1040A (2006)

1040A - Main Contents

Table of Contents

See How to avoid common mistakes on page 56.

For details on these and other changes for 2006 and 2007, see Pub. 553.

What's New for 2006

Credit for federal telephone excise tax paid. If you paid the federal excise tax on your long distance or bundled telephone service, you may be able to request a credit. See the instructions for line 42 on page 52.

Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount is increased to $42,500 ($62,550 if married filing jointly or a qualifying widow(er); $31,275 if married filing separately).

Direct deposit of refunds. If you choose direct deposit of your refund, you may be able to split the refund among two or three accounts. See the instructions for line 45a on page 53.

Jury duty pay. You can now report income received for jury duty on Form 1040A. See the instructions for line 13 on page 28. If you gave your jury duty pay to your employer, you may be able to deduct it. See the instructions for line 19 on page 31.

Penalty on early withdrawal of savings. You can now deduct any penalty on the early withdrawal of savings on Form 1040A. See the instructions for line 16 on page 28.

New credit for residential energy improvements. You may be able to take a residential energy credit for amounts paid in 2006 to have qualified energy saving items installed in connection with your home. However, you must use Form 1040 to take the credit.

IRA deduction expanded. You may be able to take an IRA deduction if you were covered by a retirement plan, your 2006 modified adjusted gross income (AGI) is less than $85,000, and you are married filing jointly or a qualifying widow(er). You and your spouse, if filing jointly, may each be able to deduct up to $5,000 if age 50 or older at the end of 2006.

For purposes of taking an IRA deduction, earned income includes any nontaxable combat pay received by a member of the U.S. Armed Forces.

Alternative motor vehicles. You may be able to take a credit if you place an alternative motor vehicle (including a qualified hybrid vehicle) or alternative fuel vehicle refueling property in service in 2006. However, you must use Form 1040 to take the credit.

Earned income credit (EIC). You may be able to take the EIC if:

A child lived with you and you earned less than $36,348 ($38,348 if married filing jointly), or
A child did not live with you and you earned less than $12,120 ($14,120 if married filing jointly).

The maximum AGI you can have and still get the credit also has increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you.

The maximum investment income you can have and still get the credit has increased to $2,800.

See the instructions for lines 40a and 40b that begin on page 40.

Personal exemption and itemized deduction phaseouts reduced. Taxpayers with adjusted gross income above a certain amount may lose part of their deduction for personal exemptions and itemized deductions. The amount by which these deductions are reduced in 2006 is only ⅔ of the amount of the reduction that would otherwise have applied.

Tax on children's income. Form 8615 must be used to figure the tax of children under age 18 (increased from age 14) with investment income of more than $1,700. See the instructions for line 28 beginning on page 32. The election to report a child's investment income on a parent's return and the special rule for when a child must file Form 6251 also now apply to children under age 18. See pages 12 and 32.

Adoption benefits. If you are claiming the adoption credit or received employer-provided adoption benefits, you must file Form 1040.

IRA distribution for charitable purposes. A distribution from your IRA that was made directly by the trustee to a qualified charitable organization may be nontaxable if you were at least age 70½ when the distribution was made. See the instructions for lines 11a and 11b on page 25.

Mailing your return. You may be mailing your return to a different address this year because the IRS has changed the filing location for several areas. If you received an envelope with your tax package, please use it. Otherwise, see Where Do You File? on the back cover.

Expired tax benefits. The following tax benefits have expired and will not apply for 2006.

Deduction for educator expenses in figuring adjusted gross income.
Tuition and fees deduction.

At the time these instructions went to print, Congress was considering legislation that would reinstate these expired tax benefits. To find out if this legislation was enacted, and for more details, go to www.irs.gov, click on More Forms and Publications, and then on What's Hot in forms and publications, or see Pub. 553.

If these deductions are reinstated, you will have to use Form 1040 to claim them.

What's New for 2007

IRA deduction expanded. You may be able to take an IRA deduction if you were covered by a retirement plan and your 2007 modified adjusted gross income (AGI) is less than $62,000 ($103,000 if married filing jointly or qualifying widow(er)).

Earned income credit (EIC). You may be able to take the EIC if:

A child lived with you and you earned less than $37,783 ($39,783 if married filing jointly), or
A child did not live with you and you earned less than $12,590 ($14,590 if married filing jointly).

