Jackson Hewitt(R) Alerts Taxpayers of Changes to the Alternative Minimum Tax
New Legislation Includes Tax Provisions Impacting More Than 26 Million Taxpayers This Year
PARSIPPANY, N.J., Oct. 10 // PRNewswire-FirstCall // -- The recently passed Emergency Economic Stabilization Act of 2008 legislation includes several tax provisions that will impact up to 26 million taxpayers* that now fall under the Alternative Minimum Tax (AMT) level. Jackson Hewitt wants taxpayers to understand how they could possibly be affected by these new provisions which were passed on October 3, 2008.
The AMT, originally created in 1969, is an alternative tax calculated by using a separate set of rules that disallow many deductions and exemptions used in computing traditional tax liability, including state income tax or second mortgages. It was originally intended to target high-income households that typically qualified for numerous tax benefits. These benefits allowed them to owe substantially less money under the tax code at that time.
"The Alternative Minimum Tax patch for 2008 is extremely important because the increase in the AMT exemption amounts will ensure that millions of middle class taxpayers are safe from being subjected to the additional tax. The AMT was originally proposed to impact higher income wage earners, but over the years has started to capture the middle class due to inflation," said Mark Steber, vice president of Tax Resources at Jackson Hewitt Tax Service. "Many of those affected by the new legislation outlined below will be eager to have their tax returns completed early in the season and eFile in order to receive their tax refund quickly. In addition to the new AMT exemption amounts, there are many other tax benefits in the legislation. There's no doubt the extension measures will keep more money in taxpayers' pockets this year."
Jackson Hewitt wants those potentially affected by the AMT patch for the 2008 tax year to understand the following when filing their tax returns in 2009:
- The exemption amounts have been increased from last year's level.
- Those making less than $46,200 (individual), $34,975 (married filing separately) and $69,950 (married filing jointly) are exempt from the AMT.
- The personal non-refundable credits will be allowed as an offset against the AMT.
- The AMT credit allowance against incentive stock options is reduced for those with adjusted gross income above $100,000 (individual) and $150,000 (married filing jointly) and allows 50 percent of long-term unused minimum tax credits to be refunded over each of two years.
The legislation also includes a change to the Additional Child Tax Credit and the extension of existing deductions for the 2008 tax year including:
- The Additional Child Tax Credit income threshold has been decreased to $8,500 and will allow certain taxpayers to qualify for up to $533 more per child in a potential refund.
- A two-year extension of the Educator Expense Deduction which allows teachers an above-the-line deduction of up to $250 for out-of-pocket classroom expenses.
- A two-year extension of the Qualified Tuition Deduction which allows students an above-the-line tax deduction for qualified higher education expenses. Students can claim up to $4,000 in tuition and fees deductions.
- A two-year extension to the sales tax deduction. Taxpayers can claim the greater of their state and local income taxes paid or their state and local sales taxes paid when itemizing deductions. This is a big break for taxpayers that live in states with little or no income tax and those that purchased high-ticket items during the year.
Additional elements of the new tax provision include incentives for going "green." Some considerations include:
- The extension of the Non-business Energy Property credit for energy-efficient improvements to existing homes. Additions such as energy-efficient doors, windows, hot water heaters, air-conditioning, roofs and biomass fuel stoves yield a lifetime tax credit of up to $500.
- The changes to the Residential Energy Efficient Property Credit include extending the credit through 2017, increasing the amount available for credit, and adding two new types of properties: wind investment property and geothermal pumps. This credit can now be used to offset the AMT.
- The plug-in electric drive vehicle has been added to the energy-efficient auto credits this year. The available credit for purchasing a new qualified vehicle ranges between $2,000 to $7,500. For more information, including a list of the most commonly overlooked deductions, credits and updates on recent tax changes, visit http://www.jacksonhewitt.com.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. (NYSE: JTX), with approximately 6,800 franchised and company-owned offices throughout the United States during the 2008 tax season, is an industry leader providing full service individual federal and state income tax return preparation. Most offices are independently owned and operated. The Company is based in Parsippany, New Jersey. More information may be obtained at http://www.jacksonhewitt.com. To locate the Jackson Hewitt Tax Service(R) office nearest to you, call 1-800-234-1040.
*According to the IRS Oversight Board 9/17/08
SOURCE Jackson Hewitt Tax Service Inc