Jackson Hewitt's Weekly 'Tax Time Tip'

Feb 21, 2006 — Jackson Hewitt Tax Service(R) (NYSE: JTX), the nation's second largest tax preparation service, continues its weekly tax season series, "Jackson Hewitt Tax Time Tips." This week's tip offers tax considerations to help members of the military make the most of filing their tax returns, such as identifying credits and deductions for which they may be eligible.
This Week's Tip: If you are in the military, there are several deductions and tax breaks that can help you maximize any tax refund you may be due. Here are some key items to remember:
* Travel Expense Deductions — Armed Forces Reservists who stay overnight
more than 100 miles away from home while on a drill or meeting may take
an above-the-line deduction to income for their travel expenses. "Many
times, certain deductible expenses are overlooked. Be sure to keep
track of all of your travel expenses, including transportation, parking
fees, ferry fees, tolls, lodging, meals and other incidental expenses,"
says Mark Steber, Vice President, Tax Resources, Jackson Hewitt Tax
Service.

* Military Differential Pay — Understanding the tax implications of
military differential pay is key to maximizing tax benefits. Military
differential pay is when activated reservists continue to receive
compensation from their employer to offset their overall reduced
income. For example, Jill, a reservist making $30,000 a year at her
job, is called to active duty making $15,000 a year. The military
differential pay would be the $15,000 that her employer continues to
pay her so she is still making $30,000 annually. "An important point to
remember about military differential pay is that while the income is
taxable, this pay is not considered wages and is not subject to Social
Security and Medicare taxes. So it's important that military taxpayers
ensure that their employers treat these earnings correctly," adds
Steber.

* Miscellaneous Deductions — Military members may be able to deduct
unreimbursed employee business expenses, such as professional dues,
subscriptions to professional journals, educational expenses and
uniform expenses, if military regulations prohibit wearing the uniform
off-duty.
Members of the military may also be eligible for tax credits associated with the Earned Income Tax Credit (EITC) and Additional Child Tax Credit. Although combat pay is not included as income when calculating federal income tax, military members have the option of including this as earned income when calculating for the EITC. "You should calculate your tax return both ways (including and not including combat pay as earned income for EITC purposes) to determine which option gives you the best result," says Steber. "Alternatively, combat pay is included as earned income when calculating the refundable portion of the Child Tax Credit."
Military taxpayers should consult a tax professional for more information on these and other tax considerations.
Contact: Allison Jackson, Jackson Hewitt Tax Service Inc., 973-630-0681, allison.jackson@jtax.com; Melissa Connerton, CooperKatz & Company, 212-455-8001, mconnerton@cooperkatz.com
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. (NYSE: JTX) is the second largest tax preparation service company in the United States with franchised and company-owned offices in 49 states and the District of Columbia. Specializing in electronic filing (IRS e-file), the Company provides full service, individual federal and state income tax preparation and facilitates related financial products. Most Jackson Hewitt offices are independently owned and operated. Jackson Hewitt is based in Parsippany, New Jersey. More information about the Company may be obtained by visiting the Company's Web site at http://www.jacksonhewitt.com. To locate the Jackson Hewitt office nearest to you, please call 1-800-234-1040.
SOURCE Jackson Hewitt Tax Service Inc.