tuition and fees deduction (claimed on about 4.7 million returns a year ago), and the educator expense deduction (claimed on 3.5 million returns last year).
Taxpayers and tax preparers can get information by:
- Visiting www.IRS.gov for updated information on the late legislation;
- Referring to a special mailing of Publication 600, which will include the state and local sales tax tables and instructions for claiming the sales tax deduction on Schedule A (Form 1040) and that the IRS will send directly to 6 million taxpayers in early January; and,
- Using IRS e-file or Free File -- the tax software will be updated to include the three key tax provisions.
Based on filings earlier this year, only about 930,000 tax returns claimed any of the three extenders provisions by Feb. 1. This year, the IRS expects to receive about 136 million total tax returns.The IRS also announced details on how taxpayers can use existing lines on the current Form 1040 and other tax documents to claim the three major extenders provisions. More details are available on the IRS Web site, at www.irs.gov/newsroom/article/0,,id=165500,00.html.
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