Phone Excise Refund was Partly Interest

[OtisMozzetti]

Here is what would come as some surprise to many taxpayers: I saw an IRS transcript of account which showed that $6.XX of the telephone excise tax refund (safe harbor amount) paid on an MFJ, no dependents, return was REPORTABLE INTEREST not refund of telephone excise tax. I wonder how many taxpayers--and how many paid preparers--are going to remember to include that interest on the returns filed for 2007.

[BOB W]

Here is what would come as some surprise to many taxpayers: I saw an IRS transcript of account which showed that $6.XX of the telephone excise tax refund (safe harbor amount) paid on an MFJ, no dependents, return was REPORTABLE INTEREST not refund of telephone excise tax. I wonder how many taxpayers--and how many paid preparers--are going to remember to include that interest on the returns filed for 2007.

The question now is > is the IRS going to issue a 1099 INT for under $10. If no, then it doesn't get reported. If Yes, than it does>>>>>>>

I guess if this telephone credit (forget about the interest) is personal, it does not get reported. But If it was for business> it gets reported an other income.

[Kram BergGold]

different take on tel excise tax

First, if you took the $30, $40, $50, or $60 there is nothing to report. Secondly,
my understanding last year was, only the portion of the telephone excise tax applicable to a business had to be reported. This is the case regardless of which method used to compute the excise taxes paid.

[Golden Rocket]

Safe Harbor

I think when IRS devised this safe harbor for the excise tax credit, it is because they wanted to rid themselves of the administrative hassle of having to implement a many-faceted plan to match what millions of taxpayers would have done, given their own notions.

I'm sure there was no intent to carry forward into this year with interest or anything else. I think they developed the safe harbor so they could be done with it, and get it behind them.

Forget reporting interest.

[Donald Rihn, EA]

Business portion has to be reported?

If the taxpayer claimed the $30, $40, $50, or $60 refund, and if the taxpayer deducted a portion of his longdistance bill on his Schedule C or F, does he have to report a portion of that refund as income on those schedules?

For instance, if my client took a tax deduction for 25% of his long distance bill as a Schedule F deduction, would he have to report as income 25% of the refund?

And do you have to allocate between Schedule F and Scedule B?

And how do you determine what was the interest portion of the $30, $40, $50, or $60?

[thomtax]

If the taxpayer claimed the $30, $40, $50, or $60 refund, and if the taxpayer deducted a portion of his longdistance bill on his Schedule C or F, does he have to report a portion of that refund as income on those schedules?

If you deducted an amount for telephone on sch C or F, and then received that amount back in a rebate, you, in effect, did not pay that amount as an expense. However, you did deduct it, which means that after the rebate you have deducted something you did not pay. Therefore, whatever C or F rebate that you get is either a lowering of expenses or additional income.

LT

[Bees Knees]

Instead of guessing, it always helps to read the instructions.

Schedule C, line 6 instructions for 2007 say the following:

If, in 2007, you received or accrued
credit or refund of the federal telephone
excise tax, include in income:
• The interest part of the credit or refund, and
• The smaller of the amounts deducted
or the amount from Form 8913, line 15,
column (d), if you deducted the federal
telephone excise tax as a business expense
in one or more prior years, except to the
extent the deduction did not reduce federal
income tax in the prior years.

The Form 1040 line 21 other income instructions say nothing about adding the $20, $30, $40, etc. amounts to income because the standard amounts for the personal credit were never available as a deduction on a business tax return. Thus, they are not reported as income in 2007.

[BOB W]

So where can we find the interest portion of the refund?

[thomtax]

Instead of guessing, it always helps to read the instructions.

Schedule C, line 6 instructions for 2007 say the following:



The Form 1040 line 21 other income instructions say nothing about adding the $20, $30, $40, etc. amounts to income because the standard amounts for the personal credit were never available as a deduction on a business tax return. Thus, they are not reported as income in 2007.

You are correct, as far as you go in addressing things. However, where is the reference to Schedule F? Also, in the original question, it appears that this was a personal phone that has a percentage of the amount applied to the Sch. F expenses. In that case the $30, $40 or $60 does come into play.

In my unforgivable question, according to your post, should I just guess that since it is not referred to I ignore it, rather than make a best guess of reading between the lines?

[S T]

Interest portion

My business clients that received their telephone excise tax refund (form 1065, 1120, 1120S) received a check from US Dept of Treasury, and on the bottom portion of the check it was noted how much of the refund was attributable to the interest.

Most all of my clients faxed me that check before deposit. However, I think you can look in your tax records to see what was filed as the refund on form 8913 which will show the rebate as well as the interest in a separate column. On one of my 1120S clients I reviewed their file and found that the refund was one amount and the interest was another amount which equalled what the amount of the refund check was issued for.

Sandy

[Kram BergGold]

question for Bees?

So is the IRS saying that a Schedule C or F filer reports item 15d in the income section of Schedule C or F and item 15e on Schedule B?

[Kram BergGold]

Adjustment to question

My question assumed 100% of the excise claim was attributable to business. If 38% was attributable to business then only 38% of line 15d and 38% of 15e would be reported as income.

[Donald Rihn, EA]

But, how much is interest?

How do you calculate the interest portion on the $30, $40, $50, $60?

My C & F clients didn't get refund checks from the IRS to denote the amount of the interest.

These were personal phone bills and a percentage of the long distance bill was expensed as a business expense.

[Kram BergGold]

$30-$60

If your client took the $30-$60 option there is nothing to report under any circumstance in 2008.

[Davc]

On the 30 credit the refund is 25.61, Int is 4.39.