Jackson Hewitt(R) Weekly 'Tax Time Tip': First-Time Filing Tips For Independent Taxpayers and Taxpayers New to the Country
PARSIPPANY, N.J. // PRNewswire-FirstCall // -- Whether a recently independent taxpayer or a new resident in the country, individuals who have not previously filed an annual tax return are often unsure how to get the process started and uncertain whether they qualify for certain credits and deductions. Jackson Hewitt Tax Service® highlights what recently independent individuals and new residents to the U.S. should know as first-time filers.
This Week's Tip: Taxpayers who will file their first tax return in 2010 have several considerations to keep in mind. Independent taxpayers – those who no longer qualify as a dependent of another taxpayer – are often eligible for many credits and deductions that can increase a tax refund or reduce the amount of tax owed. For those who have recently moved to the United States, working with a tax preparer can help clarify when filing a tax return is required and how to initiate the process.
Independent first-time filers usually claim their own personal exemption, as well as qualify for relevant credits and deductions. "Many taxpayers become independent and begin to file on their own after graduating from college, and one of the most common areas to look for tax benefits is with education," said Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. "If they had student loans, they should remember to claim the interest paid when filing. If they are still in school and paying their own tuition and fees, that's another area to be sure not to miss."
Other important credits applicable to many independent first-time filers are as follows:
- Making Work Pay credit: A refundable tax credit up of up to $400 for single filers and up to $800 for married couples filing a joint return
- Earned Income Tax credit: A popular credit for working taxpayers with wages or self-employment income below certain thresholds. The credit has been expanded this year for taxpayers with three or more children and the income limits have been increased if you are married.
- Retirement Savers credit: A forgotten credit available to taxpayers who invest in an IRA or a pension plan through their employer. Taxpayers can receive a credit of up to $1,000 ($2,000 if filing a joint return) for their contributions.
Those who have recently moved to the United States must first determine if they are required to file a tax return. A tax return is required if:
- The individual is considered a resident of the U.S. for tax purposes and their total worldwide income meets the minimum filing requirements of any other U.S. taxpayer
- The individual is considered a non-resident of the U.S. for tax purposes and has any U.S. source of income
All income received in the U.S. must be reported on an income tax return. Taxpayers are required to have a U.S. issued taxpayer identification number (TIN) when filing a U.S. income tax return. Although most taxpayers file using a Social Security number, not all taxpayers are eligible for one. In these cases, an individual taxpayer identification number (ITIN) is commonly used. However, there are certain tax benefits that are not eligible to those who file using an ITIN, such as the Earned Income Tax credit and the Making Work Pay credit.
The ITIN does not provide the taxpayer with eligibility for employment in the U.S., state and local benefits such as Medicaid, social security, or food stamps. In addition, the ITIN is not approved by the U.S. government as verification of an individual's identity.
Finally, those filing for the first time should remember that they can only submit a joint return (Married Filing Jointly) if they were married as of December 31, 2009 at 11:59 p.m.
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.