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Seven Facts about Dependents and Exemptions

Posted by William Byrnes on March 2, 2014


The IRS Tax Tip 2014-22 released this past week included a synopsis of the tax rules for rules for exemptions  and dependents – these generally affecting every taxpayer who files a federal income tax return.  

Seven facts about these rules:

1. Exemptions cut income.  There are two types of exemptions: personal exemptions and exemptions for dependents. A taxpayer can usually deduct $3,900 for each exemption claimed on the 2013 tax return.

2. Personal exemptions.  A taxpayer can usually claim an exemption for him or herself.   If married and filing a joint return, the taxpayers can also claim another exemption for the spouse.   Filing a joint return and claiming two exemptions will lead to a $7,800 deduction from the couple’s reported income.

However, if a taxpayer files a separate return, then he / she can claim an exemption for the spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer.

3. Exemptions for dependents.  A taxpayer can usually claim an exemption for each of his/her dependents.  A dependent is either the taxpayer’s child or a relative that meets certain tests.  The taxpayer can claim a spouse as a dependent.  The taxpayer must list the Social Security number of each dependent claimed.

4. Some people don’t qualify.  A taxpayer generally may not claim married persons as dependents if they file a joint return with their spouse. There are some exceptions to this rule.

5. Dependents may have to file.  People that are claimed as a 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.

6. No exemption on dependent’s return.  If a person is claimed as a dependent, then that person can’t claim a personal exemption on his or her own tax return.  This is true even if the taxpayer chooses not to actually claim that person as a dependent on the tax return.  The rule applies because the taxpayer has the right to claim that person as a dependent.

7. Exemption phase-out.  The $3,900 per exemption is subject to income limits (high income earners). This rule may reduce or eliminate the amount depending on a taxpayer’s income.

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