Date: 2008-10-10
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 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
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.