Jackson Hewitt(R) Alerts Multigenerational Families to New Rule for Claiming Children on 2009 Tax Returns

PARSIPPANY, N.J. // PRNewswire-FirstCall // -- A new tax rule provides detailed guidance to multigenerational families living in the same house on whether a grandparent versus the parent(s) can claim a child as a dependent when filing a 2009 tax return, according to Jackson Hewitt Tax Service®.

Under the rule, if a grandparent and the parent(s) of a child live in the same house and the child is considered a qualifying child for both the grandparent and the parent(s), the grandparent must now have a higher adjusted gross income (AGI) than the parent(s) to be allowed to claim the qualifying child. If not, the child can only be claimed by the parent(s).

"With today's families changing and so many grandparents raising or helping to raise grandchildren, there may be more taxpayers with questions on how a child can be properly claimed," said Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. "This new rule gives further clarification to taxpayers, particularly in cases where a child can be considered a dependent for more than one person."

Being able to claim a child or grandchild for tax purposes gives taxpayers the opportunity to take advantage of several credits, such as the following:

  • Taxpayers with qualifying children may be able to claim the Child Tax Credit (up to $1,000 for each child under the age of 17 as of December 31, 2009) or the Child and Dependent Care Credit, a nonrefundable credit (up to $2,100 for multiple dependents) for taxpayers who paid day care expenses for a dependent child under the age of 13, for a disabled spouse, or for another qualified dependent during 2009. This credit is available to either the parents or grandparents, but the same qualifying child cannot be claimed by both.
  • More working taxpayers are now eligible for the Additional Child Tax Credit, which provides taxpayers who earned $3,000 or more a refundable credit of up to $1,000 per dependent child under the age of 17.
  • If you are a working parent or grandparent, or you were working and are now looking for work, you may be able to claim a credit for your child care expenses. This credit may be as much as $1,050 for the expenses for one qualifying child or $2,100 for more than one child, depending on your adjusted gross income.
  • Unmarried individuals with dependent grandchildren may file as Head of Household if they have a dependent child or other qualifying dependent living in the household, and incurred at least 50 percent of the cost of keeping up a home.
  • Married grandparents cannot qualify as Head of Household if their only qualifying dependent is a grandchild. If you are married and trying to qualify as Head of Household, only your son, daughter, stepchild, or foster child will qualify you.

"Remember that a dependent does not have to be a son or daughter – they can be a grandchild or other person you are supporting who has lived with you during the entire year," said Steber. "But the rules on what constitutes a qualifying dependent are complex, so be sure to speak with a knowledgeable tax preparer to find out who qualifies."

Tax preparers with Jackson Hewitt can help parents, grandparents raising grandchildren and other non-traditional families filing a 2009 tax return determine which credits and deductions they are entitled to, as well as answer a host of other filing-related questions.

About Jackson Hewitt Tax Service Inc.

Jackson Hewitt Tax Service Inc. (NYSE: JTX), with more than 6,300 franchised and company-owned offices throughout the United States, is an industry leader providing full service individual federal and state income tax return preparation. Most offices are independently owned and operated. In addition, an online tax preparation product, Jackson Hewitt® Online. The company is based in Parsippany, New Jersey.

SOURCE Jackson Hewitt Tax Service Inc.

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