Top 3 Tax Facts About Exemptions and Dependents

Nearly everyone can claim an exemption on their tax return. It usually lowers your taxable income. In most cases, that reduces the amount of tax you owe for the year. Here are some facts about exemptions to help you file your tax return.

E-file your tax return.  Filing electronically is the easiest way to file a complete and accurate tax return. The software that you use to e-file will help you determine the number of exemptions that you can claim. E-file options include free Volunteer Assistance, IRS Free File, commercial software and professional assistance.

Exemptions cut income.  There are two types of exemptions. The first type is a personal exemption. The second type is an exemption for a dependent. You can usually deduct $3,950 for each exemption you claim on your 2014 tax return.

Personal exemptions. You can usually claim an exemption for yourself. If you’re married and file a joint return, you can claim one for your spouse, too. If you file a separate return, you can claim an exemption for your spouse only if your spouse:
• had no gross income,
• is not filing a tax return, and
• was not the dependent of another taxpayer

The IRS has posted additional tax facts re dependents.  Please visit:  http://www.irs.gov/uac/Top-10-Tax-Facts-about-Exemptions-and-Dependents

Davis and Hodgdon Associates CPAs has been assiting nonprofits, individuals and businesses with tax, accounting, and financial planning services in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].