List of Tax Exemptions I Can Claim

Federal tax exemptions reduce your taxable income for the year and are divided into two categories: personal exemptions and exemptions for dependents. Each tax exemption is worth $3,650 for the 2009 tax year but different rules apply to each type of deduction.

Usually, you can claim one federal tax exemption for yourself, one for your spouse if you are married, and one for each dependent if you have children. However, if another taxpayer claims you as a dependent, or is entitled to claim you as a dependent, you are not eligible for a personal tax exemption.

The following table shows the tax exemption effect on your gross income:

Federal Income Tax Exemption Table

Personal Tax Exemptions

You may generally claim one tax exemption for yourself if you are a single taxpayer.

If you are married and file a joint return, you may claim one tax exemption for yourself and one for your spouse. If you file a separate return, you are only able to claim a tax exemption for your spouse if your spouse is not filing a tax return, has no gross income, and was not claimed as the dependent of another taxpayer. If your spouse dies during the tax year, you are generally still allowed to claim a tax exemption for them for the year.

You must be married on the last day of the tax year to claim a tax exemption for your spouse on your tax return, and if you obtain a final divorce or separation decree by December 31st, you may not claim a federal tax exemption for your (ex-)spouse.

Additional Tax Exemptions for Housing Disaster Victims

You may be able to take additional personal exemptions, up to $500 each for a maximum of $2000, for providing housing to persons displaced by tornadoes, storms, or flooding in a Midwestern disaster area.

Tax Exemptions for Dependents

You may claim a tax exemption for each dependent as long as certain rules are satisfied:

• You or your spouse cannot be claimed as a dependent on another person's tax return (your spouse is never considered your dependent).
• The potential dependent cannot be married and filing jointly, unless the joint return is only a claim for a refund and there would be no taxes owed by either spouse if their returns were filed separately.
• The potential dependent must be a United States citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico (unless the dependent is a legally adopted child).
• The potential dependent must pass all tests (listed below) to be your qualifying child or qualifying relative.

Qualifying Child

A person may qualify as a dependent if they are a qualifying child or qualifying relative. There are six tests that an individual must pass in order to be considered a qualifying child for a tax exemption:

1. Relationship Test: The child must be your daughter, son, stepchild, foster child, sister, brother, half sister, half brother, stepsister, stepbrother, or a descendant of any of these. A child whom you legally adopt is always considered to be your child.
2. Age Test: The child must be one of the following: 1) under the age of 19 at the end of the year and younger than you or your spouse (if filing jointly); 2) a full-time student under the age of 24 at the end of the year and younger than you or your spouse (if filing jointly); or 3) permanently disabled at any time during the year, regardless of his or her age.
3. Support Test: The child must have not provided more than half of his or her own support for the year.
4. Residency Test: The child must have lived with you for more than half of the year.
5. Joint Return Test: The child must not file a joint tax return for the year (if he or she is married).
6. Special Test for Qualifying Child of More than One Person: If the child could be a qualifying child for more than one person, you must be the person who is entitled to claim the child (see below).

If your child was born on or before December 31st and all of the qualifying child tests are passed, then you may claim the child for a dependency tax exemption on your tax return.

Qualifying Relative

You may also add exemptions for dependents who are qualifying relatives. An eligible qualifying relative must pass the following four tests:

1. Not a Qualifying Child Test: The qualifying relative cannot be your qualifying child and cannot be claimed as a qualifying child on another person's tax return.
2. Relationship Test: The qualifying relative must either have lived with you for the entire year as a member of the household (a person who is not actually related to you may meet the requirements in this way), or be related to you in one of the following ways: your child, stepchild, grandchild or other descendant of one of your children (or stepchildren or foster children), son-in-law, daughter-in-law, brother, sister, half brother, half sister, stepbrother, stepsister, brother-in-law, sister-in-law, parent, stepfather, stepmother, father-in-law, mother-in-law, grandparent, and, if related by blood, aunt, uncle, niece, or nephew. Remember that a child whom you legally adopted is always considered to be your child. Also note that, for the purposes of this test, divorce or death does not change any relationship which was established by marriage (e.g. son-in-law, daughter-in-law, etc.)
3. Gross Income Test: The qualifying relative must have made less than $3,650 in gross income during the year.
4. Support Test: You must have provided more than half of the qualifying relative's total support during the year.

For more information on exemptions, dependents, qualifying children, and qualifying relatives, please consult Publication 501, Tax Exemptions, Standard Deduction, and Filing Information.

Qualifying Child of More than One Person

What if two or more people want to claim the same child as a dependent on their tax returns?

Only one person may claim another person as a dependent and/or qualifying child on a tax return (except, of course, if married filing jointly). The same person may not be claimed as a dependent and/or qualifying child by more than one taxpayer, even for different tax benefits. If a child is eligible to be your dependent or qualifying child, that child is not eligible to be claimed by anyone else.

For situations where the same dependent is eligible to be claimed as a qualifying child by more than one person, the IRS has established a set of "tiebreaker rules":

• If one of the people claiming the child is the child's parent, then the child will be the qualifying child of the parent.
• If both parents claim the child but do not file jointly, then the child will be the qualifying child of the parent with whom the child lived for a longer portion of the year.
• If the child lived with both parents for an equal amount of time, then the child will be the qualifying child of the parent with the higher adjusted gross income (AGI).
• If no parent chooses to claim the child, the child will be the qualifying child of the claiming person with the highest AGI, as long as that number is higher than the AGI of either parent. (If the parents are married filing jointly, their joint AGI may be split equally to determine their individual incomes for the purposes of this rule).
• If no parent qualifies to claim the child, the child will be the qualifying child of the claiming person with the highest AGI, regardless of the parents' income.
• Special rule for unmarried parents: If the parents are not married but lived together with their child all year and the child meets all qualifying tests for both parents, then the parents may decide between them which parent will claim the child.

Reductions of Tax Exemptions - Phaseouts

The tax deduction for personal exemptions begins to phase out after your adjusted gross income (AGI) reaches a certain limit. If your AGI exceeds the limit, determined by filing status, you must reduce the dollar amount of your exemptions by 2% for each $2,500 that your AGI exceeds the limit set out below. You can only lose up to 50% of your exemptions through phase-out AGI reductions. The AGI income ceilings are listed below and divided by filing status:

For more information on phaseouts of exemptions, and on tax exemptions in general, please refer to Publication 501, Tax Exemptions, Standard Deduction, and Filing Information.

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