{"id":614,"date":"2015-10-04T13:39:31","date_gmt":"2015-10-04T17:39:31","guid":{"rendered":"http:\/\/www.etax.com\/blog\/?p=614"},"modified":"2015-09-29T13:40:37","modified_gmt":"2015-09-29T17:40:37","slug":"tax-exemptions-add-more-to-your-wallet","status":"publish","type":"post","link":"https:\/\/www.etax.com\/blog\/2015\/10\/04\/tax-exemptions-add-more-to-your-wallet\/","title":{"rendered":"Tax Exemptions Add More to Your Wallet"},"content":{"rendered":"<p>Understanding the tax laws isn\u2019t always an easy task. However, there are certain parts of the tax code that are relatively straightforward and simple to comprehend \u2013 for tax code that is. Exemptions are one of the few great parts of filing your taxes, because they help taxpayers get back more of their hard earned cash.<\/p>\n<p>Exemptions are like deductions in that they lower the amount of your income that is subject to taxes. This tax year, each exemption can reduce your gross income by $4,000 which is then used to calculate your taxable income. Taxpayers in the 25% bracket can save up to $1,000 in taxes.<\/p>\n<p>There are three types of exemptions that you can take:<\/p>\n<ol>\n<li>Personal exemption (Yourself)<\/li>\n<li>Your Spouse<\/li>\n<li>Each Dependent<\/li>\n<\/ol>\n<p><strong><em>Example:<\/em><\/strong><em> A married taxpayer with two children can deduct $16,000 in exemptions ($4,000 per qualifying person). <\/em><\/p>\n<p>Examples are fairly easy to fill out on a paper form, and even easier if you e-file, as the software will calculate your exemptions for you. There are exceptions to every rule of course, so be sure you qualify for an exemption before claiming one. Also, remember that you\u2019ll be required to report the Social Security Number for any person you claim as a dependent when you file your return.<!--more--><\/p>\n<p><strong><u>Personal Exemption<\/u><\/strong><\/p>\n<p>Basically, if you pay taxes, you\u2019re entitled to a personal exemption. To the government, this exemption is the equivalent of the \u201cfree space\u201d on a bingo card.<\/p>\n<p><em>Fine Print: <\/em>If you qualify to be claimed as a dependent on anyone else\u2019s tax return, you are not eligible for a personal exemption. The other person doesn\u2019t even have to claim you \u2013 it\u2019s essentially just the idea that they <em>can<\/em> claim you as a dependent that inhibits your ability to take a personal exemption. Check out the criteria for qualifying dependents to determine if you fall under that category for anyone else. A good rule of thumb is if anyone else supports you, you are likely a dependent.<\/p>\n<p><strong><u>Spousal Exemptions<\/u><\/strong><\/p>\n<p>The government doesn\u2019t classify your spouse as a dependent, although the same restrictions apply when claiming an exemption for your spouse. You can take a spousal exemption when you file a joint return.<\/p>\n<p><em>Fine Print: <\/em>If you file separately from your spouse, you will only be able to claim the exemption if your spouse meets the following conditions:<\/p>\n<ul>\n<li>He\/she has no gross income for the tax year<\/li>\n<li>He\/she is not filing a tax return<\/li>\n<li>He\/she cannot be claimed as a dependent by another taxpayer<\/li>\n<\/ul>\n<p><strong><u>Dependent Exemptions\u00ad\u00ad\u00ad<\/u><\/strong><\/p>\n<p>Children under age 19 who live in your household can likely be claimed as a dependent, and therefore you are able to take an exemption for each. Children who are permanently and completely disabled throughout the tax year are always eligible to be claimed as dependents, no matter how old they are.<\/p>\n<p>For children to be considered dependents, they must be either:<\/p>\n<ul>\n<li>Your son, daughter, grandchild, stepchild, or a foster child<\/li>\n<li>Your brother, sister, half-sibling, step-sibling, or a neice or nephew or some other descendant<\/li>\n<\/ul>\n<p><em>Fine Print: <\/em>Your child actually needs to be dependent on you in order to claim them. You aren\u2019t able to claim a dependent if:<\/p>\n<ul>\n<li>You are claimed as a dependent on another\u2019s tax return<\/li>\n<li>Your child files a joint tax return with their spouse \u2013 unless they file only for a refund and do not claim their own personal