Debt Free News

Last minute tax deduction changes are adding confusion to 2006 returns (part 1)

December 21, 2006

When it comes to getting the best debt free information, relying on debt free news articles can be a great service to you. We have observed new tax deduction information that was released recently and we will pass it onto you to help you with your 2006 tax return.

It is not recommended that you use common sense to get your taxes done, rely on debt free news and tax news to help you get the most out of your tax return this year. After all, your our financial health depends on accurate and new information. In the coming months, millions ands millions of US citizens will be adding and subtracting in order to get their taxes done.

This year, many tax payers will find it harder to calculate their taxes and how to determine how to claim 3 old deductions that terminated last year but recently added back by Congress. It is being reported that lawmakers never actually restored these 3 deductions after all. Well, not until after the Internal Revenue Service (IRS) started to print its 2006 forms that is – see President Bush only just signed the legislation into law YESTERDAY. The IRS is releasing new special instructions regarding these 3 changes this week.

So, many tax payers may be perplexed as to what to do. Here is some help and the latest info that has been released:

For your higher education tuition and fees deduction, you will now put them on line 35 of your 2006 1040 tax form. This is true even though the line says something different. You will see it state domestic production activities deduction. You will enter the letter T on the line to the left of line 35 only if you wish to claim this deduction.

Now, if you are eligible for both of the above deductions, you will put the letter B on that line to the left of line 35 on your 2006 1040 tax form. Keep in mind that if you do wish to claim both of these deductions, you will have to supply a complete explanation as to your findings - you have to show all amounts claimed for each deduction. Lat year, there were nearly 4.8 million US citizens that claimed the tuition and fees deduction. The eligible deduction can be up to $4,000 for eligible tax payers, but you have to read the 1040 form’s instruction regarding income limits.  

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