Jackson Hewitt(R) Highlights Special Tax Considerations for Seniors Age 65 and Over

PARSIPPANY, N.J., March 23 /PRNewswire-FirstCall/ -- Although older taxpayers have been filing annual tax returns for years, most will find that new considerations arise when they turn age 65.  To address these special circumstances, Jackson Hewitt Tax Service® shares important tips for seniors, as the nation enters the last few weeks of the tax filing season.

"If you are 65 or older, it's important to understand how age and sources of income impact your tax return," said Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc.  "For example, taxpayers over the age of 65 are entitled to a larger standard deduction, which may lead to a larger tax refund amount or lower the amount of tax owed.  Also, contrary to what many may believe, there is no set age when we no longer have to pay taxes, and most retirement income is taxable."

The first step, according to Steber, is to determine if you need to file a tax return. You are required to file if your income was at least the following amounts: Single: $10,750; Head of Household: $13,400; Married Filing Jointly: $19,800 if one spouse is age 65 or older, $20,900 if both spouses are age 65 or older; Qualifying Widow or Widower: $16,150 or Married Filing Separately: $3,650.

Steber further outlines tax considerations for those over the age of 65:

• You can include your real estate taxes paid, up to $1,000, as an increased standard deduction.  

• Your pension and IRA distributions and interest, as well as your dividend income, are usually taxable.  If your income is greater than $25,000 ($32,000 if married filing jointly and $0 if married filing separately), up to eighty-five percent of your Social Security may be taxable.  

• For 2009, you are not required to take a minimum required distribution from your pension plan or IRA if you are age 70-1/2 or older. Note that this rule has been reinstated for 2010, and you must take a minimum required distribution if you are over 70-1/2.

• If you or your spouse are unable to care for yourself and outside care is needed while the other spouse works, you may qualify for a tax credit for Dependent Care.  The credit is based on a percentage of the amount paid for care, with a maximum credit of $1,050 for the care of one qualified person or $2,100 for two or more qualified persons.  If the care is for medical purposes, you can claim the cost of care (above the amount used for the credit) as a medical expense if you are itemizing deductions.

• If you are age 65 or older or if you are blind and do not itemize, you may qualify for a higher standard deduction. Seniors whose filing status is single or head of household can add an additional $1,400 to their standard deduction amount in 2009.  Add an additional $1,100 if you are married filing jointly, married filing separately or a qualifying widow or widower.

• Although you can claim a higher standard deduction as a senior, there may be benefits to itemizing deductions.  Doing so allows you to claim expenses such as legal fees for advice related to retirement tax planning or medical-related expenses, such as those covering inpatient care at a hospital or similar institution; laboratory fees and fees for X-rays; prescription medicines and insulin; artificial limbs, eyeglasses, contacts, hearing aids and their batteries, and artificial teeth; health insurance including Medicare B, Medicare D, and Medicare supplements.

• Keep in mind that some states offer a deduction based on age.  Ask your tax preparer if your state does.

To explore many of the tax credits and deductions available to them, older taxpayers are encouraged to visit the Tax Topics section of the Jackson Hewitt Web site.  Information on finding a local office can also be found online at www.jacksonhewitt.com or can be obtained by calling 1-800-234-1040. 

About Jackson Hewitt Tax Service Inc.

Jackson Hewitt Tax Service Inc. (NYSE: JTX), with more than 6,300 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.  In addition, an online tax preparation product, Jackson Hewitt® Online, is available at www.jacksonhewittonline.com. The company 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.