Discussion:Telephone tax credit

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Discussion Forum Index --> Tax Questions --> Telephone tax credit


Markm (talk|edits) said:

30 January 2007
I understand all the information needed to calculate this credit and how to calculate it for a business. However, trying to find the actual federal excise tax on long distance phone bills for April and September is not so easy.In some cases it appears the tax did not change from April to September.They should probably give a business standard deduction like they give individuals.It seems like alot of work to get the correct tax percentages from the bills.Does anyone have any short cut suggestion to get the actual federal excise tax credit without usuing the actual method?

JR1 (talk|edits) said:

January 30, 2007
Yep, I've published with trepidation what I'm doing. Check one of the other threads on it...

Markm (talk|edits) said:

31 January 2007
JR1-GO IRISH.HOW DO I SEE WHAT YOU PUBLISHED?I'M NEW ON THIS SITE

Mauro (talk|edits) said:

31 January 2007
Mark go to http://www.irs.gov/newsroom/article/0,,id=164310,00.html and the IRS Itself is telling how to simply the way of calculating this credit.

Also as JRI mentioned review previous discussions on the subject matter and be aware of what the IRS is saying about this Refund " Some taxpayers have requested large and apparently improper amounts for the telephone tax refund". Use caution when figuring your actual amount of tax paid. See news release IR-2007-16.

Empty pockets (talk|edits) said:

31 January 2007
I have 5, yes, 5 cell phones, since I have a big family. I called my carrier (Verizon) and they could not tell me anything about the contents of the fed tax line item on the monthly phone bill. With so many cell phones and 2 home lines, I know I can justify over the $60 max, but no one can explain it. I even called IRS and they had no answer, just to have the phone company explain it!

Yogafan00 (talk|edits) said:

31 January 2007
The IRS also says that any refund would be considered income in 2007.

Empty pockets (talk|edits) said:

31 January 2007
I disagree. I discussed that issue and it is definitely not 2007 income. No 1099 would be generated.Empty pockets 09:16, 31 January 2007 (CST)

JR1 (talk|edits) said:

January 31, 2007
Income only to businesses...

Yogafan00 (talk|edits) said:

31 January 2007
Emptypockets - I thought you guys were talking about businesses so I didn't elaborate.

Empty pockets (talk|edits) said:

31 January 2007
Yogafan00: If Verizon will not give me 2004-2005 records for free, can I do a "constructive recreation" and compare the difference to post-2006 billings and assume the difference is all excise tax?Empty pockets 12:04, 31 January 2007 (CST)

Deback (talk|edits) said:

January 31, 2007
Empty Pockets - No. Try to come up with an average for long-distance calls per month and then multiply that amount by 41 months and then multiply by 3%.

Yogafan00 (talk|edits) said:

31 January 2007
The link posted by Mauro is self-explanatory.

CATAXES (talk|edits) said:

31 January 2007
Deback - That is incorrect. THe IRS has given a method for getting the credit amount if you don't have the actual $$. No other method appears to qualify. What you have suggested is like trying to come up with your own method for standard mileage if you don't have actual costs. They give you a method, it's pretty simple, and you are supposed to use it.

Death&Taxes (talk|edits) said:

31 January 2007
The estimated method I read about is for business, the extrapolating from what was deducted for telephone expense for the years 2003-06, with formulae to allow for the first two months in 2003 and to cover only thru July 2006. I think Emptypockets wanted something for personal, I think. I think the allowance for that was in size of family. I only get $30 for being one person.

JR1 (talk|edits) said:

January 31, 2007
I know CAT, but nearly none of our clients will get the refund if you do that. Start the timer. Call the client. Go get your April and Sept. phone bills...get back to me...no, nothing else to do but leave your work out on the desk...you will burn 20 minutes minimum to do this that way, now to enter the numbers onto the worksheet. I can do the entire S return usually in 20 minutes. Do I double my fee? HAHAHAAHA. And yet...it doubles my time, when my time is worth a bundle. So I cannot do this that way. I wonder if it's like the new charitable rules, which basically exist in order to now deny most charitable deductions...this is designed to actually prevent most people from collecting these taxes.

CATAXES (talk|edits) said:

31 January 2007
First S Corp return was a $1300 credit on a phone bill that averaged about $10,000 per month. Also, FYI... the credit is refunded to the Corp. No pass throughs to shareholders.

Death&Taxes (talk|edits) said:

31 January 2007
Of course, Debit Cash in Bank, Credit Telephone Expense.

Mtmckeecpa (talk|edits) said:

1 February 2007
I've looked at several now and neither bills from Sprint nor ITC Delta show a specific line item for "...Excise Taxes" I am guessing that the prior excise tax is included in the line item, "Federal taxes"?

I called ITC Delta today and they said, if it doesn't show specifically on the bill "federal excise taxes" then the client didnt' pay. The rep said some people paid and some didn't...making no sense to me.

Deback (talk|edits) said:

February 1, 2007
"Federal Tax" is the description you should look for at the end of the long-distance charges (don't include Federal tax on local charges when figuring this credit). On one of my AT&T bills in 2004 (formerly SBC), it states "Federal at 3%" under the title "Taxes." I don't think all (or any) of the telephone companies print the word "excise" on the bills.

