By Michelle Singletary
Thursday, January 11, 2007

Tax time is near, and you know what that means, right?

It means changes -- and lots of them. Why must we poor taxpayers have to put up with this constant tinkering of the code?

Oh, well, as Richard Hooker, a British theologian, said: "Change is not made without inconvenience, even from worse to better."

That about sums up the many tax code changes that will affect your 2006 return. For instance, educators can still deduct up to $250 per year for unreimbursed expenses for classroom supplies they buy. That deduction was scheduled to end in 2005.

The problem is that some of the changes will not be reflected in the tax forms the Internal Revenue Service sent out. That's because Congress, known for moving at a glacial pace, passed the Tax Relief and Health Care Act of 2006 too late to make the IRS publication deadline.

The tax forms and first round of instructions, in fact, were printed well before the president signed the bill into law in December, says David Bergstein, a certified public accountant and analyst for CCH Complete Tax ( http://www.completetax.com), an online tax program for the do-it-yourself filer.

So this is your notice from me. Whether you plan on doing your own taxes or having them prepared by a professional, you need to read up on these changes. You can do that by going to the IRS Web site ( http://www.irs.gov). Once there, click on the link for "individuals," and you will see a number of announcements you should read before starting in on your tax return.

"If you don't know what you don't know, you don't know what to ask," Bergstein said.

This tax year may be particularly problematic for people who prepare their own returns, says Cindy Hockenberry, a tax information analyst for the National Association of Tax Professionals.

"People will look at the form that was mailed to them and not realize that some deductions have been extended," Hockenberry said. If you plan to buy a tax-preparation program, you need to go to the software company's Web site and download all updates, she said.

If you're doing your own taxes, be aware that the IRS has announced it will not be able to process returns -- paper or electronic -- claiming one or more of the affected breaks until Feb. 3.

Even Mark W. Everson, the IRS commissioner, warned Congress that this would be a confusing year. In a letter to Sen. Max Baucus (D-Mont.), now chairman of the Senate Finance Committee, Everson wrote in December that all the late changes would challenge the agency and "add significant risk to an already high risk filing season."

To get you started on your research, here is a crib sheet of some of the changes for 2006 you may not be aware of, as outlined by the NATP and CCH:

· Individual taxpayers may still elect to deduct either state and local income taxes or state and local general sales taxes as an itemized deduction. Look for Publication 600, which includes the state and local sales tax tables and instructions for claiming the sales tax deduction.

· For 2006 only, taxpayers are eligible for the Telephone Excise Tax Refund, which is designed to refund previously collected long-distance telephone taxes. The refund is available to anyone who paid such taxes on a land line, or for wireless or voice-over-Internet-protocol service. And so that we all don't have to go digging for old telephone bills, the IRS is offering a standard refund amount ranging from $30 to $60. How much you get is based on the number of exemptions you claim on your tax return. The standard amount is not available to businesses and nonprofit groups, which must base their refunds on the amount of tax paid.

· Just as a reminder, the maximum tax-deferred contribution to a 401(k) plan, a tax-sheltered 403(b) annuity, a salary reduction simplified employee pension or a government-sponsored 457 plan increases to $15,000 for 2006. People 50 or older are permitted additional catch-up contributions of $5,000 to their plans in 2006.

· Beginning in 2006, there are new energy-saving tax credits, subject to a lifetime limit of $500.

· For the first time, you can divide your refund and have it deposited in up to three accounts. This includes having the money sent directly to a retirement account such as a 401(k) or an individual retirement account. To have your refund divided, you have to complete and attach to your federal income tax return Form 8888, "Direct Deposit of Refund to More Than One Account."

The latter change may be welcome among many couples who file jointly. I've encountered quite a few spouses who learn, after the fact, that their husband or wife spent the joint tax refund without their knowledge. Spouses who keep separate accounts can now split the refund before the money comes into the household.

"This might reduce a lot of arguments," Bergstein said.

See, Hooker was right. Some change is for the better, even if it's inconvenient.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail:singletarym@washpost.com.

Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.