exemption<\/li>\n<li>The dependent is not a resident of the U.S., Canada, or Mexico<\/li>\n<li>Your child is older than 19 and not considered a full-time student<\/li>\n<li>Your child is older than 24 at the end of the year<\/li>\n<li>You did not provide more than half of the support for the dependent<\/li>\n<li>The dependent didn\u2019t live in your house for half of the year at least (exceptions are made in cases of military service, illness, education, business, birth, or death)<\/li>\n<li>You are separated\/divorced, and the child lives with the other parent more often<\/li>\n<\/ul>\n<p><strong><u>Qualifying Relatives<\/u><\/strong><\/p>\n<p>You may be able to claim a dependent exemption for other relatives beside just your children. A \u201cqualifying relative\u201d may also be considered as a dependent, as long as you are supporting them. There is no age requirement, or living requirements.<\/p>\n<p><em>Fine Print: <\/em>Qualifying relatives must meet the following criteria:<\/p>\n<ul>\n<li>Be a U.S. citizen, or a resident of Canada or Mexico<\/li>\n<li>Not file a joint return with a spouse<\/li>\n<li>Have earned less than $4,000 in gross income, including unemployment benefits for the tax year<\/li>\n<li>Receive over half of their support from you, whether through shelter, clothing, medical costs, education expenses, transportation, and recreation. You can determine your percentage of the relative\u2019s support by adding all their help through the tax year, including state support like welfare and food stamps, and comparing it to the total amount you contributed.<\/li>\n<\/ul>\n<p>Some examples of qualifying relatives may be a parent, sibling, stepparent, step-sibling, half-sibling, grandparent, grandchild, or in-laws.<\/p>\n<p><em>Fine Print: <\/em>Cousins are not qualifying relatives. Other relatives, such as aunts, uncles, nieces and nephews, are only qualifying if related through blood. So your sister\u2019s daughter would count, but your wife\u2019s sister\u2019s daughter would not, if you try to claim her. However, if you file a joint return with your wife, you are able to claim her sister\u2019s daughter.<\/p>\n<p><strong><u>Member of Household<\/u><\/strong><\/p>\n<p>So you\u2019ve been supporting your best friend, or your boyfriend\u2019s kid for the last tax year. That means they may qualify to be claimed as a dependent, as long as they lived with you all year long and meet the same requirements that a qualifying relative must meet:<\/p>\n<ul>\n<li>Be a U.S. citizen, or a resident of Canada or Mexico<\/li>\n<li>Not file a joint return with a spouse<\/li>\n<li>Have earned less than $4,000 in gross income, including unemployment benefits for the tax year<\/li>\n<li>Receive over half of their support from you, whether through shelter, clothing, medical costs, education expenses, transportation, and recreation.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Understanding the tax laws isn\u2019t always an easy task. However, there are certain parts of the tax code that are relatively straightforward and simple to comprehend \u2013 for tax code that is. Exemptions are one of the few great parts of filing your taxes, because they help taxpayers get back more of their hard earned [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[123],"tags":[56,46,47,103,14,386,298,52,342,303,246,37,249,223,170],"class_list":["post-614","post","type-post","status-publish","format-standard","hentry","category-deductions-2","tag-boyfriend","tag-child","tag-children","tag-deduction","tag-deductions","tag-divorce","tag-education-expenses","tag-expenses","tag-military-service","tag-personal-exemption","tag-qualifying-relative","tag-social-security","tag-taxable-income","tag-transportation","tag-unemployment"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Tax Exemptions Add More to Your Wallet - eTax.com\u00ae Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.etax.com\/blog\/2015\/10\/04\/tax-exemptions-add-more-to-your-wallet\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tax Exemptions Add More to Your Wallet - eTax.com\u00ae Blog\" \/>\n<meta property=\"og:description\" content=\"Understanding the tax laws isn\u2019t always an easy task. 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