Personal Exemptions for Taxpayers Lawyers

What Types of Exemptions Are Available for Taxpayers?

There are three major types of personal exemptions taxpayers may make on their tax return for themselves and the people they know. They are as follows:

Personal exemptions
Spousal exemptions
Dependency exemptions

What Is the Personal Exemption?

The personal exemption is a statutorily determined exemption ($3100 as of 2004) that all taxpayers may make on their tax return from their gross income. Each individual filing by himself supports one personal exemption. As long as a person is not being claimed by someone else as a dependant, they may make this exemption. For young persons, if your parents claim you as a dependant, you may not take this exemption from your income.

What Is a Spousal Exemption?

The spousal exemption is an exemption that a person who is married and has no income but files their taxes separately from their spouse may take. The IRS has decided that since the taxpayer supports that spouse they are entitled to deduct a standardized support cost from their gross income. The amount of deduction changes quite often. Check with you local taxing authority to determine the statutory amount.

What Is the Dependency Exemption?

The dependency exemption is a statutory entitlement which allows a taxpayer to deduct a standardized amount from his tax return each year for the support he offers to his dependants. The specific dollar amount of the statutory entitlement changes almost yearly.

How Many Dependency Exemptions May I Take on My Tax Return Each Year?

Theoretically, there are no limitations on how many dependency exemptions a single taxpayer may take provided that the person they are taking the dependency exemption for meets the statutory test of a dependant.

What Qualifies Someone as a Dependant?

In order to be a dependant and thus be claimed as a dependant, a three part test must be satisfied:

Relationship - Dependent must have a familial relationship to the taxpayer
Support - Dependent must be supported by greater than 50% by the taxpayer
Income - Dependant can't earn more income than the exemption amount (which also changes yearly) -a major exception to the income test exists for college students earning income while also being claimed as a parent's dependant

Should I Contact a Lawyer Regarding my Personal Exemption Questions?

With the plethora of tax software out there, most people are capable of doing their taxes on their own. More sophisticated and more complex tax returns (i.e. those done by business owners) may require more time and perhaps the advice of a lawyer. Additionally, should you have a dispute with the taxing authority about personal exemptions you may need to go to court, and then a lawyer may be required.

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