Its hard to keep up with all the different rules when tax time comes, this is why we stay in the loop when it comes time to do your taxes. Here are some facts to help you better understand your exemptions and dependents:
- Exemptions cut income – You can usually deduct $3,900 for each exemption that is claimed on your tax return for 2013, however this is subject to income limits. This amount will either reduce or be eliminated depending on your income.
There are two different types of exemptions: Personal exemptions and exemptions for dependents. In order to better understand how these differences might help you during tax season, it’s important to be aware of how each of them can be applied to you.
- Personal Exemptions – The majority of the time you can claim an exemption for yourself. Should you be married and have a joint tax return filed, your spouse can also be claimed as an exemption. If a separate return is filed between you and your spouse, you can only claim your spouse if they had no gross income and was not the dependent of a separate taxpayer.
- Exemptions for Dependents – An exemption can usually be claimed for each of your dependents. A dependent is normally a child or relative so long as certain tests are met. Finally the social security number of each person claimed must be listed. For rules that apply to people who don’t have an SSN, see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information,
It’s important to remember that not all people qualify as potential dependents. For example, generally you may not claim married persons as dependents if they file a joint tax return with their spouse. Additionally some dependents may have to file their own federal tax return depending on the amount of their income, marital status or if they owe certain taxes. These rules wouldn’t apply in some cases as there are some exceptions.
When a person can be claimed as a dependent on your tax return, that person can not claim a personal exemption on their tax return. This is also true if they aren’t actually claimed on your tax return. This rule applies because you, whether or not you do it, have the right to claim that person as a dependent.
For details you can always contact us directly or refer to Publication 501 released annually by the IRS.