If you are a single taxpayer and your family consists of a child, dependent, or parent, the IRS allows you to claim one of two types of exemptions: personal exemptions and dependency exemptions. Both types of exemptions lower your taxable income, resulting in less income tax. When claiming a personal exemption, you must provide the social security number of the dependent, as well as a description of the relationship between you and the dependent.
Claiming A Dependent Exemption
You can claim a dependent exemption if you have a child under the age of 17 years. Another benefit is dependent credit. This credit reduces the amount of tax you owe by the amount of money you spend on each dependent. This credit is available for children who are under the age of 17 and all other dependents. However, the credit phases out for higher-income taxpayers. For example, Josh and Kristen earn a combined income of $90,000 and each can claim a $4,050 personal exemption. This will reduce their taxable income by $20,250. In addition to personal exemptions, they can claim several deductions, which reduce their adjusted gross income.
If one of the parents is a stay-at-home parent, their child will be considered a dependent exemption. The child must be a biological child, under the age of 19, or 24 years old, or be a full-time student or permanently disabled. This will result in a deduction of up to $4,000, which is not very useful if the parent is not earning anything.
Dependent Exemption For Financial Support
The IRS defines dependents as people who rely on another person for financial support. Dependents can include children or domestic partners. There are special rules for children of divorced parents. In most cases, the custodial parent is entitled to the child’s dependency exemption, but the other parent can choose to waive it. The IRS defines a dependent as someone who lives with the taxpayer more than half the time. For 2017, the tax exemption amount was $4,050 per qualifying dependent. However, the tax cuts and jobs act eliminated the dependency exemption. However, taxpayers can still take advantage of the many tax credits available to them by claiming dependents. These credits will lower the amount of taxes a taxpayer owes to the IRS.
There are a few important requirements for claiming a dependent exemption. First, you must be a citizen of the United States. Second, you must live in the United States. Finally, your child must be legally adopted. The child must be a member of the taxpayer’s household. When filing your taxes, you should remember to keep your pay stubs, 1099s, and other documentation of your income. These items will show you exactly how much you earned and how much you should expect to receive as a refund. By comparing your documentation with your previous tax returns, you should be able to determine if you owe taxes or not. For complicated tax returns, Jariwala recommends hiring a tax professional. To know a bit more about this dependent exemption, visit here at nationaltaxreports.com.
A refund can be delayed, due to a number of reasons, including processing issues and errors. To prevent these delays, make sure to sign up for direct deposit of your tax refund and double-check your return for errors. Once you’ve received your refund, you can use it to pay off debts or put money into your retirement nest egg. If you have a habit of overpaying your taxes, consider updating your W4 to reduce withholdings. This will put more money into your paycheck and help you get a refund if you do owe. You can also try using tax credits to get a refund even when you owe taxes. Some of these credits are refundable and will come in the form of a cash refund.
The Bottom Lines
The IRS rules for qualifying dependents are not particularly complicated. They cover every scenario, from housekeepers to emancipated children. It is also important to note that the child must have some income. In addition, the dependent cannot provide more than half of his or her own annual support. Further, a taxpayer cannot claim a dependent if he or she is a dependent of another taxpayer.