Don't Let IRS Form Fool You: Tax Breaks Are There

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This year, new or one-time tax breaks are available for which many people qualify. But these breaks don't appear on the printed forms that many taxpayers use, making them easy to overlook.

As Kevin McCormally of Kiplinger's Personal Finance tells Robert Siegel, chief among these deductions is a one-time tax refund opportunity for which almost everyone is eligible: a phone tax refund.

The refund is for federal taxes on long-distance or bundled phone service; it stems from a court's decision that the tax should not have been applied to long-distance service.

Congress extended several deductions after forms were printed, which has forced the IRS to issue new rules on how to use the breaks. Deductions for teachers and their aides; for college tuition; and for state sales taxes are allowed for 2006, as they were in 2005.

The trick is to know where to put these deductions.

In some cases, the IRS is making lines designated for other purposes do double-duty on the printed tax forms. The deduction for college tuition, for example, goes on line 35 of the 1040 form, which is labeled as "Domestic Production Activities." There, filers must enter the letter "T" to the left of the line to denote a claim for tuition expenses.

And for those hoping to claim deductions for tuition and for domestic production, a "B" — for both — is needed.

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