PARSIPPANY, N.J., Jan. 19 /PRNewswire-FirstCall/ -- As taxpayers gather their essential tax-related documents and prepare to meet with their tax preparer, it is important to be aware of new and changed tax rules that may help to make a positive impact on their bottom-line. Last year, significant changes were made in the Earned Income Tax Credit (EITC), a popular, "pro-taxpayer" credit, providing an estimated additional $2.3 billion* to eligible taxpayers. Jackson Hewitt Tax Service® alerts taxpayers to the new EITC provisions, including higher credit amounts, higher income thresholds and a new rule offering $629 in additional credit for taxpayers with three or more children.
Overall EITC amounts have increased for tax year 2009 and are based on the number of qualifying children per taxpayer:
- A new $5,657 credit with three or more qualifying children
- $5,028 credit with two qualifying children (an increase of $204)
- $3,043 credit with one qualifying child (an increase of $126)
- $457 credit with no qualifying children (an increase of $19)
- The credit only applies to taxpayers who have "earned income," such as wages, tips, salary, income from self-employment and other taxable compensation.
- Income thresholds to qualify for EITC have increased, most notably for individuals with three or more children. Only taxpayers with total earned income and adjusted gross income (AGI) less than the following amounts qualify for the credit:
- Income limit for a taxpayer claiming three or more children: $43,279 (48,279 if married filing jointly) NEW!
- Two qualifying children claimed: $40,295 ($45,295 if married filing jointly) [up from $38,646 ($41,646 if married filing jointly)]
- One qualifying child claimed: $35,463 ($40,463 if married filing jointly) [up from $33,995 ($36,995 if married filing jointly)]
- No qualifying children: $13,440 ($18,440 if married filing jointly) [up from $12,880 ($15,880 if married fling jointly)]
"These increased dollar amounts, including those for larger families, and higher income limits are likely to make a big difference for countless working families, especially in these tough economic times," said Mark Steber, chief tax officer, Jackson Hewitt Tax Service. "But because the Earned Income Tax Credit is a complex credit, we encourage consumers to reach out to a knowledgeable tax preparer to explore if they qualify and ensure that they properly claim the credit on their income tax return."
Steber notes that besides income, there are a number of other qualifications to determine eligibility for the EITC, which include:
- A qualifying dependent must be under the age of 19, have the same place of residence as the taxpayer (for at least half of the year) and be related to the taxpayer (defined as a child, stepchild, foster child or descendant of these).
- New this year, the child must also be younger than the taxpayer claiming that child (unless the qualifying child is disabled) and not have filed a joint return other than for a claim of refund.
- Grandparents, aunts, uncles, and older siblings may claim a child as their qualifying child, provided they shared a residence with the child for more than six months of the tax year. However, the same child cannot be claimed by more than one taxpayer for EITC purposes.
- A taxpayer with no qualifying child may claim the credit if he or she is at least 25 years old, but under 65 at the end of the year, and is a resident of the U.S. for more than half the year.
- For members of the military, there is an option of treating combat pay (which is non-taxable) as income for purposes of calculating the Earned Income Tax Credit – and thereby potentially increasing a tax refund.
Jackson Hewitt locations across the country are open now to help local taxpayers determine EITC eligibility. For more information on this valuable credit, as well as information on other new and changed tax laws, visit www.jacksonhewitt.com. To speak with a local tax preparer or find the Jackson Hewitt office nearest to you, call 1-800-234-1040.
* Joint Committee on Taxation, February 12, 2009 (JCX-19-09)
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.