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Five Important Facts about Dependents and Exemptions

January 11, 2011

Some tax rules affect every person who may have to file a federal income tax return – these rules include dependents and exemptions. Here are six important facts you should know about dependents and exemptions that will help you file your 2010 tax return.

1.     Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,650 on your 2010 tax return.

2.     Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.

3.     Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the social security number of any dependent for whom you claim an exemption.

4.     If someone else claims you as a dependent, you may still be required to file your own tax return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and any advance Earned Income Tax Credit payments you received.

5.     If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.

Sources:
IRS.com

Clergy Financial Resources
http://www.clergytaxnet.com

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.

To learn more about our services, please visit the links below:

Tax Preparation
http://www.clergytaxnet.com/taxprep.htm

Mortgage Financing
http://www.clergytaxnet.com/clergy_financial_mortgage.htm

Church Payroll
http://www.clergytaxnet.com/payroll/churchpayroll.html

Clergy/Church Tax Law Products
http://www.clergytaxnet.com/online_store.htm

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