Discussion:Telephone Tax Refunds Twice?

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Discussion Forum Index --> Tax Questions --> Telephone Tax Refunds Twice?


John of PA (talk|edits) said:

13 January 2007
I notice Lacerte 06 automtaically takes the standard Telephone Tax Refund on a 1040, line 71. My question is, doesn't a Sch C business also get a Telephone Tax Refund? So if the 1040 has a Sch C over 25,000 in gross income, how would that 2nd Telephone Tax Refund be taken on the 1040, or is it not allowed in addition to the personal Telephone Tax Refund?

Deback (talk|edits) said:

January 13, 2007
The refund on line 71 is for the personal phone line. If someone has a second phone line that's used 100% for business, Form 8913 must be filled out to deduct either the actual Federal tax paid or the alternative method using the April and September 2006 total bills and total Federal tax. So, yes, there are two separate telephone refunds, if there is a personal phone line and a business phone line.


Wrong, Deb! See my 2nd answer to this below.

PJLCPA (talk|edits) said:

13 January 2007
One thing to remember on the business credit....it will be income in the year received.

John of PA (talk|edits) said:

13 January 2007
Thank You, that makes sense.

John of PA (talk|edits) said:

13 January 2007
I just played with it a little, and I still don't see how you get the 8913 to generate the doulbe credit, that is, both an individual and a personal Telephone Credit

FlaGators (talk|edits) said:

13 January 2007
PJLCPA, an accrual basis company could accrue the income. Our company accrued in last fiscal year and it passed audit, and it was over materiality threshhold. I'm not really sure if that's a required GAAP accrual, but I can tell you why we did it in one word - "EBITDA".

Www.cpa1.biz (talk|edits) said:

13 January 2007
This is what I heard at a seminar.

You have to take either or with self employed business (SCH C) or the standard telelphone deduction. I know this is unfortunate but this is what I heard so no, you do you not get to take both.

Death&Taxes (talk|edits) said:

13 January 2007
John: Deb is right. "Options for requesting this refund vary for sole proprietors, who file a Schedule C with the Form 1040, depending on the gross income reported on the Schedule C. Sole proprietors who report gross income of $25,000 or less on their Schedule C may use the standard amounts or request a refund based on their actual expenses. Sole proprietors reporting more than $25,000 of gross income have three options: they can use the standard amounts which cover both personal and business expenses, they can use the formula for their business expenses and actual for their personal ones, or they can choose to use actual amounts for both business and personal." http://www.irs.gov/newsroom/article/0,,id=164305,00.html The last sentence tells us we can have both.

John of PA (talk|edits) said:

13 January 2007
So if they take the 2ed option and take actual expenses for both business and personal, how do you report both these credit. Is it reported on the 8913 as one hugh credit (I hope so)?

Deback (talk|edits) said:

January 13, 2007
I was wrong and BJ is correct. I just checked this out in my software (hadn't gotten that far up until now). You can only get one telephone refund, if you have both personal and business lines - either the standard amount or the actual amount, if the actual amount is higher. In my case, I get $30.

Deback (talk|edits) said:

January 13, 2007
But I used the April/Sept method, because I'm not in the mood to go dig out 41 months of telephone bills right now.

Death&Taxes (talk|edits) said:

14 January 2007
Forget what the software does, how does it square with what I printed from IRS about covering both business and personal....admittedly on one refund, not two. Maybe that is what you are saying.

Deback (talk|edits) said:

January 14, 2007
I just read your msg above and then the link you provided and now need to start over with this. Too much multitasking right now, so I'll get back to ya on this.  :)

Deback (talk|edits) said:

January 14, 2007
(1) On Form 8913, electing the April/Sept method, I just entered $500 tax and $20,000 total phone bill for April and entered $50 tax and $20,000 total phone bill for Sept. My credit was $30. (Maybe I'm missing something here, but I checked the applicable box for a business to use the business formula method, and no missing info error showed up in the ctrl-T error-checking.)


(2) On Form 8913, electing the actual 41 months method, I entered $20 on each of the 14 lines for a total of $280 federal excise tax paid during the entire period. My credit is now $280. The software did not give me an addl standard of $30 for my personal line, but I think when using Form 8913 to list the actual tax paid, you would include the tax for both personal and business lines.

Deback (talk|edits) said:

January 14, 2007
You're right, DT. This sentence is the answer: Sole proprietors reporting more than $25,000 of gross income have three options: they can use the standard amounts which cover both personal and business expenses, they can use the formula for their business expenses and actual for their personal ones, or they can choose to use actual amounts for both business and personal.
  • $30 is my standard amount, which covers both of my phone lines.
  • The formula doesn't work for me, even when I use an exorbitant amount.
  • Using actual amounts (I used high estimates) worked.

Death&Taxes (talk|edits) said:

14 January 2007
I dig all my bills out last month, created an Excel spreadsheet, and then found I left out things like total phone bill. What is perplexing is that when I lived and worked in upstate NY, I had 4 lines for business [but two had little long distance] and one personal. Now I have no personal line, only 3 business ones and use Pam's phone when I need to leave a personal #. I am going to take the lazy man's out for both the corporation and self.

John of PA (talk|edits) said:

14 January 2007
I read yours discussions with great interest. I am concluding more and more that it is OK to take actual expnese for both the personal and the business line (Sch C business) and enter them on the 8913 as one big credit.

Deback (talk|edits) said:

January 14, 2007
That is correct, John. But I'm still a little concerned about why the software didn't work, when I tried using the business formula for April and Sept. Hopefully, I'll discover that I missed something when I entered $20,000 for each month's total phone bills and $500 for the Federal tax in April--and my refund was still only $30. I had checked all applicable boxes on Form 8913, and ProSeries showed no errors when I hit Ctrl-T.

Beengel (talk|edits) said:

January 14, 2007
Isn't the busiess tax limited to 2%? Not sure where I got that, but for some reason that is sticking in my head...

Deback (talk|edits) said:

January 14, 2007
Yes, now that you remind me, that was the problem when using the business formula. So, it appears, that the actual method will always work better, if the Federal excise tax was material.

Dennis (talk|edits) said:

14 January 2007
D&T -- If your spreadsheet has the breakdown for Long Distance calls separated, the actual tax was 3%. You don't need total phone bill.

John of PA (talk|edits) said:

15 January 2007
Great Discussion. It would come as no suprise if the software is not handling this as comrehsively as it could, given how new this is. I would have no problem overiding the sofeware with our interpretation of how this credit should work (when both a Sch C and a personal credit).

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