You are entitled to one personal exemption for yourself, one for your spouse (if filing a joint return), and one exemption for each dependent that you claim on your tax return. The exemption amounts are generally increased year by year, as adjusted for inflation, and the amount for tax year 2014 is $3,950 ($4,000 for tax year 2015). Three critical tests, however, must be met before you can claim someone as a dependent.
1. The Dependent Taxpayer Test
If you could be claimed as a dependent by another taxpayer, you cannot claim anyone as a dependent on your tax return. This is true even if you have a qualifying child or qualifying relative. Also, if you file a joint return with your spouse, and can be claimed as a dependent by someone else, you and your spouse cannot claim anyone as a dependent on your joint return.
2. The Joint Return Test
Generally, you cannot claim a married person as a dependent if he or she files a joint return. However, if the married person filed the joint return only to claim a tax refund, and a tax liability would not exist for either spouse on separate returns, then you can claim that person as a dependent if all the other conditions are met.
3. The Citizen or Resident Test
You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident, U.S. national, or a resident of Canada or Mexico for some part of the year.
If you are a U.S. citizen or national who has legally adopted a child who is not a U.S. citizen, resident alien, or national, this test is met if the child lived as a member of your household the entire tax year.
The primary objective of this article is to empower taxpayers to learn to do their own taxes. For more information on how to claim your exemptions, grab yourself a copy of “Doing Your Own Taxes is as Easy as 1, 2, 3,” ($6.98) on TaxConnections.com.