The maximum AGI you can have and still get the credit also has increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you.

The maximum investment income you can have and still get the credit has increased to $2,900.

Nontaxable combat pay. The election to include nontaxable combat pay in earned income for the earned income credit will expire.

Exemption for housing person displaced by Hurricane Katrina expires. The additional exemption amount for housing a person displaced by Hurricane Katrina will expire.

These rules apply to all U.S. citizens, regardless of where they live, and resident aliens.

Have you tried IRS e-file? It's the fastest way to get your refund and it's free if you are eligible. Visit www.irs.gov for details.

Do You Have To File?

Use Chart A, B, or C to see if you must file a return.

Even if you do not otherwise have to file a return, you should file one to get a refund of any federal income tax withheld. You should also file if you are eligible for the earned income credit, the additional child tax credit, the health coverage tax credit, or the credit for federal telephone excise tax paid.

Exception for children under age 18. If you are planning to file a return for your child who was under age 18 at the end of 2006, and certain other conditions apply, you can elect to include your child's income on your return. But you must use Form 1040 and Form 8814 to do so. If you make this election, your child does not have to file a return. For details, use TeleTax topic 553 (see page 8) or see
Form 8814.

A child born on January 1, 1989, is considered to be age 18 at the end of 2006. Do not use Form 8814 for such a child.

Resident aliens. These rules also apply if you were a resident alien. Also, you may qualify for certain tax treaty benefits. See Pub. 519 for details.

Nonresident aliens and dual-status aliens. These rules also apply if you were a nonresident alien or dual-status alien and both of the following apply.

You were married to a U.S. citizen or resident alien at the end of 2006.
You elected to be taxed as a resident alien.

See Pub. 519 for details.

When Should You File?

File Form 1040A by April 16, 2007. If you live in Maine, Maryland, Massachusetts, New Hampshire, New York, Vermont, or the District of Columbia, you have until April 17, 2007. If you file after this date, you may have to pay interest and penalties. See page 57.

If you were serving in, or in support of, the U.S. Armed Forces in a designated combat zone, qualified hazardous duty area, or a contingency operation (for example, you were in the Afghanistan, Bosnia, Kosovo, or Persian Gulf area), see Pub. 3.

What If You Cannot File on Time?

You can get an automatic 6-month extension if, no later than the date your return is due, you file Form 4868. For details, see Form 4868.

If you make a payment with your extension request, see the instructions for line 43 on page 52.

An automatic 6-month extension to file does not extend the time to pay your tax. See Form 4868.

If you are a U.S. citizen or resident alien, you may qualify for an automatic extension of time to file without filing Form 4868. You qualify if, on the due date of your return, you meet one of the following conditions.

You live outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico.
You are in military or naval service on duty outside the United States and Puerto Rico.

This extension gives you an extra 2 months to file and pay the tax, but interest will be charged from the original due date of the return on any unpaid tax. You must attach a statement to your return showing that you meet the requirements. If you are still unable to file your return by the end of the 2-month period, you can get an additional 4 months if, no later than June 15, 2007, you file Form 4868. This 4-month extension of time to file does not extend the time to pay your tax. See Form 4868.

Where Do You File?

See the back cover for filing instructions and addresses.

Private delivery services. You can use certain private delivery services designated by the IRS to meet the “timely mailing as timely filing/paying” rule for tax returns and payments. These private delivery services include only the following:

DHL Express (DHL): DHL Same Day Service, DHL Next Day 10:30 am, DHL Next Day 12:00 pm, DHL Next Day 3:00 pm, and DHL 2nd Day Service.
Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First.
United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.

The private delivery service can tell you how to get written proof of the mailing date.

Private delivery services cannot deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address.

Chart A—For Most People

IF your filing status is . . .	AND at the end of 2006 you were* . . .
Single	under 65 65 or older	$8,450 9,700
Married filing jointly***	under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)	$16,900 17,900 18,900
Married filing separately	any age	$3,300
Head of household (see page 19)	under 65 65 or older	$10,850 12,100
Qualifying widow(er) with dependent child (see page 20)	under 65 65 or older	$13,600 14,600
* If you were born on January 1, 1942, you are considered to be age 65 at the end of 2006. Gross incomemeans all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you may exclude part or all of it). Do not include social security benefits unless you are married filing a separate return and you lived with your spouse at any time in 2006. * If you did not live with your spouse at the end of 2006 (or on the date your spouse died) and your gross income was at least $3,300, you must file a return regardless of your age.