Mauro (talk|edits) said:

1 February 2007
More from the IRS Issue Number: IR-2007-21

Mistakes Abound on Telephone-Tax Refund; IRS Offers Tips for Getting a Speedy Refund

WASHINGTON — The Internal Revenue Service today offered taxpayers tips for requesting the telephone excise tax refund, after early tax returns show some people are making basic mistakes, others are requesting excessive refunds and many are missing out on the refunds, altogether.

“We encourage taxpayers to take a few minutes and review the details of the telephone-tax refund,” said IRS Commissioner Mark W. Everson. “A little extra time will reduce the chance for a mistake, avoid a refund delay and possibly add a few dollars onto refund checks.”

More to it ...........

Mtmckeecpa (talk|edits) said:

1 February 2007
I called ITC Delta com back this morning just to confirm and they state that if their customer paid the excise tax it would have shown up under the long distance charges as "Federal Excise Tax".

I have a client that uses ITC Delta Com and I know FOR SURE that they have long distance every month and have been with ITC for 3 years...so go figure? I had the client pull several bills from 05 and this "federal excise tax" was never charged by ITC....

I don't know about the other carriers....anybody see the word specifically as "Federal Excise TAx" on those bills?

Johnny (talk|edits) said:

1 February 2007
I am using Proseries Basic this year. However, it defaults the telephone excise credit for my individual taxpayers as the standard amounts. I have afew clients end up showing me their actual bills ;HOWEVER, most of my clients tell me that they paid for either long distance or bundle service in 2003 to 2006. How do we verify if this is a legitimate without seeing the actual bill? Indeed,I am not going to verify every single bill with clients. I am sorry if I ask a silly question. Here is my question: All taxpayers are qualify for the standard amounts even though they did not pay for the long distance bills or bundle services? THANKS

Deback (talk|edits) said:

February 1, 2007
If they paid phone bills during the 41-month period, they qualify for the standard credit.

RickCPA1 (talk|edits) said:

1 February 2007
JR1 -

I went back and looked at your calculation of your down & dirty method of 2%, and 1.5% if you are conservative. Are you actually doing this and comfortable with it? I do not think it makes a "material" difference to the tax return.

I have a feeling that for the value a lot of times it is hardly worth the time to prepare the form however if we do not what does the client think?

The way my clients keep records I doubt I will get copies of the April & Sept 2006 telephone bills.

Anyone else - how long is it taking you to prepare this form with client communication, documentation, and preparing the form? Thank you, Rick

JR1 (talk|edits) said:

February 1, 2007
It's still taking 10-15 minutes, but it's easier since I'm not waiting for info. As I play with the numbers, there's so much leeway that I feel like I have to be reasonably close to the right answer that I'd get if I used to official method.

JR1 (talk|edits) said:

February 1, 2007
Another new decision today. Have decided that unless phone expense exceeds $200 per month, I'm not even thinking about the credit. That covers just all the usual local phones, cells, etc. and clearly not much LD, so not worth taking any time on it at all.

RickCPA1 (talk|edits) said:

1 February 2007
JR-

Been out all day. Thank you. Rick

Actionbsns (talk|edits) said:

5 February 2007
How do you get the standard credit into the S-Corp return and on what line?

Kevinh5 (talk|edits) said:

5 February 2007
there is no standard credit for a business

JR1 (talk|edits) said:

February 5, 2007
You go to Form 8913 worksheet. Good luck, that's what the whole conversation is about.

Actionbsns (talk|edits) said:

5 February 2007
Sorry 'bout that, I read the first post but didn't actual realize what it was saying and as I read the rest the thread moves more into how to calculate this PIA credit. I get brownie points however for not starting a new thread!!!

Kevinh5 (talk|edits) said:

5 February 2007
have you noticed that more and more people are not starting new threads for topics with similar prior posts? They are using the search field correctly, and if they can't find the answer they are appending their question onto the most appropriate post. I think that is very helpful, in that it gives people a background on the topic, as well as limits the amount of stuff to sift through to find a relevant thread.

Dennis (talk|edits) said:

5 February 2007
Also gives us a chance to correct errors, such as D&T's journal entry. DR Cash CR Other Income.

JR1 (talk|edits) said:

February 5, 2007
Just like Quickbooks!

Natalie (talk|edits) said:

February 14, 2007
How about those prepaid phone cards that are used for long-distance calling (by businesses)? If I understand it correctly, there's no credit/refund because the excise tax is a liability of the vendor selling the card, not the holder who is actually using it. So, if you have a retailer who is selling these cards, there's an additional credit out there some people may not be thinking of. On the other hand, businesses that use the prepaid cards receive no credit. . . or am I missing something?

DZCPA (talk|edits) said:

15 February 2007
$10 per period generates a $158 credit. Takes only 1 minute. Works for most of the companies unless they have large phone bills.

DZCPA (talk|edits) said:

15 February 2007
$10 per period generates a $158 credit. Takes only 1 minute. Works for most of the companies unless they have large phone bills.

LJACPA (talk|edits) said:

15 February 2007
Could someone please tell me where to find the info re income in 2007 for business credit in 2006? Is this like the fuel tax credit?

Klesher (talk|edits) said:

15 February 2007
Individual brings me a dollar amount of 91.25 of federal excise tax she added from her phone bills . I just divided it into the form 8913 to make it work. Just checking the interest is calculating through? So if taxpayer uses actual amounts, they get the interest also? So she is getting 104 and not 91 back Thanks

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