Date: 2009-02-06

Jackson Hewitt Tax Service Advises Taxpayers of Pitfalls to Avoid When Claiming Recovery Rebate Credit

PARSIPPANY, N.J., Feb 06, 2009 /PRNewswire-FirstCall via COMTEX/ -- The Internal Revenue Service reported last week that about 15 percent of income tax returns filed so far this year contained errors related to the recovery rebate credit.* Common mistakes included taxpayers entering incorrect amounts for the rebate, erroneously claiming the rebate, or entering a wrong amount for the economic stimulus payment received last year. To help avoid mistakes, Jackson Hewitt Tax Service(R) advises taxpayers to be aware of these pitfalls and to make sure they understand the rules for the recovery rebate credit.

The recovery rebate credit is part of a two-phased program that began with the economic stimulus payment, which was an advance payment of the estimated amount of recovery rebate credit available on the taxpayer's 2008 return. Phase two is the recovery rebate, which allows taxpayers who did not receive their full economic stimulus payment in 2008 to qualify for the remainder as a recovery rebate credit on their 2008 tax returns.

"Economic stimulus payments and recovery rebates are new items for filers to consider this year, so people are bound to be confused," said Mark Steber, vice president of tax resources at Jackson Hewitt Tax Service. "Confusion can lead to errors and errors on an income tax return can delay delivery of a refund. To avoid errors, taxpayers should make sure they fully understand the recovery rebate credit and how to file for it if they are eligible."

Steber notes these other key things consumers should know about the recovery rebate credit and the economic stimulus payments:

• Not everyone qualifies to receive the credit. People who are eligible for it typically fall into one of five categories:
  • Individuals who did not receive an economic stimulus payment
  • Those who received less than the maximum economic stimulus payment in 2008 -- $600 per taxpayer; $1,200 if married filing jointly -- because their qualifying or gross income was either too high or too low
  • Families who gained an additional qualifying child in 2008
  • Individuals who could be claimed as a dependent on someone else's tax return in 2007, but who cannot be claimed as a dependent on another return in 2008
  • Individuals who did not have a valid Social Security number in 2007 but who did receive one in 2008
   
• Taxpayers must file Form 1040, 1040A or 1040EZ to claim the recovery rebate credit.
• To claim the recovery rebate credit, taxpayers must know the amount of any economic stimulus payment received in 2008. Consumers can find out the amount they received by visiting the "How Much Was My 2008 Stimulus Payment" page on the IRS Web site and inputting the appropriate information.
• Economic stimulus payments are not taxable and should not be reported as income when filing tax returns.
• The economic stimulus payment is not the same as a regular tax refund. The IRS reports that some taxpayers may be confusing the tax refund they received last year with the economic stimulus payment. When completing 2008 tax returns, be sure to enter accurate information for these payments on the appropriate lines.
• The recovery rebate will be included in tax refunds for 2008. Unlike the economic stimulus payment, the recovery rebate credit will not be issued as a separate payment.

"Perhaps the best way to avoid errors or a delay in getting your refund is to work with a professional tax preparer who understands the rules for managing this credit on your tax return this year," Steber said.

For more information, 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, http://www.irs.gov/newsroom/article/0,,id=203191,00.html

Contact:

Sara Garibaldi
Ketchum (Public Relations)
646-935-4097
Sara.garibaldi@ketchum.com

Ally Gellert
Ketchum (Public Relations)
646-935-3959
Ally.gellert@ketchum.com

SOURCE Jackson Hewitt Tax Service Inc.