Jackson Hewitt Alerts Taxpayers to Choose Wisely in Selecting Tax Return Filing Status

PARSIPPANY, N.J., Feb. 16 /PRNewswire/ -- With so many pro-taxpayer credits and deductions available this year, filers need to be especially careful in selecting the correct filing status on their tax returns, according to Jackson Hewitt Tax Service®. Choosing an incorrect filing status can impact whether a taxpayer is eligible for certain tax credits and deductions, ultimately affecting the amount of a tax refund or tax liability due.

"Choosing the correct filing status may be straightforward for some taxpayers who clearly fall into a specific category, but it can be confusing for taxpayers who have more complex personal circumstances or where there is a misunderstanding of how each filing type is defined," said Mark Steber, Chief Tax Officer, Jackson Hewitt Tax Service Inc. "If you're not sure which status best suits your situation, be sure to speak with a knowledgeable tax preparer to determine the most appropriate option."

Here are considerations for each filing type:

• Married Filing Jointly: If you were married as of 11:59 p.m. on December 31, 2009, you are considered married for a full year for tax purposes.  Married Filing Jointly is one of the filing statuses available when you are married.  You can use this status even if you are married and live apart or if only one spouse is working.  This filing status often provides the largest standard deduction and the lowest effective tax rate.  The phase-out range for many deductions, including deductible IRA contributions, itemized deductions and personal exemptions is greater under married filing jointly.  This status also offers higher phase-out ranges for many credits such as the Earned Income Tax Credit (EITC), Additional Child Tax Credit and the Education credits.  
• Married Filing Separately: This status is appropriate if you are married and you or your spouse prefers to file a separate return, or if you are married and filing a non-resident return.  This filing status allows the highest effective tax rate and the lowest phase-out range for deductible IRA contributions, itemized deductions and personal exemptions.  There are no deductions for education expenses and no Earned Income Tax Credit (EITC). The Child Tax Credit is one of the few credits allowed. "Many married couples assume that they must file a joint return, but in some cases, such as couples in the middle income range or circumstances where one spouse has high medical expenses for the year, completing separate returns may be a better option," said Steber.
• Head of Household: Filing as Head of Household offers a higher standard deduction than Single or Married Filing Separately with a lower effective tax rate.  There is a higher phase-out for the Child Tax Credit than Married Filing Separately.  You may be considered unmarried for filing purposes and claim the Head of Household filing status if you meet the following conditions:
  • You must not have lived with your spouse at any time during the last six months of the year. Separation due to the military or other working conditions does not qualify.
  • You must have a qualifying child that lives with you for more than six months of the year.
  • You must have paid more than 50% of the cost of keeping up a home.
  • On state tax returns that do not offer a Head of Household status, it is acceptable to choose the Single status when filing.
• Qualifying Widow(er): To be eligible for this status, the deceased must have passed away prior to the current tax filing year, but not more than three years earlier. For example, you may claim the status on your 2009 tax return if your spouse died in 2007 or 2008. You must not have remarried but must have been entitled to file a joint return for the year of the spouse's death. Also, you must have paid more than 50% of the cost of keeping up a home for you and a qualifying child that is a son, daughter, stepchild or foster child. This status carries the same higher standard deduction and lower effective tax rate as Married Filing Jointly.  
• Single: This is the correct status if you are unmarried and do not qualify for any other filing status. You are eligible for all tax credits and adjustments and have a lower effective tax rate than married filing separately.  Unlike Married Filing Separately, you are allowed to claim the EITC.

To learn more about how filing status impacts eligibility for the credits and deductions that can be claimed on a tax return, please review information provided at www.jacksonhewitt.com. Information on finding a local office can also be found by calling 1-800-234-1040. 

About Jackson Hewitt Tax Service Inc.

Jackson Hewitt Tax Service Inc. (NYSE: JTX), with more than 6,000 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. 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.

SOURCE Jackson Hewitt Tax Service Inc.