Chart B—For Children and Other Dependents

See the instructions for line 6c that begin on page 21 to find out if someone can claim you as a dependent.

If someone can claim you as a dependent, use this chart to see if you must file a return.
In this chart, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. Earned income includes wages, tips, and taxable scholarship and fellowship grants. Gross income is the total of your unearned and earned income.
Single dependents. Were you either age 65 or older or blind?
	No. You must file a return if any of the following apply.
	Your unearned income was over $850. Your earned income was over $5,150. Your gross income was more than the larger of—
		$850, or Your earned income (up to $4,850) plus $300.
	Yes. You must file a return if any of the following apply.
	Your unearned income was over $2,100 ($3,350 if 65 or older and blind). Your earned income was over $6,400 ($7,650 if 65 or older and blind). Your gross income was more than—
			The larger of:	Plus	This amount:
		$850, or Your earned income (up to $4,850) plus $300.			$1,250 ($2,500 if 65 or older and blind)
Married dependents. Were you either age 65 or older or blind?
	No. You must file a return if any of the following apply.
	Your unearned income was over $850. Your earned income was over $5,150. Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Your gross income was more than the larger of—
		$850, or Your earned income (up to $4,850) plus $300.
	Yes. You must file a return if any of the following apply.
	Your unearned income was over $1,850 ($2,850 if 65 or older and blind). Your earned income was over $6,150 ($7,150 if 65 or older and blind). Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Your gross income was more than—
			The larger of:	Plus	This amount:
		$850, or Your earned income (up to $4,850) plus $300.			$1,000 ($2,000 if 65 or older and blind)

Chart C—Other Situations When You Must File

You must file a return if either of the following applies for 2006.

You received any advance earned income credit (EIC) payments from your employer. These payments are shown in Form W-2, box 9.
You owe tax from the recapture of an education credit or the alternative minimum tax. See the instructions for line 28 that begin on
page 32.

You must file a return using Form 1040 if any of the following apply for 2006.

You owe any special taxes, such as social security and Medicare tax on tips you did not report to your employer.
You owe uncollected social security and Medicare or RRTA tax on tips you reported to your employer or on your group-term life insurance.
You had net earnings from self-employment of at least $400.
You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes.
You owe additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if you are filing a return only because you owe this tax, you can file Form 5329 by itself.

Would It Help You To Itemize Deductions on Form 1040?


	You may be able to reduce your tax by itemizing deductions on Schedule A (Form 1040). Itemized deductions include amounts you paid for state and local income taxes, real estate taxes, personal property taxes, and mortgage interest. You may also include gifts to charity and part of the amount you paid for medical and dental expenses. You would usually benefit by itemizing if—
	Your filing status is:	AND	Your itemized deductions are more than:
	Single
Under 65 65 or older or blind 65 or older and blind				$5,150 6,400 7,650
	Married filing jointly
Under 65 (both spouses) 65 or older or blind (one spouse) 65 or older or blind (both spouses) 65 or older and blind (one spouse) 65 or older or blind (one spouse) and 65 or older and blind (other spouse) 65 or older and blind (both spouses)				$10,300 11,300 12,300 12,300 13,300 14,300
	Married filing separately*
Your spouse itemizes deductions Under 65 65 or older or blind 65 or older and blind				$0 5,150 6,150 7,150
	Head of household
Under 65 65 or older or blind 65 or older and blind				$7,550 8,800 10,050
	Qualifying widow(er) with dependent child
Under 65 65 or older or blind 65 or older and blind				$10,300 11,300 12,300
* If you can take an exemption for your spouse, see Standard Deduction Chart for People Born Before January 2, 1942, or Who Were Blind on page 33 for the amount that applies to you.
If someone can claim you as a dependent, it would benefit you to itemize deductions if they total more than your standard deduction figured on the Standard Deduction Worksheet for Dependents on page 33.

