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FACT SHEET FRENZY

January 05, 2007

The IRS just issued a batch of "fact sheets." Some of these are quite handy. Here is a summary of the new fact sheets, with links (from the IRS web site):

Credit Available for Taxpayers Who Purchased or Leased Hybrid Vehicles In 2006
FS-2007-9, January 2007 � Taxpayers who purchased or leased any of 44 different models of hybrid vehicles in 2006 may be entitled to a tax credit on their 2006 returns worth as much as $3,150 for the most fuel-efficient models.

2007 IRS E-file
FS-2007-8, January 2007 � Find out all the options available to taxpayers who file their returns electronically in 2007.

Tax Packages for the 2007 Filing Season
FS-2007-7, January 2007 � Tax packages are in the mail.

Free Tax Help Available
FS-2007-6, January 2007 � Taxpayers who need free assistance from the IRS have several options available to them.

Taxpayers Have More Direct Deposit Options for Their 2006 Refunds
FS-2007-5, January 2007 � For the first time, taxpayers will be able to have their refunds split and directly deposited to up to three separate financial accounts.

Special Steps Needed for Paper 1040 Filers to Claim Late Tax Changes
FS-2007-4, January 2007 � Because of late tax legislation, taxpayers will have to follow special instructions when using the major tax forms while claiming certain deductions.

Recently Enacted Tax Law Extends State Sales Tax Deduction
FS-2007-3, January 2007 � Taxpayers who itemize on their tax return may choose to deduct state and local sales taxes instead of state and local income taxes this year and next.

Highlights of 2006 Tax Law Changes
FS-2007-2, January 2007 � Taxpayers will find new credits, incentives for saving and special rules for charitable donations this year.

One-Time Tax Refund Available to Long-Distance Telephone Customers
FS-2007-1, January 2007 � Individuals, businesses and tax-exempt organizations can request the refund as a credit on their 2006 tax return.

This selection from the "Late Tax Changes" fact sheet will get a lot of use:

State and Local General Sales Tax Deduction:

* The deduction for state and local general sales taxes will be claimed on Schedule A (Form 1040), line 5, �State and local income taxes.� Enter "ST" on the dotted line to the left of line 5 to indicate you are claiming the general sales tax deduction instead of the deduction for state and local income tax.

* The IRS also will issue Publication 600 for 2006, which includes the state and local sales tax tables, a worksheet and instructions for figuring the deduction.

* This option is available to all taxpayers regardless of where they live, though it�s primarily designed to benefit residents of the eight states without state and local income taxes.

Higher Education Tuition and Fees Deduction:

* Taxpayers must file Form 1040 to take this deduction for up to $4,000 of tuition and fees paid to a post-secondary institution. It cannot be claimed on Form 1040A.

* The deduction for tuition and fees will be claimed on Form 1040, line 35, �Domestic production activities deduction.� Enter "T" in the blank space to the left of that line entry if claiming the tuition and fees deduction, or "B" if claiming both a deduction for domestic production activities and the deduction for tuition and fees. For those entering "B," taxpayers must attach a breakdown showing the amounts claimed for each deduction.

Educator Expense Adjustment to Income:

* Educators must file Form 1040 in order to take the deduction for up to $250 of out-of-pocket classroom expenses. It cannot be claimed on Form 1040A.

* The deduction for educator expenses will be claimed on Form 1040, line 23, �Archer MSA Deduction.� Enter "E" on the dotted line to the left of that line entry if claiming educator expenses, or "B" if claiming both an Archer MSA deduction and the deduction for educator expenses on Form 1040. If entering "B," taxpayers must attach a breakdown showing the amounts claimed for each deduction.