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Personal exemption can help you reduce your income tax burden. Understanding how income tax personal exemption laws work will help you maximize your income tax return every year.
What Is an Income Tax Personal Exemption?
Tax exemptions exclude money from your taxable income that would otherwise be included. If you are single then you are allowed a single tax exemption for yourself. If you are married, then you are allowed one exemption for yourself and one for your spouse. If you have children that are dependents, you are allowed an additional tax exemption for each of the child dependents on your tax return every year.
Personal Tax Exemptions for Spouses and Children
In order to claim a tax exemption for a spouse on your annual tax return, you have to be legally married on the final day of the tax year. You can take a tax exemption for a dependent as long as they were born living before December 1st and meet all five of the tests for tax exemption in addition to a Child Tax Credit, which is separate from the exemption.
Every person that you can claim on your tax return as a dependent is capable of earning you a single tax exemption. There are five specific tests that need to be met in order for a dependent to be claimed.
Who Qualifies as a Dependent?
In order to be a dependent, the person must be a resident of the United States, Canada or Mexico, or they must be a United States citizen. They cannot be file a joint tax return with a spouse. Additionally, they must receive at least half of their support from you and must receive less than a specific amount of income during the year unless they are your child and a full time student aged younger than 24 or aged under 19 without being a student.
In order to qualify as your dependent, the person has to pass a relationship or member of household test. This means that they should be your child, adopted or stepchild, grandchild or great grandchild, your son or daughter by law, your mother or father by law, your sister or brother by law, your sister or brother, your stepparent or step sibling, half sibling or uncle, aunt, nephew or niece if related through blood. These relatives do not have to be living with you in order to quality as a dependent. People who are a member of your household for an entire year, regardless of whether or not they are related, are also capable of qualifying as a dependent for an income tax personal exemption.
What Is an Income Tax Personal Exemption?
Tax exemptions exclude money from your taxable income that would otherwise be included. If you are single then you are allowed a single tax exemption for yourself. If you are married, then you are allowed one exemption for yourself and one for your spouse. If you have children that are dependents, you are allowed an additional tax exemption for each of the child dependents on your tax return every year.
Personal Tax Exemptions for Spouses and Children
In order to claim a tax exemption for a spouse on your annual tax return, you have to be legally married on the final day of the tax year. You can take a tax exemption for a dependent as long as they were born living before December 1st and meet all five of the tests for tax exemption in addition to a Child Tax Credit, which is separate from the exemption.
Every person that you can claim on your tax return as a dependent is capable of earning you a single tax exemption. There are five specific tests that need to be met in order for a dependent to be claimed.
Who Qualifies as a Dependent?
In order to be a dependent, the person must be a resident of the United States, Canada or Mexico, or they must be a United States citizen. They cannot be file a joint tax return with a spouse. Additionally, they must receive at least half of their support from you and must receive less than a specific amount of income during the year unless they are your child and a full time student aged younger than 24 or aged under 19 without being a student.
In order to qualify as your dependent, the person has to pass a relationship or member of household test. This means that they should be your child, adopted or stepchild, grandchild or great grandchild, your son or daughter by law, your mother or father by law, your sister or brother by law, your sister or brother, your stepparent or step sibling, half sibling or uncle, aunt, nephew or niece if related through blood. These relatives do not have to be living with you in order to quality as a dependent. People who are a member of your household for an entire year, regardless of whether or not they are related, are also capable of qualifying as a dependent for an income tax personal exemption.
