Jackson Hewitt® Shares Top 5 Mid-Year Tax Tips

The Heat Is On for Taxpayers to Plan for "Taxmageddon" and Other Changes

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Jul 25, 2012, 11:00 ET

PARSIPPANY, N.J., July 25, 2012 /PRNewswire/ -- With taxes in the news almost every day, and many important tax breaks having expired at the end of 2011 and more set to expire at the end of 2012, taxpayers would benefit from spending some time this summer reviewing their tax profiles and learning about possible changes. To assist with cutting through the complexity, Jackson Hewitt Tax Service® has honed in on the top five areas taxpayers should consider now, that may help put them in a better position when filing their tax returns next year.

"January will be here before we know it, and with the upcoming 'Taxmageddon' that is likely to occur, this is the time to pay attention to what's coming up in the tax environment, as nearly every taxpayer will be impacted by higher taxes and significant changes when they file their 2012 and 2013 tax returns," said Mark A. Steber, chief tax officer of Jackson Hewitt Tax Service Inc. "Not only are the Bush tax credits set to expire and the new Affordable Care Act tax provisions set to begin, but the upcoming presidential election will set the stage for what the tax code will look like in the coming years. Now, more than ever, is the time to dig in and understand what can be currently done and what to watch for going forward."

To assist taxpayers, Jackson Hewitt's shares five tips on what to keep in mind now:

Know how any major changes happening in your life can impact a tax return: A wide range of common life occurrences may trigger tax considerations, which can result in a higher tax refund or a reduction to the amount of income taxes owed. For example, did you get married? Did you have or adopt a child? Buy a home? Move for a new job? Decide to go back to school? All of these life changing events, and many others, may have related tax deductions and credits available and it is important to know what benefits exist and who is eligible. Similarly, if you are planning to make any of these life changes later in 2012, it's helpful to talk to a tax preparer in advance to get a better understanding of how the change may impact your tax return;
Check your withholdings to make sure they are correct: The Form W-4 determines the amount of withholding from a paycheck. In some cases, it is beneficial to consider changing a withholding status during the course of the year, such as when a child is born – leading to a new dependent to claim – or, if a taxpayer works multiple jobs during the year. Withholding can be changed at any time by completing a new Form W-4 for your employer;
Think about what you are saving: Putting money away in an IRA account, or participating in a company sponsored 401(k) plan, can be an easy, tax-free way to reduce taxable income and start saving for the future. Taxpayers in lower income brackets may also qualify for a tax credit. For 2012, you can contribute up to $17,000 for a 401(k) plan if you are under age 50 ($22,500 if 50 or over) and up to $5,000 for an IRA if under age 50 ($6,000 if 50 or over);
Beware of "Taxmageddon": A double whammy of problems for 2013 is expected to occur if provisions are not made by December 31, 2012. Not only will most households see their taxes rise significantly, but the U.S. economy may also be affected. Because of the many changes currently applicable to both 2012 and 2013, many are calling the upcoming tax situation the "Taxmageddon." This includes the loss of deductions such as the Educator's Expense deduction, the Tuition and Fees deduction, and the Sales tax deduction. In addition, the Alternative Minimum Tax (AMT), a parallel tax collected from certain taxpayers, is currently expected to increase taxes on more than 20 million taxpayers by assessing the additional tax or limiting the amount of credits allowed. The 2013 changes currently include lower standard deductions and higher taxes for all, the reinstatement of the marriage penalty, which further lowers the standard deduction and increases taxes for married taxpayers, increases in capital gain taxes, and changes to many popular tax credits and deductions. In addition, the Affordable Care Act tax changes are currently scheduled to begin in 2014. Taxpayers need to know what deductions and credits will be off the table – and what new considerations may be available to them that could improve their tax situation; and,
Remember that the person in the White House can influence the tax situation in your house: By the middle of November, we will know who will set the course for taxes over the next four years. There are many proposals being considered from general tax rates to tax rates on specific types of income, as with capital gains and dividends, and various considerations related to business, including small businesses.

While taxes are certainly confusing, unpredictable, and up-in-the-air this year and next year, tax professionals throughout the country are keeping up with the constant changes and are ready to help you. Jackson Hewitt is monitoring all tax changes as they occur and is keeping an eye on any potential impact on the upcoming tax filing season.

Jackson Hewitt tax preparers are available year-round nationwide to assist taxpayers in reviewing their year-to-date financial profiles and earnings, and their 2011 tax returns to ensure they took advantage of all of the credits and deductions available to them. They can also assist with questions related to amending a return, responding to an IRS or state tax notice, changing a withholding status and more.

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, in the 2012 tax season. 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.