Line 40: Earned Income CreditYou may be eligible to claim the Earned Income Credit if:
- Your Adjusted Gross Income on Line 21 is less than $12,120 (for single people) or less than $14,120 (for Married people) and you have no dependents.
- Your Adjusted Gross Income on Line 21 is less than $36,348 (for Head of Household) or less than $38,348 (for Married people) and you have qualifying dependents.
- You and your spouse (if married) cannot be claimed as a dependent by someone else.
Tax Tip If you earned combat pay, you can choose to include your combat pay in calculating your EIC. Calculate your earned income credit both ways (with and without combat pay) and use the method that results in the higher EIC amount. Combat pay is found on your W-2 statement, box 14, code Q. If including your combat pay for calculating your EIC, put your combat pay amount on line 40b.
Line 41: Additional Child Tax Credit.
- The additional child tax credit is the amount of your child tax credit in excess of your tax liability. This additional amount may result in a higher tax refund.
- Use your calculations on the Child Tax Credit Worksheet in the instruction booklet, page 38, then calculate the additional child tax credit on Form 8812 (PDF).
Line 42: Credit for Federal Telephone Excise Tax PaidYou can claim a standard refund of the telephone excise tax. You can also claim a refund of your actual telephone taxes. The standard amounts are determined by the number of personal exemptions you are claiming on line 6d. Here are the standard refund amounts:
- $30 if you are claiming 1 personal exemption.
- $40 if you are claiming 2 personal exemptions.
- $50 if you are claiming 3 personal exemptions.
- $60 if you are claiming 4 or more personal exemptions.
Line 43: Total Payments
- Using a calculator, add up the figures on lines 38, 39, 40a, 41, and 42.
- Put the total figure on line 43.
- This figure represents the total amount of money that has been applied toward your tax liability for the year. This figure will be used to calculate how much of a refund or balance due you have.
Lines 44 or 47: Refund or Balance Due
- Using a calculator, enter your total payments from line 43, and then subtract your total tax from line 37.
- If the result is less than zero (a negative number), then you have a tax refund. Put the answer (ignoring the negative sign) on line 44.
- If the result is more than zero (a positive number), then you have a balance due. Put the answer on line 47.
- If the result is exactly zero, then put "-0-" (zero) on lines 44 and 47. Your payments exactly met your tax liability, and you have no refund and no balance due.
Line 45a and 46: Refund Amount and Estimated Tax Payment
- If you are getting a tax refund, you can choose how much of the amount on line 44 you want refunded to you, and how much you want to be applied to next year's estimated tax payments.
- If you expect your taxes to be higher next year, or if you are making estimated tax payments, you may want to consider applying some of your refund amount.
- If you want to make an estimated tax payment, put the amount of your estimated payment on line 46.
- Then put the remainder of your refund amount on line 45a.
- If you do not want to make any estimated payments at this time, then put the full amount of your refund on line 45a.
Lines 45b, c, and d: Direct Deposit
- If you are getting a refund, the amount on Line 45a can be deposited directly to your checking or savings account. Getting direct deposit is faster and more secure than getting a refund check mailed to you.
- Get out your checkbook, and look at one of your checks. In the bottom left-hand corner you will see lots of numbers. The first series of numbers should be a 9-digit bank code. This is called the Routing Number. Copy your routing number to Line 45b.
- Next, check the appropriate box on Line 45c, depending on whether you want your refund deposited into a checking or savings account.
- Next, find your account number on your check. Enter your account number on Line 45d.
- Triple check your bank numbers. If you are not sure, call your bank and ask them. Last year, one reader lost her $5,000 tax refund because of incorrect direct deposit information. Please do not let this happen to you.
New for 2006 - Deposit Your Refund in up to 3 Bank Accounts
You can use have your tax refund directly deposited into two or three different bank accounts, including Individual Retirement Accounts. Use IRS Form 8888 (PDF) and check the box on line 45a to indicate you are splitting your refund. For more information, see Frequently Asked Questions about Splitting 2006 Federal Income Tax Refunds on the IRS Web site.
Line 48: Estimated Tax Penalty
- If the amount on line 47 (your balance due), is $1,000 or more, and is more than 10% of your total tax shown on line 37, then you may have a penalty for not paying enough estimated taxes.
- Calculate your penalty using Form 2210 (PDF) after reading carefully the instructions for line 48 in the instruction booklet on pages 54-55.
- The calculations on Form 2210 can be rather complicated. If you prefer, you can leave line 48 blank, and the IRS will calculate your estimated tax penalty and send you a notice. There will be no interest charged on this penalty amount if you pay the amount in full by the date shown on the notice you will receive from the IRS.