Good news from the IRS; If you haven't filed your income tax return yet, take a deep breath and relax.
You have two extra days to file this year.

Since April 15 falls on Sunday and the following day, April 16, is Emancipation Day, a legal holiday in the District of Columbia, the IRS moved the deadline for filing 2006 tax returns to April 17, said Gloria A. Sutton, an IRS spokeswoman for North and Central Florida.

Of course the IRS would love for you to avoid the last minute rush and file earlier.
Before filing, Sutton pointed out a few things to keep in mind that might help reduce what you owe or help pad your refund.

"The most significant tax messages this year: Telephone Tax Refund, Free-file, which is not new, but enhanced this year; split refund option and of course letting taxpayers know about claiming the Earned Income Tax Credit, if they qualify,'' she said.

Telephone tax refund: The one-time tax refund of $30 to $60 is available to long-distance telephone customers who paid federal long-distance excise taxes on land line, cell phone, fax and Voce over Internet Protocol, or VoIP. This includes bundled services. "To claim your $30 telephone tax refund when you file your 2006 income tax return, look on line 71 on form 1040," Sutton said. "If you don't have to file a tax return, click on the 1040EZ-T link at www.IRS.gov.

Split refund option: The new split-refund option is available to taxpayers who choose direct deposit regardless of whether they filed the original returns on paper or in electronic format using Form 1040, 1040A, 1040EZ, 1040-PR, 1040NR, 1040NR-EZ or 1040-SS. However, if you're filing Form 1040-EZ-T, Request of Federal Excise Tax; or Form 8379, Injured Spouse Allocation, you cannot opt for the split refund. To split your direct-deposit refunds among two or three different accounts or financial institutions, you should complete new Form 8888, Direct Deposit of Refund to More Than One Account. You also can continue to use the direct deposit line on Form 1040 to electronically send your refund to one account.

Earned Income Tax Credit: If you paid someone to care for a child or a dependent so you could work or look for work, you may be able to reduce your tax by claiming the Child and Dependent Care Credit on your federal income tax return. You may also be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for a spouse or a dependent of any age who is physically or mentally incapable of self-care. The credit is a percentage of the amount of work-related child and dependent care expenses you paid to a care provider. The credit can be up to 35 percent of your qualifying expenses, depending upon your income. For 2006, you may use up to $3,000 of the expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals. These dollar limits must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from your income.

To claim the credit for child and dependent care expenses, you must meet the following conditions:
o Income: You must have earned income from wages, salaries, tips or other taxable employee compensation, or net earnings from self-employment.
o Payee: The payments for care cannot be paid to someone you can claim as your dependent on your return or to your child who is under age 19.
o Filing Status: Your filing status must be single, head of household, qualifying widow(er) with a dependent child or married filing jointly.
o Care: The care must have been provided for one or more qualifying persons.
o Home: The qualifying person must live with you for more than half of 2006.

NEED MORE HELP?
If you have questions or need more details on any of these or other IRS filing issues, Sutton said free assistance to taxpayers is available. To get your Guide to Free Tax Services, IRS Publication 910, log on to www.IRS.gov, call 800-829-1040, or call the local IRS office at 435-8468, or visit the office at 125 W. Romana St. Monday through Friday 8:30 a.m. to 4:30 p.m.

Tax Changes
As taxpayers everywhere begin preparing their 2006 tax returns, the same questions are on their minds: What’s new in the tax code? Can I take advantage of new deductions? What about charitable contributions? Should I do the return myself or call a tax professional?

The National Society of Accountants (NSA) reports the following changes that affect 2006 returns, including some good news:

• Charitable Contributions: Clothing and household items donated to charity after Aug. 17, 2006, must be in good used condition or better. However, a taxpayer may claim a deduction of more than $500 for any single item, regardless of its condition, if the taxpayer includes a qualified appraisal of the item with the return.

• Inflation Adjustments: The value of each personal and dependency exemption is $3,300, up $100 from 2005. The standard deduction is $10,300 for married couples filing a joint return and qualifying widow(er)s, a $300 increase over 2005; $5,150 for singles and married individuals filing separate returns, up $150; and $7,550 for heads of household, up $250.

• IRA Contribution Limits: The contribution limit for Roth and traditional IRAs rose to $5,000, up from $4,500 in 2005, for those age 50 or over. For those under 50, the limit remains unchanged at $4,000.

