Some tax rules affect everyone who files a federal income tax return. With that in mind, here are seven facts about dependents and exemptions that taxpayers should know about.
There are two types of exemptions: personal exemptions and exemptions for dependents. You can usually deduct $4,050 for each exemption you claim on your tax return.
You can usually claim an exemption for yourself. If you're married and file a joint return you can also claim one for your spouse. If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer.
You can usually claim an exemption for each of your dependents. A dependent is either your child or a relative that meets certain tests. You can't claim your spouse as a dependent. In addition, you must list the Social Security number of each dependent you claim. If you don't have a social security number, special rules apply. Don't hesitate to call if this is your situation.
You generally may not claim married persons as dependents if they file a joint return with their spouse. Again, there are some exceptions to this rule, so please call if you have any questions about this.
People that you can claim as your dependent may have to file their own federal tax return. This depends on many things, including the amount of their income, their marital status and if they owe certain taxes.
If you can claim a person as a dependent, that person can't claim a personal exemption on his or her own tax return. This is true even if you don't actually claim that person as a dependent on your tax return. The rule applies because you have the right to claim that person.
The $4,050 per exemption is subject to income limits. This rule may reduce or eliminate the amount depending on your income. Please call if you need additional information about the exemption phase-out.
Questions about dependents and exemptions? Call the office today.