1. Personal Exemptions

2. Objectives Distinguish between personal and dependency exemptions Determine if a taxpayer can claim a personal exemption Determine how many personal exemptions a taxpayer can claim

3. What are Exemptions? An exemption is a dollar amount that can be deducted from an individual's total income which reduces the taxpayer's taxable income. Taxpayer's can claim to types of exemptions: Personal Exemptions, taxpayers can claim themselves and possibly their spouse. AND Dependency Exemptions, any qualifying dependents.

4. Taxpayer The taxpayer can claim a personal exemption if they answer no to the intake question, "Can anyone claim you or your spouse on their tax return?" Taxpayers who can be claimed as a dependent must claim "0" exemptions. This means they will not be able to subtract the exemption amount from their gross income and may need to use a smaller standard deduction amount.

5. Spouses Spouse is never considered a dependent of the other spouse. Taxpayers may be able to claim a personal exemption for their spouse if they are married but must meet the following conditions: Married as of December 31 of the tax year, AND Spouse cannot be claimed as a dependent on another person's tax return, AND Files a joint return, or files a separate return and the spouse had no income and is not filing a return. If married taxpayers file a joint return. they are allowed to take the personal exemption for each spouse. If they file separate returns, they each take a personal exemption for themselves. Girlfriends and boyfriends CANNOT be claimed as a spouse.

6. True or False The taxpayer can claim his girlfriend as a spouse on his tax return.

7. Answer FALSE Why?: A taxpayer CANNOT claim their boyfriend/girlfriend as a spouse because they are not legally married. Therefore, the taxpayer’s filing status is SINGLE. However, a taxpayer can claim their boyfriend/girlfriend as a dependent if he/she passes the dependency test. (Refer to Tables 1 & 2 pgs C-4 & C-5 in Publication 4012)

8. Deceased Spouses A taxpayer whose spouse died during the tax year can claim the personal exemption for the deceased spouse, if the following conditions are met: Taxpayer did not remarry by December 31 of the tax year, AND Was not divorced or legally separated from their spouse on the date of death, AND Would have been able to claim the exemption under the rules for a joint or separate return.

9. True or False? The taxpayer's spouse can be claimed as a dependency exemption.

10. Answer FALSE Why?: A taxpayer can claim the spouse as a personal exemption but NOT as a dependency exemption.

11. Jenny married Rick in April of the tax year. Neither can be claimed as a dependent on another's tax return. Both worked and earned gross income for the year. Can they claim both of their personal exemptions on their joint tax return? Test Your Knowledge

12. Answer YES Why? Married taxpayers filing a joint return can claim two personal exemptions, one for each spouse.

13. Line 6a and 6b of Form 1040 Exemptions are claimed on Form 1040 line 6.