Portland and La Grande: (541) 786-6989 Call Now
Email: Steven@BerleyCPA.com or Tom@BerleyCPA.com
Get Help
toggle menu
Portland and La Grande: (541) 786-6989 Call Now
Email: Steven@BerleyCPA.com or Tom@BerleyCPA.com
Get Help
toggle menu

How Exemptions and Dependents Can Reduce Taxable Income

Most taxpayers can claim an exemption for themselves and reduce their taxable income on their tax return. They may also be able to claim an exemption for each of their dependents. Each exemption normally allows them to deduct $4,050 on their 2016 tax return. Here are seven key points to keep in mind on dependents and exemptions:

  1. Personal Exemptions. Taxpayers can usually claim exemptions for themselves and their spouses on a jointly filed tax return. For married taxpayers filing separate returns, an exemption can only be claimed for a spouse if that spouse:
  • Had no gross income,
  • Is not filing a tax return, and
  • Was not the dependent of another taxpayer.
  1. Exemptions for Dependents. A dependent is either a child or a relative who meets a set of tests. Taxpayers can normally claim dependents as exemptions. List a Social Security number for each dependent. For more on these rules, see IRS Publication 501, Exemptions, Standard Deduction and Filing Information.
  2. No Exemption on Dependent’s Return.If a taxpayer can claim a person as a dependent, then that dependent cannot claim a personal exemption on his or her own tax return. This is true even if no one claims that person on a tax return.
  3. Dependents May Have to File.A dependent may have to file a tax return. This depends on certain factors like total income, whether they are married and if they owe certain taxes.
  4. Exemption Phase-Out. Taxpayers earning above a certain amount will lose part or all the $4,050 exemption. See Publication 501 for details

Email

Steven@BerleyCPA.com,
Emails will be returned within 24 hours

Email
Oregon Phone:

(541) 786-6989

7 days a week: 9-6pm

Call Now

Get Help

If you would like to further discuss your situation, reach Mr. Berley anytime at (541) 786-6989

Steven BerleyFinance Specialist
Get Help