• Energy Credits: A 10 percent credit is allowed for various energy-saving improvements made to a taxpayer's main home. The credit is based on the cost of new energy-efficient improvements including insulation, exterior windows, exterior doors, water heaters, heat pumps, central air conditioners, furnaces and hot water boilers. The overall credit is limited to $500

“Everyone’s situation is a little different, but there are opportunities for tax savings for most people if they look hard enough,” explains NSA President Robert H. Fukuhara, Jr. CPA, ABA, ATA, of Fujieki, Fukuhara & Company, Honolulu, Hawaii.

Many people will choose to hire a professional to prepare their tax return, but they should move quickly — tax season is already underway.

“As professional accountants specializing in serving individuals and ‘main street’ businesses, we want to help everyone who comes to us,” Fukuhara says. “But our schedules fill up quickly this time of year, so I encourage anyone considering hiring a professional to do so right away.”

Fukuhara and NSA have also identified several changes that take effect for 2007 that taxpayers should consider as they plan for the coming year:

• Basic standard deductions have increased to for $5,350 for single individuals, $10,700 for married couples filing jointly, $7,850 for heads of households, and $5,350 for married individuals filing separately.

• Dependent exemption has increased from $3,300 in 2006 to $3,400.

• 0%, 5%, 15% capital gains and qualified dividend rates are extended to 2010.

• Cash contributions to charity must now be supported by a dated bank record or a dated receipt. Contribution of used clothing and household items must be in “good” condition or better.

• Hope and Lifetime education credits will be phased out ratably for taxpayers with modified adjusted gross income of $47,000 to $57,000 ($94,000 to $110,000 for joint filers).

• Business mileage goes from 44.5 cents per mile to 48.5 cents. Medical mileage goes from 18 cents per mile to 20 cents. Charity purpose miles stay unchanged at 14 cents per mile.

• Social Security wage base rises from $94,200 in 2006 to $97,200 in 2007.

NSA has an easy-to-use online search engine to access a nationwide directory of tax professionals at www.nsacct.org.

About the National Society of Accountants

NSA and its affiliates represent 30,000 members who provide accounting, auditing, tax preparation, financial and estate planning, and management services to approximately 19 million individuals and business clients. Most members are sole practitioners or partners in small- to medium- size accounting firms. NSA protects the public by requiring its members to adhere to a strict code of ethics. For more information, visit www.nsacct.org.

Hiring a Tax Preparer
With tax season looming, the Better Business Bureau of Northwest Florida is reminding consumers to use caution when choosing a tax preparer.

“While most preparers provide good service to their clients, a few unscrupulous tax preparers file false and fraudulent tax returns and ultimately defraud their clients,” said Jonathan Richardson, communications director with the BBB. “It is important for taxpayers to know that even if someone else prepares their return, they are ultimately responsible for all the information on the tax return.”

Dishonest tax preparers can commit fraud by claiming inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. Fraudulent preparers also may manipulate income figures to obtain fraudulent tax credits, such as the Earned Income Tax Credit.

Signs that a preparer could be acting unethically include:
• Claiming that they can obtain larger refunds then other preparers.
• Basing their fee on a percentage of the amount of the refund. Fees should be based on the complexity of the return, never on the size of the tax savings or refund.
• Claiming they can get you immediate payment of your return. Keep in mind that this is a loan. Fraudulent tax prepares often pad their pockets by giving cash up front at a high interest rate while presenting it as an instant refund from the federal government.
• Refusing to sign the tax return or provide the taxpayer a copy for his or her records. Always make sure that you have something in hand that shows proof of what transpired and you should have a receipt for services rendered.

The Better Business Bureau recommends that taxpayers follow these tips when hiring a preparer:
• Get referrals from satisfied clients and check out the company with the BBB.
• Ask the preparer about their training, experience and current knowledge of tax law.
• Find out whether the preparer has ever represented taxpayers in an audit, or has ever been denied eligibility to do so.
• Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months or even years after the return has been filed.

Taxpayers should review their return before signing and keep a copy of the return for their records. Never sign a blank tax form or one filled out in pencil.

For more information or a list of tax preparers in the Florida panhandle, contact the Better Business Bureau at (850) 429-0002 or visit www.nwfl.bbb.org.