Millions of People Missed Tax Breaks

According to a report by the U.S. Treasury Inspector General for Tax Administration, millions of people missed or overlooked important tax breaks and made other costly mistakes on their 2006 tax returns.

Many people did not claim the telephone excise tax refund, which is $30-60, depending on how many exemptions they have. Roughly 93 million people had filed for the refund, totaling about $4-billion. The IRS had expected 145-165 million people would claim the refund, totaling about $8-billion.

In addition, about 2.1 million taxpayers who were eligible to deduct their state and local sales taxes did not do so. This figure is up by 50% over the previous year, and they missed roughly $3.6-billion in deductions, according to the Treasury auditors.

Part of the reason for many mistakes is how complex the tax code is. Even though many people use software to prepare their taxes or go to a tax preparer to have their taxes done, there are many changes to keep up with. Part of the blame also lies with Congress, because they waited until the end of the year to extend several tax provisions that expired at the end of 2005, which was past the deadline the IRS had to send the forms and publications to the printer.

Look over your 2006 tax return, and if there are any mistakes, file an amended return using form 1040X, Amended U.S. Individual Tax Return. Amended returns cannot be filed electronically.

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