Changes with Family, Home and Employment Can Drive Deductions and Credits
PARSIPPANY, NJ – As the end of the year moves closer, it is a great time for taxpayers to reflect on the year 2011, and, if the year includes any big life changes, consumers may be entitled to extra dollars when filing a tax return.
“There may be significant deductions available to you, such as having children or starting a new business this year,” said Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. “Contact your local Jackson Hewitt tax preparer now to learn how to turn your major life changes into major tax savings at tax time.”
Steber notes several common changes that can qualify for tax benefits:
- Having or adopting a child: Claiming a son or daughter as a dependent may significantly reduce federal tax liability. A parent may be entitled to a $3,700 exemption per dependent as well as a Child Tax Credit of up to $1,000 per qualifying child. Those who adopt a child and pay adoption expenses may be able to claim a refundable credit for qualified expenses of up to $13,360 per child.
- Continuing an education (for yourself, spouse, or dependent child): Up to $2,500 of student loan interest paid may be claimed as a direct deduction against your income. The loan must be for tuition, fees, books, and other qualified expenses for a student enrolled half-time or more.
- Making energy efficient improvements to your home: Common changes to improve your home’s energy efficiency can also lower your tax expense. Adding insulation, energy-efficient heating and air conditioning systems or installing energy-efficient exterior windows may qualify for the Non-business Energy Property Credit. Up to 10 percent of the cost of all qualifying improvements may be available, for a total lifetime credit limit of $500.
- Working independently or self-employed: Given the challenging economy and employment landscape, many consumers established their own businesses this year or started work as independent contractors. Taxpayers who are newly self-employed can directly deduct all expenses for their business against their income. Expenses such as advertising, supplies, office supplies, equipment, phones, and the applicable costs of owning and driving a vehicle are all allowed deductions that can reduce your total taxes.
- Caring for an adult parent financially: An aging parent may qualify as a dependent if the taxpayer is responsible for more than half of the parent's expenses, such as for food, medical care and lodging. Expenses for assisted living facilities or nursing homes can also count toward parental support if the taxpayer paid those costs. Taxpayers may also be able to deduct any medical expenses being paid. Finally, if they are paying for senior care, they may be eligible for a credit of up to $2,100. However, according to Steber, “often siblings will share in the support of the aging parent and are surprised to learn that one of them may claim the parent as a dependent.”
“There are many other life changes that can qualify for tax deductions,” continued Steber. “Not all online filing options fully assist tax payers with these changes, so working with a knowledgeable tax preparer is critical to taking advantage of the available deductions.”
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 franchised and company-owned office locations throughout the United States. Jackson Hewitt Tax Service® also offers an online tax preparation product at www.jacksonhewittonline.com. For more information, or to locate the Jackson Hewitt® office nearest to you, visit www.jacksonhewitt.com or call 1-800-234-1040. Jackson Hewitt can also be found on Facebook and Twitter.
David G. Weselcouch Melissa Connerton
Jackson Hewitt Tax Service Inc. CooperKatz & Company
(973) 630-0809 (917) 595-3039
# # #