PARSIPPANY, N.J., March 19, 2012 /PRNewswire/ -- Jackson Hewitt Tax Service®, the nation's second largest tax preparation firm, reminds taxpayers that one of the best ways to increase a refund or reduce taxes owed is to take advantage of all of the deductions the tax code offers. However, with more than 15,000 changes to the U.S. tax code since 1986, most taxpayers are simply unaware of all the deductions available to them.
"There are thousands of tax deductions available to taxpayers this and every year, ranging from medical expenses to funds spent on education and much more," said Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. "The key is knowing what you can claim and being sure to speak with a local tax preparer if you are unsure of eligibility."
Like tax credits, deductions serve to reduce the amount of tax an individual pays. Unlike tax credits, which lower an individual's tax burden dollar for dollar, deductions serve to reduce the amount of a taxpayer's income subject to tax. Various expenses may be deducted from an individual's income before tax, especially expenses incurred to produce income.
When filing a 2011 tax return, Steber advises taxpayers to pay close attention to these five commonly missed deductions:
1. Charitable donations – In addition to deducting cash contributions, the fair market value of any other property donated to qualified organizations is generally deductible;
2. Job-seeking expenses – Resume preparation services, long-distance phone charges, parking, toll and other travel expenses may all be deducted if used to find employment within the taxpayer's present field;
3. Education expenses – Interest paid on student loans and funds paid to maintain or improve job skills may be deducted. Taxpayers may also be able to deduct up to $4,000 for qualified tuition and fees paid for higher education even if they do not itemize deductions, although various exceptions do apply;
4. Medical expenses – Contact lenses, eyeglasses, eye surgery, dental expenses, hearing aids, and crutches are all some of the many medical expenses that can be deducted on a 2011 tax return. Expenses paid for prescription drugs and insulin may also be deducted; and,
5. Certain expenses for the self-employed – Up to 100 percent of medical insurance costs paid for the self-employed taxpayer, their spouse and their dependents may be deductible. Operating a business or part of a business from home may also trigger additional deductions, as can using a personal vehicle for business purposes.
"With these and other tax considerations, it's a good idea to get into the habit of keeping proper documentation throughout the year," advises Steber.
A list of the top overlooked deductions is available at www.jacksonhewitt.com. Taxpayers can also review Jackson Hewitt's [email protected]®, a list of potential deductions based on an individual's job or career.
About Jackson Hewitt Tax Service Inc.
Based in Parsippany, NJ, Jackson Hewitt Tax Service Inc. is an industry-leading provider of full service individual federal and state income tax preparation, with nearly 6,500 franchised and company-owned locations throughout the United States, including 2,800 located in Walmart stores nationwide. Jackson Hewitt Tax Service® also offers an online tax preparation product at www.jacksonhewittonline.com. For more information, or to locate your neighborhood Jackson Hewitt® office, visit www.jacksonhewitt.com or call 1-800-234-1040. Jackson Hewitt can also be found on Facebook and Twitter.
SOURCE Jackson Hewitt Tax Service Inc.