Exemptions on Tax Return

You as an individual have to pay taxes to the federal government, for the income you earn every year. So, you need to report your income by filling up a form and list your personal exemptions. It's important to claim exemptions, as it would help you save more money. The maximum amount you can claim as exemptions as of 2010 is US $3,650 per person and this amount may change every year depending on the inflation during that year. This amount is applicable only if the adjusted gross amount is less than the phaseout amount. If you are married and are filing for tax exemption separately, the phaseout amount starts at US $125,000, if you are filing as a single the amount is US $ 166,800, if you are the head of the household and are filing for exemptions on tax return the phaseout amount is US $ 208,500 and if you file jointly, the amount is US $250,200.

Number of Exemptions on Tax Return

Besides the above-mentioned exemptions on tax return which you can claim, you are also entitled to get one exemption for every person you show as dependent, even though the person files for a separate income tax return. When you say dependent in this case, it means either a qualifying relative or a qualifying child. Each has its own meanings and certain criteria, which needs to be fulfilled to be called either a qualifying relative or a qualifying child.

For your child to meet the qualifying child criteria, the following rules apply:
  • For the child to be called qualifying child, the person must be your son, daughter, step-sibling, half-sibling, sister, brother, foster child or a stepchild. If you have legally adopted a child is then he or she is also qualified to be called a qualifying child.
  • The

    child you claim must not be older than you in age and should not be more than 19 years of age. In case the child is a full-time student and is less than 24 years of age, you can call him or her a dependent.

  • To be called a qualifying child, the child must live with you for more than half the year. However, there are exceptions like temporary absence due to travel, illness, etc.
  • As per rules, your child should not be in a position to be able to provide for himself.
  • If you want an exemption, you should make sure that the child does not file an income tax return with any other person for that financial year.
For you to file for an exemption on tax return and meet the qualifying relative criteria, the rules are:
  • The relative whosoever is dependent on you and you want to show that while filing for tax return, must have lived with you throughout the year as a member of the family. You can also claim an exemption if he or she is related to you like being in-laws or half sibling.
  • The relative whom you want to show as dependent should not have a gross income of more than US $3,650 or more. Moreover, you should show that you have supported the relative during the year.
If you want to claim an exemptions on tax return and show someone as a dependent, you would need to provide the name of the person, his or her social security number and the person's relation with you. You may also need to provide the birth dates of the dependent. While filing for exemptions on tax returns, make sure that you know the complete set of rules and regulations which apply.

Source: www.buzzle.com

Category: Taxes

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