December 14, 2006
From The Wall Street Journal
Congress has resurrected several popular tax breaks that expired last year. However, because lawmakers took so long to act, the changes won't appear on federal income-tax forms and instructions that millions of people will be receiving in coming weeks.
Last week the House and Senate approved legislation that includes restoring a provision allowing taxpayers to deduct either their state and local income taxes or sales taxes. Lawmakers also voted to restore a special deduction for higher-education tuition and fees, and a separate deduction for many teachers' out-of-pocket expenses for classroom supplies. President Bush is expected to sign the bill soon.
About 11.2 million returns deducted state and local sales taxes for 2004, the IRS's latest data show. About 4.7 million returns claimed the tuition and fees deduction, and 3.4 million teachers took the educator deduction for buying classroom supplies.
Here is the gist of the three tax breaks:
Sales Taxes
If you itemize your deductions, you can deduct either your state and local income taxes or general sales taxes, but not both. When Congress enacted this break in 2004, the provision applied only to 2004 and 2005. Now, lawmakers have extended it to 2006 and 2007. If Congress hadn't acted, taxpayers wouldn't have been allowed to deduct their sales taxes.