6 Tax Rules to Know When Claiming Dependents and Exemptions

by Lynnette Khalfani-Cox, The Money Coach on January 18, 2012

in Taxes


When you’re filing your federal income tax return, you undoubtedly want to pay the least amount of money possible to Uncle Sam.

One effective way to minimize your taxes is by claiming various dependents and exemptions on your income taxes.

Claiming the right number of dependents and exemptions can sometimes save you hundreds, or possibly even thousands of dollars in taxes owed.

But as juicy as these tax perks are, you still have to be careful that you don’t run afoul of the law and improperly claim dependents or take exemptions to which you’re not entitled.

To keep you on the straight and narrow, the IRS offers these six tax tips about claiming dependents and exemptions. Keep this advice handy when you, or the tax preparer you choose, are completing your 1040 tax returns:

1. Exemptions reduce your taxable income.

There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,700 on your 2011 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 and any special taxes you owe. 

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. 

6. Some people cannot be claimed as your dependent.

Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent. That publication is available at www.irs.gov or you can order it by calling 800-TAX-FORM (800-829-3676).

Have more questions about dependents and exemptions? You can also use ITA, the Interactive Tax Assistant, at www.irs.gov to determine who you can claim as a dependent and how much you can deduct for each exemption you claim.

And remember, even though your individual tax return is unique and different from the next person’s, the rules listed above about dependents and exemptions affect every single individual filing a federal income tax return. By following these rules, you’ll help avoid any problems with your tax returns, and prevent the IRS from challenging any dependents or exemptions you may claim.

Related Questions:

  • what happens if you claim 2 dependents on your taxes
  • how does number of dependents affect taxes
  • how much does claiming a dependent save on taxes
  • claiming 6 exemptions
  • how much will claiming 2 dependents
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Lynnette Khalfani-Cox, The Money Coach

Personal Finance Expert and Co-Founder at Ask The Money Coach.com
Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.

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