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.
1. Exemptions lower your income. 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.
2. Personal exemptions. 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.
3. Exemptions for dependents. 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.
4. Some people don’t qualify. 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.
5. Dependents may have to file. 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.
6. No exemption on dependent’s return. 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.
7. Exemption phase-out. 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.
Have questions? Contact Dan Gordon
Dan has been preparing tax return for US Taxpayers and Expatriates since 1998 beginning with US military and Embassy mission personnel in Bangkok, Thailand. He has always loved math and took business accounting at City U. in Seattle Washington. Dan worked at Clint Gordon & Associates (Accredited Tax Consultant) were he gained his foundational knowledge of the US taxing system.
Dan has been studying tax preparation and tax law ever since increasing his skill and knowledge of the tax preparation business accordingly, Dan is known in many circles around the globe as an Expatriate Tax Expert. His book entitled “The Complete US Expat Tax Book” has recently been published and is available on Kindle, Amazon and booksellers around the world.
Thru the years, Dan has fought many battles with the Internal Revenue Service as well as various state taxing departments with great success in helping lower and or eliminate his clients tax debts.
Dan Gordon and his staff enjoy the work they do from the simplest 1040EZ to the most complex corporations, with the goal that no client should pay more tax than legally required.
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