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Tax Breaks

Don't Miss This Write-Off

Millions of taxpayers failed to claim the one-time-only refund of the long-distance telephone tax.

Editor's note: This is the transcript of Kiplinger Editorial Director Kevin McCormally's commentary on the April 2 broadcast of Nightly Business Report.

With procrastinating taxpayers scrambling to finish up their returns over the next couple of weeks, I've got bad news for millions of Americans who may be feeling a little bit smug because they've already done the deed: They need to do a do-over because a goof on their returns cost them money.

I'm talking about the 20 million or more Americans who arleady have failed to claim the one-time-only refund of the long-distance telephone tax. I call this the billion dollar boo-boo because early filers have left more than 1 billion extra refund dollars on the table.

A quick review: After a federal judge ruled the 3% excise tax on long-distance calls illegal, the government decided to refund 41 months' worth via credits on this year's tax returns. Nearly everyone who has a telephone deserves the refund and, to save you the trouble of figuring out how much tax you actually paid, the IRS set standard refund amounts based on how many exemptions you claim on your return: $30 for one exemption, $40 for two, $50 or three and a $60 credit for four or more.

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If you missed this free money when you originally filed, you can still get your share by filing an amended return using Form 1040X. That form actually has a special line on it for claiming the refund, so it's clear the IRS expected a lot of taxpayers to make this mistake. It might sound like a pain to file another tax return just to recover 30 to 60 bucks. But, believe me, you can leave most of the 1040X blank. To make it even easier for you to get your money, we have a step-by-step explanation of how to fill out the form.

And, if you're still working on your return, be sure to claim the refund in the first place.

See Kevin's previous tip.