PARSIPPANY, N.J. // PRNewswire-FirstCall // -- One of the first decisions taxpayers must make when preparing their returns can also be among the most challenging. Should they itemize or simply take the standard deduction? With less than a week to go to the April 15 tax filing deadline, Jackson Hewitt Tax Service® highlights the key issues to weigh to determine which approach may offer the better outcome.
"If the itemized deductions for which you are eligible exceed your standard deduction, it tends to be advantageous to itemize on Schedule A (Form 1040)," explained Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. "Taxpayers with certain expenses for 2009, such as charitable donations, unreimbursed business expenses or mortgage interest, just to name a few, will often find themselves in a more favorable tax position by itemizing. But even those who don't itemize will benefit from the increased standard deduction available for the 2009 tax year."
Itemizing deductions on a 2009 tax return may be beneficial if any of the considerations below are applicable to an individual's tax situation:
The amount of standard deduction is based on an individual's filing status, including whether that person is 65 or older or blind and whether another taxpayer can claim an exemption on that person's behalf.
The 2009 standard deduction amounts for most taxpayers are as follows:
There are certain items that can increase the standard deduction, including up to $500 ($1,000 if filing jointly) in real estate taxes paid, sales and excise taxes paid on a new vehicle, and any net loss from a federally declared disaster. In addition, if you are 65 or older or disabled, you may qualify for a higher standard deduction amount.
Taxpayers not eligible to use the standard deduction include married filing separate taxpayers if the spouse itemized, nonresident aliens, dual-status aliens and certain individuals who file returns for periods of less than 12 months.
"Remember that you may see limited itemized deductions if your adjusted gross income exceeds certain amounts. For 2009, the 'phase out' amount for itemized deductions is $166,800 or $83,400 if you are married filing separately," said Steber. "This limit applies to all itemized deductions except medical and dental expenses, casualty and theft losses, gambling losses and investment interest expenses. Visiting with a knowledgeable tax preparer can help you in determining whether you should itemize or claim the standard deduction."
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. The company is based in Parsippany, New Jersey. Jackson Hewitt Technology Services LLC is located in Sarasota, Florida.
SOURCE Jackson Hewitt Tax Service Inc.