Date: 2007-09-19
Jackson Hewitt® Alerts Taxpayers About Increased Limits for Education Tax Credits and Deductions
UPDATED OCTOBER 9, 2007
PARSIPPANY, N.J., September 19, 2007 – For those who are back on campus or enrolled in a continuing education course, Jackson Hewitt Tax Service®, an industry leader providing full service individual federal and state income tax preparation, is alerting taxpayers that increased credits and deductions are now available for many of their educational expenses.
“This year, the federal government has increased numerous education-related tax credits and deductions, offering greater savings to taxpayers,” notes Mark Steber, Vice President of Tax Resources, Jackson Hewitt Tax Service Inc.
“By understanding the new limits and carefully documenting educational expenses, taxpayers can obtain the credits and deductions they deserve when filing their 2007 tax return.”
Available education-related tax credits and deductions include:
- Hope and Lifetime Learning Education Credits: These are two popular credits that help supplement the cost of education. The Hope Credit allows up to $1,650 per student for qualified tuition and fees paid during the first two years of higher education. The Lifetime Learning Credit is available for 20% of tuition expenses (up to $2,000) per tax return for any courses students take (such as those to acquire or improve job skills). The cap for both credits increases to $57,000 ($114,000 if Married Filing Jointly) this year.
- Tuition and Fees Deduction: An alternative to the Hope Credit or Lifetime Learning Credit, this deduction covers up to $4,000 in expenses for enrollment or attendance at an eligible educational institution. This deduction is available to those with a modified adjusted gross income of $65,000 or less ($130,000 or less if Married Filing Jointly), but no more than $80,000 ($160,000 if Married Filing Jointly).
“In planning how to manage education expenses for the year, it may be a great idea for some people to prepay their January 2008 tuition payments by December 31, 2007,” explains Steber.
“This approach increases the amount of annual tuition that can be claimed under the Hope or Lifetime Learning credits, as well as the Tuition and Fees Deduction.”
Other education tax benefits available to taxpayers are the following:
- Coverdell Education Savings Accounts: This account, which functions like an education IRA, can be established for a child under the age of 18. Contributions can be made to the account at any time but have an annual limit of $2,000. The investment appreciates tax-free as long as it is used to cover education expenses.
- Education Savings Bonds: A taxpayer can exclude interest on qualified U. S. savings bonds from gross income if he or she has paid qualified higher educational expenses during the redemption year. Remember that there are income limits: you do not qualify for the exclusion if your modified adjusted gross income for 2007 is greater than $65,600 ($98,400 if Married Filing Jointly) in the year the bond is redeemed.
Finally, once a course of study is completed, taxpayers who have student loans should take advantage of deductions available as these loans are paid off. Up to $2,500 in interest in 2007 can now be deducted from a student loan each year. To claim this deduction, a taxpayer must have a modified adjusted gross income of less than $70,000 ($140,000 if Married Filing Jointly), and must not be filing as Married Filing Separately. Importantly, a student loan deduction is treated as an adjustment to income; taxpayers do not have to itemize in order to claim it.
Many Jackson Hewitt offices are open year-round to assist taxpayers and answer questions related to tax benefits, including education credits and deductions. More information for consumers is available at
www.jacksonhewitt.com. To speak with a local tax preparer or locate a nearby Jackson Hewitt office, call 1-800-234-1040.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. (NYSE: JTX), with over 6,500 franchised and company-owned offices throughout the United States during the 2007 tax season, is an industry leader providing full service individual federal and state income tax 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 office nearest to you, call 1-800-234-1040.
Contact:
Melissa Connerton Jorge Lavina
CooperKatz & Company CooperKatz & Company
212-455-8001 212-455-8041