If you plan to file for deductions for state sales taxes, college tuition and classroom supplies you may have to wait. The 2006 IRS tax forms don’t have lines for those deductions.

The 109th Congress extended those deductions at the last minute but they were not in time to make it into the tax forms printed up by the IRS.

To claim these deductions, go to the IRS website for instructions. If you e-file, the IRS says the online forms should all be updated to include these deductions. However, the IRS doesn’t plan on processing forms claiming those deductions until after Feb 3, so there’s no rush to file yet.

As I have mentioned before, the IRS offers taxpayers with an income of less than $50,000 (increasing to $52,000 for 2007) the option to file their taxes online for free.

The tax services offered through Free File are provided by third party tax preparers such as H&R Block. These tax preparers have offered refund anticipation loans along with the tax filing but the IRS says it will prohibit those loans in the future.

Refund Anticipation Loans, or RALs, offer taxpayers a way to get their refund money faster but there are high interest charges and fees that are deducted from the refund, thus lowering the final refund the taxpayer receives. The attraction of getting that refund in a few days has cost low-income taxpayers millions of dollars in fees and the IRS wants to put an end to it.

The IRS says it is going to ban the marketing of refund anticipation loans to taxpayers who use the “Free File” online filing system.

The IRS is making it easier for some who owe delinquent taxes to make payment arrangements by making the application available online.

The OPA (Online Payment Agreement) is now available at the IRS website and allows taxpayers to file a request for a payment arrangement and receive immediate notification of approval.

Taxpayers who wish to use this tool must have already filed all required tax returns and have the following information available:

* Balance due notice from the IRS.

* Social Security number or Individual Taxpayer Identification Number.

* Personal identification number, which can be established online using the caller identification number from the balance due notice.

Three payment options are available when applying online:

* Pay in full — Taxpayers who pay within 10 days save interest and penalties.

* Short-term extension — Receive a short-term extension of up to 120 days. No fee is charged, but additional penalties and interest will accrue.

* Monthly payment plan — A $43 user fee will be added to the amount owed, and interest and penalty will continue to accrue on the unpaid balance.

The application is available Monday through Friday from 6 a.m. to 12:30 a.m., Saturday from 6 a.m. to 10 p.m. and Sunday from 4 p.m. to midnight (all are Eastern Time).

Online Payment Agreement Application

Appropriately signed into law on Memorial Day, the Heroes
Earned Retirement Opportunities (HERO) Act allows military personnel to count tax-free combat pay when calculating whether they qualify to contribute to traditional or Roth IRAs.

Additionally, the bill is retroactive, allowing military personnel to go back to 2004 and 2005 and make IRA contributions for those years if their income was tax-free combat pay. A special extension applies to making these contributions, extending the deadline to May 28, 2009.

Contributions to IRAs normally can only be made on “taxable” income. Military personnel on active duty may not have filed tax returns for 2004 and 2005 if they received only tax-free combat pay during that time. If returns have been filed, they will need to file an amended return.

For more information, visit the IRS website.