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http://www.omniture.com --> Sections Home Page Local News AP News Archives Business Classifieds Event Calendar Forums Life Opinion Obituaries Photo Gallery Readers Photo Gallery Sports Tempo Weather Special Coverage 2006 Britt Festivals --> Shop Our Valley AutoFinder HomeFinder JobFinder Search Our Valley Special Sections Distinctly Northwest Readers' Choice Homelife Magazine Joy Magazine Holiday Guide Oregon Golf Info Oregon Wine Info Other Publications Local Links Ashland News eSouthernOregon Newspapers In Education Personals Moving Here Movie Listings TV Listings Volunteer Customer Service Advertise With Us Media Kit Place Classified Ad Contact Us FAQ's Home Delivery Site Map --> Email Story to a Friend January 17, 2007 Missing deductions may puzzle taxpayers Three key tax breaks don't appear on 2006 forms, but you can still claim them By Eileen Ambrose Congress last month breathed new life into some expired tax breaks — but not in time to make the IRS deadline for printing its 2006 tax forms, so lines to take deductions for sales tax, college tuition and classroom supplies don't appear on forms or in instruction booklets. The IRS recently posted instructions on its Web site for how to file these deductions. If you file paper returns, keep an eraser handy. If you file electronically, software programs are supposed to be updated with the latest instructions. That will eliminate some confusion. Yet you still could be affected. The IRS won't start processing returns that claim one of these three deductions until Feb. 3. Paper returns filed earlier will be held until the IRS is ready to process them, says Jim Dupree, a spokesman for the IRS in Baltimore. But electronic returns filed before Feb. 3 will be rejected if they claim one of the three tax breaks. These filers will have to resubmit their returns, Dupree says. Advertisement Filing taxes is confusing enough without deductions failing to match lines on forms. Do-it-yourselfers filing paper returns are most likely to be frustrated. If you still file your return the old-fashioned way, here's how to claim the three deductions: Sales tax. You have the option of deducting state sales taxes you paid last year or the amount you shelled out in state and local income taxes. Congress re-instated this deduction for 2006 and 2007 after it had expired in 2005. The sales tax option largely benefits people in nine states with low or no income taxes, including Florida, Texas and Alaska, says David Bergstein, a tax analyst with CCH Inc., a provider of tax information. No matter where you live, if you bought a big-ticket item last year, say, a boat, you might be better off deducting the sales tax, he says. You can deduct the actual sales taxes paid if you still have the receipts, or you can use the sales tax estimates in IRS publication 600. You must claim the sales tax deduction on line 5 of Schedule A and file that along with a form 1040. Line 5 is also the line to claim state and local taxes. On the left of line 5, write "ST" to denote a sales tax deduction. Classroom expenses. Teachers from kindergarten through high school may deduct the cost of school supplies they pay for with their own money. This deduction, worth as much as $250, has been revived for 2006 and 2007. You must claim this deduction on line 23 of the 1040. This is also the line for the Archer Medical Savings Account deduction. Put an "E" to the left of entry if you are claiming only the education expense deduction. Put a "B" there if you are claiming both the education and medical account deductions. If you take both, you must attach a statement of how much you are claiming for each. Higher education tuition and fees. This deduction, worth as much as $4,000 of tuition and fees paid to colleges or other post-secondary schools, is back for 2006 and 2007. The maximum deduction is available to single filers with adjusted gross income of $65,000 or less and joint filers with income of as much as $130,000. As much as $2,000 may be deducted by single filers earning more than $65,000 but not more than $80,000, and joint filers with incomes exceeding $130,000 but not more than $160,000. The deduction must be claimed on line 35 of the 1040, which is also the line for "domestic production activities deduction." If you take only the tuition deduction, put a "T" in the space to the left of the entry. If you take the tuition and the domestic production deductions, put a "B" there. Attach a statement that breaks out the amount of each deduction. For up-to-date filing instructions, go to www.irs.gov . And remember: Wait until at least Feb. 3 to submit an electronic return if you take one of these three deductions. The IRS says this delay shouldn't have a big effect on the 136 million anticipated filers this year. Last year, 930,000 filers claimed at least one of these three deductions before February. Bergstein says the delay could affect refund anticipation loans, where taxpayers file returns early to get a short-term, high-priced loan based on their expected refunds. Liberty Tax Service expects this will have little impact on the refund loans it offers. Only a small percentage of filers claimed these deductions prior to February last year, says Chief Executive John Hewitt. And taxpayers can always file early and later amend their returns to claim one of these deductions, a service Liberty would provide for free to its customers, Hewitt says. Distributed by the Los Angeles Times-Washington Post News Service a Would you like to respond to this story? If so Click Here to visit our forums. Advertisement Copyright © 1997-2007 Mail Tribune, Inc. All rights reserved. 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