When preparing your Federal income tax return, there are two different types of exemptions that you may be allowed to claim:
- Personal exemptions for yourself (and your spouse, if applicable)
- Exemptions for qualifying dependents
An exemption is similar to a tax deduction because it lowers your taxable income. Each exemption is worth $3,9000 (for tax year 2013), which means you can deduct $3,900 for each exemption you take.
The amount of your exemption is reduced if your AGI (adjusted gross income) is above a certain level, based on your Federal filing status. For tax year 2013, that level is:
- $150,000 for a married taxpayer filing a separate return
- $250,000 for a single taxpayer
- $275,000 for married taxpayers filing a joint return, or a qualifying widow(er)
You are allowed to claim one personal exemption for yourself and one for your spouse (if you are married). Remember you will need to provide your spouse’s name and Social Security Number (SSN) on your tax return.
Note that if you can be claimed as a dependent on another person’s tax return, you cannot claim a personal exemption for yourself (because then the IRS would essentially be counting you twice). This applies even if the other taxpayer does not actually claim you as a dependent on their return. Additionally, if you can be claimed as a dependent on someone else’s tax return, you are not allowed to claim anyone else as a dependent.
You are allowed to claim one exemption for each of your dependents. A dependent is defined as a qualifying child or qualifying relative, and can be determined though various dependency tests.
For example, in order to qualify as your dependent, you must have provided at least half of that person’s financial support during the tax year. If you are claiming a dependent child, he/she must be under the age of 19 (as of the last day of the tax year), or under age 24 if they are a student. If you are claiming a dependent relative, his/her annual income cannot be more than the exemption amount ($3,900).
For more information about claiming personal and dependent exemptions, see IRS Publication 501 (Exemptions, Standard Deduction, and Filing Information).