Personal exemptions help reduce taxable income. Most taxpayers can claim one personal exemption for themselves and one for their spouse if they are married. Personal exemptions may also be claimed for each dependent. Each exemption normally allows a deduction of $4,050 for 2017 tax returns. While each exemption is worth the same amount, different rules apply to each type.
Here are five things to remember about exemptions and dependents when filing your 2017 tax return:
Claiming Personal Exemptions:
On a joint return, taxpayers can claim one exemption for themselves and one for their spouse if they file a joint return.
If a married taxpayer files a separate return, they can only claim an exemption for their spouse if their spouse meets all of these requirements.
- Had no gross income.
- Is not filing a tax return.
- Was not the dependent of another taxpayer.
Claiming Exemptions for Dependents:
A dependent is either a child or a relative who meets certain requirements. The IRS provides an interactive tax assistant that will help you determine if you can claim an exemption for your dependent. You can access the IRS Interactive Tax Assistant here.
Be sure to remember to list a Social Security number for each dependent on your tax return.
Dependents Cannot Claim Exemption:
If a taxpayer claims an exemption for their dependent, the dependent cannot claim a personal exemption on their own tax return.
Dependents May Have to File a Tax Return:
This depends on certain factors like total income, whether they are married, and if they owe certain taxes.
The exemption is subject to a phase-out that begins with adjusted gross incomes of $261,500 ($313,800 for married couples filing jointly). The exemption phases out completely at $384,000 ($436,300 for married couples filing jointly).
The complete IRS Tax Tip about Exemptions and Dependents can be found here.