Where To Report Certain Items From 2006 Forms W-2, 1098, and 1099

IRS e-file takes the guesswork out of preparing your return. You may also be eligible to use free online commercial tax preparation software to file your federal income tax return. Visit www.irs.gov/efile for details.

If any federal income tax withheld is shown on these forms, include the tax withheld on Form 1040A, line 38.

Form	Item and Box in Which It Should Appear	Where To Report
W-2	Wages, tips, other compensation (box 1)	Form 1040A, line 7
	Allocated tips (box 8)	See Tip income on page 24
	Advance EIC payment (box 9)	Form 1040A, line 36
	Dependent care benefits (box 10)	Schedule 2, line 12
	Adoption benefits (box 12, code T)	Must file Form 1040
	Employer contributions to a health savings account (box 12, code W)	Must file Form 1040 if required to file Form 8889 (see the instructions for Form 8889)
	Amount reported in box 12, code R or Z	Must file Form 1040
W-2G	Gambling winnings (box 1)	Must file Form 1040
1098	Mortgage interest (box 1) Points (box 2)	Must file Form 1040 to deduct
	Refund of overpaid interest (box 3)	See the instructions on Form 1098
1098-C	Contributions of motor vehicles, boats, and airplanes	Must file Form 1040 to deduct
1098-E	Student loan interest (box 1)	See the instructions for Form 1040A, line 18, on page 31
1098-T	Qualified tuition and related expenses (box 1)	See the instructions for Form 1040A, line 31, on page 37, but first see the instructions on Form 1098-T
1099-A	Acquisition or abandonment of secured property	See Pub. 544
1099-B	Broker and barter exchange transactions	Must file Form 1040
1099-C	Canceled debt (box 2)	Must file Form 1040 if taxable (see the instructions on Form 1099-C)
1099-DIV	Total ordinary dividends (box 1a)	Form 1040A, line 9a
	Qualified dividends (box 1b)	See the instructions for Form 1040A, line 9b, on page 25
	Total capital gain distributions (box 2a)	See the instructions for Form 1040A, line 10, on page 25
	Amount reported in box 2b, 2c, or 2d	Must file Form 1040
	Nondividend distributions (box 3)	Must file Form 1040 if required to report as capital gains (see the instructions on Form 1099-DIV)
	Investment expenses (box 5)	Must file Form 1040 to deduct
	Foreign tax paid (box 6)	Must file Form 1040 to deduct or take a credit for the tax
1099-G	Unemployment compensation (box 1)	Form 1040A, line 13. But if you repaid any unemployment compensation in 2006, see the instructions for line 13 on page 28
	State or local income tax refund (box 2)	See the instructions on page 24
	Amount reported in box 5, 6, or 7	Must file Form 1040
1099-INT	Interest income (box 1)	See the instructions for Form 1040A, line 8a, on page 24
	Early withdrawal penalty (box 2)	See the instructions for Form 1040A, line 16, on page 28
	Interest on U.S. savings bonds and Treasury obligations (box 3)	See the instructions for Form 1040A, line 8a, on page 24
	Investment expenses (box 5)	Must file Form 1040 to deduct
	Foreign tax paid (box 6)	Must file Form 1040 to deduct or take a credit for the tax
	Tax-exempt interest (box 8)	Form 1040A, line 8b
	Specified private activity bond interest (box 9)	Must file Form 1040
1099-LTC	Long-term care and accelerated death benefits	Must file Form 1040 if required to file Form 8853 (see the instructions for Form 8853)
1099-MISC	Miscellaneous income	Must file Form 1040
1099-OID	Original issue discount (box 1) Other periodic interest (box 2)	See the instructions on Form 1099-OID
	Early withdrawal penalty (box 3)	See the instructions for Form 1040A, line 16, on page 28
	Original issue discount on U.S. Treasury obligations (box 6)	See the instructions on Form 1099-OID
	Investment expenses (box 7)	Must file Form 1040 to deduct
1099-PATR	Patronage dividends and other distributions from a cooperative (boxes 1, 2, 3, and 5)	Must file Form 1040 if taxable (see the instructions on Form 1099-PATR)
	Domestic production activities deduction (box 6)	Must file Form 1040 to deduct
	Amount reported in box 7, 8, 9, or 10