10 new tax laws for 2006
BY Linda K. Bowman UF/IFAS Santa Rosa County Extension

There are major changes in the tax code that will affect many of us as we file our 2006 returns or plan for our 2007 tax year. The top ten list follows. For further information, check with your tax preparer or check the IRS website.

1. Telephone tax credit:

This rebate is for taxes paid on long-distance service from February 28, 2004 to August 1, 2006. You don't have to have the old phone bills to collect. The IRS has an average calculation you can use.

2. Multiple direct deposit option:

You can have your tax refund divided and direct deposited into up to three accounts.

3. Energy saving home improvements:

If you took advantage of energy saving home improvements, they may be eligible for a tax credit if you file the long Form 1040.

4. Alternative fuel auto credit:

In 2006, the previous tax deduction for cars that run on alternative fuel was changed to a tax credit. If you bought an IRS-approved vehicle it could amount to a credit of as much as $4,000.

5. Tougher donation rules:

Beginning August 18, any donated clothing or household goods must be in good or better condition- no more broken TV donations. Also, if you gave any amount of money to a charity, you must have "a bank record or a written communication" from the charity detailing the group's name and the dame and amount of the gift. This includes donations in your church collection plate.

6. Older philanthropist options:

If you are 70 ½ or older, you can transfer money directly from an IRA to a charitable organization. (You can't claim it as a contribution though as you will already be sidestepping the usual tax on that amount).

7. Kiddie tax tightened:

No longer can parents claim the tax advantage of having earnings on college funds taxed at the youth's usually lower rate. Additionally, this was retroactive to all transactions since January 1, 2006.

8. Foreign income adjustments:

U.S. workers with jobs abroad will most likely find they are paying higher taxes since the exclusion amount has been bumped up. There are also some other changes including housing allowance changes that should be checked out if this is your situation.

9. Rolling over retirement money:

This change takes effect January 1, 2008 and will allow employees to transfer company retirement plans directly into a Roth IRA when they leave a job.

10. Old deductions are new again:

Three popular tax breaks that stopped at the end of 2005 have been resurrected again. These are deductions for state sales taxes, educators' classroom expenses and college tuition and fees. These are for 2006 and apply through 2007. You must itemize to claim. Forms may be difficult to find if you file on paper since these were reinstated after many forms were printed.

Many previous amounts for various laws have new dollar amounts adjusted for inflation. Check before you get the pencil out. Since April 15 falls on a Sunday, your taxes aren't due until April 16. One more day to figure!

For more information or if you have a question, call Linda Bowman, Family and Consumer Sciences Extension Faculty, The University of Florida/IFASSanta Rosa County Extension, at 850-623-3868, between the hours of 8:00 am and 4:30 pm weekdays. Hearing-impaired individuals may call Santa Rosa County Emergency Management Service at 983- 5373 (TDD).