Date: 2009-06-23

Mid-Year Marks Time for Personal Tax Review

Jackson Hewitt Provides Tips for Reviewing Your Tax Situation Mid-Year To Help You Make The Most of Filing Your 2009 Tax Return

PARSIPPANY, N.J., June 23, 2009 – Jackson Hewitt Tax Service® notes that the month of July marks a great time for taxpayers to spend a few minutes reviewing their current financial status to get a better sense of their overall tax situation. Knowing how to make mid-year adjustments and take advantage of applicable tax benefits prior to the end of the year can prove beneficial for taxpayers and can help place them in a more favorable tax situation as 2009 draws to a close.

“There are always things that taxpayers can do throughout the year to help manage their tax situation,” comments Mark Steber, Vice President of Tax Resources, Jackson Hewitt Tax Service Inc. “There are many things taxpayers can do now to ensure they receive the largest refund they may be due or reduce the tax liability they may owe.”

The following are some useful reminders of what can be done now:

•Review your financial profile: Take a look at your past six months of financial activity and earnings. If you expect your finances to remain about the same for the remainder of the year, this will be a good indication of what your annual financial picture will look like. Is it similar to last year? Will you have more or less income, credits and deductions? “By estimating your year-end tax situation mid-year, you can make adjustments in your lifestyle and to your W-4, if necessary, which means fewer surprises come tax filing time,” notes Steber.

•Are your withholdings accurate?: Many taxpayers owe taxes at the end of the year because they don’t have enough withheld from their paycheck throughout the year. Some taxpayers have too much withheld during the year and needlessly struggle between paychecks. The birth or adoption of a child, a home purchase, paying a mortgage off, collecting unemployment, retiring, or working multiple jobs can all affect the amount of taxes being withheld. Don’t be faced with the surprise of a balance due next tax season, but don’t struggle every payday if you have too much being withheld. A Jackson Hewitt tax professional can help you determine the correct withholdings for your tax situation now, so the remaining six months of the year can help make a positive difference.

•Keep an eye on tax-saving strategies: Common activities, such as making home improvements, may lead to tax benefits. For example, the Energy Tax Act offers tax incentives for energy-efficient products installed in the home, allowing taxpayers to claim up to 30% of the cost of energy saving improvements to their primary residence. With a maximum credit amount of $1,500, the credit is three times the amount allowed in previous years. Qualified energy-efficient items include: heat pumps, central air conditioners, hot water heaters, wood stoves, oil furnaces and hot water heaters. If you have or plan to make such a purchase, make sure you file important documents, including receipts and warranties for easy reference come tax time. “Keep in mind that this is a complex credit due to the limitations placed on the various improvements,” says Steber. “Consult your tax adviser for information specific to your situation.”

•Evaluate what you are saving and how: Look for ways to participate in tax-free savings opportunities. Many companies offer a 401(k) program – a helpful way to save and reduce your taxable income. According to Steber, a simple tax tip is to become involved with your company’s 401(k) plan and to try to contribute the maximum amount. “Participate in your 401(k) plan if at all possible, even if you can’t contribute the maximum amount of $16,500 this year. By contributing what you can, you’ll be better positioned for increased tax savings.”

•Plan for the future: Look into investing money in a traditional or Roth IRA. If you are under 50 years of age you can contribute up to $5,000 this year; the contribution increases to $6,000 if you are 50 or older. The benefits to you can be significant – a traditional IRA may lower your taxes today, while a Roth IRA contribution will help keep your taxes lower when you retire and start drawing the money out.

•Buying a home?: If you have purchased or plan to purchase a new home before December 1, 2009, you can claim a refundable credit of 10% of the purchase price, up to $8,000 ($4,000 if married and filing separately) on your 2008 tax return. This credit is for homes purchased after December 31, 2008. If you have already filed your 2008 income tax return before you purchased your home, you can claim the credit by amending your 2008 tax return or you can wait and claim the credit when you file your 2009 tax return. The credit for homes purchased on or after January 1, 2009 and before December 1, 2009, does not have to be repaid unless you sell the home within 36 months.

•In the market for a new car?: New for 2009, you can claim the sales taxes paid when you purchased a new car as an additional standard deduction amount and potentially lower your tax bite. There are also additional credits (up to $7,500) available for purchasing a hybrid or “plug-in” car. Speaking with a Jackson Hewitt tax preparer can help you find out which vehicles qualify.

•Go see your doctor: If you’ve been putting off an elective medical or dental procedure, it may be in your interest to make an appointment. Qualifying medical expenses can often be deducted on a tax return, taking some of the pain out of those bills by reducing the amount of taxes owed. If you contribute to a Flexible Savings Account (FSA), remember that the money put into the account must be used by December 31, 2009; it cannot rollover for use in 2010.

•Buy a computer for your college student: If your college or college-bound student has a 529 plan, they can take a tax-free distribution from the plan to purchase a computer, computer peripherals, and Internet access during 2009 and 2010. The equipment and Internet services must be used by the beneficiary and their family during the period they are enrolled in a qualifying institution.

•Give back: When donating items to a favorite charity, it is now more important than ever to get the right kind of documentation if you wish to claim the donation on a tax return. According to Steber, “The IRS requires a receipt, cancelled check, or bank record as proof of a charitable contribution, regardless of the item’s value. While you may not need to provide documentation when submitting a return, it is needed in the event of an audit.”

•Commit to getting organized: Above all, get organized! Start storing important receipts and paperwork that may help you when you file next year’s tax return, such as proof of payment for home improvements, medical expenses and items donated to charity. Storing any tax-related documentation in a shoe box, folder or dedicated drawer in a safe, easy to access location not only means less scrambling during tax time, but also offers the possibility of keeping more or getting more money in your pocket.

Information on these tips and other mid-year tax considerations can be accessed by going to www.jacksonhewitt.com. To speak with a local tax preparer or find the Jackson Hewitt office nearest to you, call 1-800-234-1040.

About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. (NYSE: JTX), with approximately 6,600 franchised and company-owned offices throughout the United States during the 2009 tax season, is an industry leader providing full service individual federal and state income tax return preparation. Most offices are independently owned and operated. Jackson Hewitt 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
917-595-3039 917-595-3047
mconnerton@cooperkatz.com jlavina@cooperkatz.com