Tax Exemptions for 1040 Taxpayer Flashcards
How much exemption can the taxpayer take for someone born or dies during the year?
Takes the full exemption for that dependent and/or spouse
What exactly are exemptions? Are they the same as deductions?
A form of a tax break. Exemptions are NOT deductions, even though they both reduce your taxable income.
Criteria for Qualifying Relative to take the exemption on your tax return
Must be citizen of North America (Canada, US, or Mexico)
Same “relative” test as the test for medical expenses paid for another person:
If the person is your mother/father or CLOSER than a cousin, no need to live with you.
Otherwise, must live w/ you.
Must provide >50% support to that person
Cannot earn more than the Personal Exemption amount (Social Security does not count as income)
Married Filing Jointly
Must be married at end of year
if spouse dies, must still be married to that dead spouse at the end of year.
Head of Household
Has a dependent child
Provides >50% support
Lives with taxpayer for >50% of the year
Qualifying Widower
Has a dependent child (lived w/ you full time & paid for principal home)
Gets MFJ status for year of death + 2 tax years
What can be done if your spouse refuses to sign a joint return with you?
File a separate tax return for yourself. Can claim an exemption for your spouse as long as s/he is not claimed as dependent on anyone else’s tax return.
Qualifying Dependent Child
Must be resident of North America (Canada, Mexico, USA)
<24 yr old and in college
Can a taxpayer’s spouse be a dependent?
Never, simply as a PERSONAL exemption when filed jointly
In 2014, Sam provided > 50% support for his wife, his father’s brother, and his cousin. Sam’s wife was the only relative who was a member of Sam’s household. None of the relatives had income, nor did any of them file a tax return. All are US citizens. Which of these relatives can be claimed as a dependent on Sam’s 2014 tax return?
Only the uncle aka “his father’s brother” b/c IRC sees that as a relationship at the same level as father/mother/brother/sister. Cousin falls outside of that boundary.
The wife is only a PERSONAL exemption, not a dependent.
Multiple support agreement - who gets to claim the dependency exemption?
Qualified relative who provided the most support, even if it is less than 50%.
