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February 9, 2007

Solar Energy System Equipment Credit

          New York has amended the Tax Law to change the solar electric generating equipment credit to the solar energy system equipment credit.  The amendment expands the credit to include solar energy system equipment which utilizes solar radiation to provide heating, cooling, hot water, or electricity for use in a residence.
          In addition, the maximum credit is increased to $5,000 from $3,750 for property placed in service on or after September 1, 2006.

Telephone Excise Tax Refund         

          The telephone Excise Tax Refund is a one-time payment available on your 2006 federal income tax return whether you are an individual, a business or a tax-exempt organization.  The refund covers the 3% tax paid on long distance and bundled services billed after February 28, 2003 and prior to August 1, 2006.  The federal excise tax continues to apply to local-only telephone service.
          Taxpayers can base their refund request on the actual amount of tax paid.  To do this, they must fill out Form 8913, Credit for Federal Telephone Excise Tax Paid.  Individuals and businesses should attach it to their regular 2006 income tax returns.  Tax exempt organizations should attach it to Form 990-T.
          If you do not want to dig through past records, then an individual can claim an arbitrary amount on their individual income tax return, as follows, based on the number of personal and dependency exemptions that are able to be claimed on their 2006 individual income tax return:

                    1 exemption  = $30
                    2 exemptions = $40
                    3 exemptions = $50
                    4 exemptions = $60

           There is not standard amount for businesses and tax exempt organizations because they typically have more varied telephone usage patterns than individuals.  Instead, they can choose to use a special formula (also called the estimation method) to estimate the actual amount of tax on long distance and bundled service they paid. 
          The formula is optional.  It makes it easier by basing the estimate on just two monthly telephone bills (April 2006 and September 2006).  Individuals reporting more than $25,000 of gross business, farm and rental income can choose the formula. 
          For those millions of people not required to file income tax returns the IRS has created a special short form, Form 1040EZ-T in order to request the telephone excise tax refund.  The form can be filed electronically for free via the Free File link on  FS-2007-1

New Charitable Contribution Rule

          Effective for 2007, individuals making Cash Contributions will have to have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution.  No undocumented cash deductions will be allowed!!  IR 2006-192
          We recommend that churchgoers do not place cash in the offering plate.  We recommend placing a check in the plate.  We further recommend you ask your church to start an envelope system if they do not already have one.

Tax Quote

          Income tax returns - the most imaginative fiction written today. 
                                                                                                        -Herman Wouk

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