Jackson Hewitt Highlights Tax Credits and Deductions for Senior Taxpayers
Last Weeks of Tax Season are When Most Seniors File Returns
PARSIPPANY, N.J., April 1 // PRNewswire-FirstCall // -- With less than one month left before the filing deadline for 2008 tax returns, Jackson Hewitt Tax Service(R) is offering tax tips to an important group of late-season filers: senior citizens. Taxpayers over the age of 65 accounted for approximately 13 percent of the more than 124 million returns filed last year, according to figures from the Internal Revenue Service. And more than 62 percent of senior taxpayers filed their returns during the last month of the tax filing season.*
"People with more complicated tax returns typically file during the last weeks before the deadline. Usually they have more itemized deductions, more investments or operate their own businesses," said Mark Steber, vice president of tax resources at Jackson Hewitt.
But not all seniors have complex tax returns, Steber added, and whether their returns are simple or complex, older taxpayers need to be sure they are getting all of the credits and deductions available to them. That is why Jackson Hewitt(R) is highlighting some important tax considerations for seniors as well as some of the credits and deductions that can help keep more money in their pockets at tax time.
Some of the tax considerations for individuals who are age 65 or older include:
Should you file? If you are age 65 or older, you must file a return for 2008 if your income was at least:
- Single: $10,300
- Head of Household: $12,850
- Married Filing Jointly: $18,950 if one spouse is age 65 or older, $20,000 if both spouses are age 65 or older
- Qualifying Widow or Widower: $15,450
- Married Filing Separately: $3,500
Social Security benefits. Individuals who are collecting Social Security benefits may receive Form SSA-1099, Social Security Benefit Statement. Depending on any other income a taxpayer may have, up to 85 percent of these funds may be taxable.
Standard deduction for seniors. Individuals who are age 65 or older and who do not itemize, generally qualify for a higher standard deduction. Seniors whose filing status is single or head of household, should add an extra $1,350 to their standard deduction for 2008. Those who are married filing jointly, married filing separately or a qualifying widow or widower, should add an extra $1,050 for each taxpayer age 65 or older. The same amounts apply if a taxpayer is blind.
Itemized deductions. While seniors are entitled to a higher standard deduction, they should still review their expenses during the year to determine if itemizing deductions would be more beneficial. They may reduce their taxes by claiming the following itemized deductions:
- State or local personal property taxes paid on tangible assets such as a car
- Real estate taxes paid
- Investment interest paid on money borrowed to invest in property held for taxable investment
- Legal fees for advice related to retirement tax planning
- Various medical expenses paid to treat or alleviate a medical condition or to obtain medical care, such as:
- Inpatient care at a hospital or similar institution, including meals and lodging
- Laboratory fees and fees for X-rays
- Prescription medicines and insulin
- Artificial limbs, eyeglasses, contacts, hearing aids and their batteries, and artificial teeth
Real estate taxes. Individuals who pay real estate taxes and are not otherwise eligible to itemize deductions can increase their standard deduction amount by the lesser of:
- Real estate taxes paid in 2008 OR
- $500 ($1,000 if married filing jointly)
Retirement Plans and IRAs. Generally, individuals may take distributions from retirement plans and IRAs without penalty after age 59 and one half. Taxpayers who reach age 70 and one half are no longer allowed to contribute to a traditional IRA; however, you may continue to make contributions to a pension plan or a Roth IRA as long as you are working. The maximum IRA contribution for individuals 50 and older is $6,000 for 2008. Contributions cannot be more than an individual's taxable compensation.
Credit for the Elderly or Disabled. If you were age 65 or older at the end of the tax year, you may qualify for this credit if:
- Your adjusted gross income was less than $17,500 ($25,000 if married filing jointly and both spouses qualify; $20,000 if married filing jointly and only one spouse qualifies; or $12,500 if married, filing separately and you lived apart from your spouse for the entire year)
- Your nontaxable Social Security benefits and other nontaxable pensions were less than $5,000 ($7,500 if married filing jointly and both spouses qualify; $5,000 if married filing jointly and only one spouse qualifies; or $3,750 if married filing separately and you lived apart from your spouse for the entire year)
Credit for dependent care expenses. If you or your spouse are unable to care for yourself and outside care is needed while the other spouse works, you may qualify for this tax credit. The credit is based on a percentage of the amount paid for care, and the maximum credit is $1,050 for the care of one qualified person or $2,100 for two or more qualified persons.
Volunteer work. Individuals who do volunteer work may be able to deduct un-reimbursed expenses related to their services if they are provided to a qualified organization. Taxpayers may deduct the actual cost of their gas or the standard mileage rate for charity (14 cents per mile) if they use their personal vehicle while performing volunteer services.
Participating Jackson Hewitt locations are offering a special discount of $30 off tax preparation services for retirees from April 6 through April 12.
Tax preparers at Jackson Hewitt Tax Service are available now to assist seniors with preparation and filing of 2008 income tax returns. For information on the latest tax law changes that may affect seniors this filing season, and for a list of commonly overlooked credits and deductions, visit http://jacksonhewitt.com/oldertaxpayers. To locate a Jackson Hewitt Tax Service location nearest you, visit: www.jacksonhewitt.com and click on the Office Locator tab at the top of the home page.
*Internal Revenue Service, Taxpayer Usage Study 2007, http://www.irs.gov/taxstats/article/0,,id=184856,00.html
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. (NYSE: JTX), with approximately 6,600 franchised and company-owned offices throughout the United States during the 2009 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.
SOURCE Jackson Hewitt Tax Service Inc.