Chapter 3: Exemptions and Dependents

In Chapter 3 of the free tax course, you will learn about exemptions and dependents. There are two types of exemptions for tax purposes; personal exemptions and dependent exemptions. Personal exemptions are easy to identify but dependent exemptions are complicated. There are many tests that a dependent and the person claiming the dependency must meet to claim someone as a dependent on his or her tax return. After this chapter, you will understand the types of exemptions the IRS allows, the qualifying child tests, qualifying relative tests as well as the definition of phase-out of tax exemptions.

Income Tax Exemptions

Personal Tax Exemptions

Exemptions for Dependents

How to Claim Tax Exemption for a Dependent?

Qualifying Child Dependents

Tests for Qualifying Child

Child of Divorced Parents Claim Tax Dependents

IRS Tie Breaker Rule

What is a Qualifying Relative?

Tests for Qualifying Relative Dependents

Children of Divorced or Separated Parents

Summary of Exemptions and Dependents

Phaseout of tax exemptions

The amount you can claim as a deduction for exemptions is phased out once your adjusted gross income or AGI goes above certain level of your tax fling status. You must reduct the dollar amount of your tax exemptions by 2% for each $2,500 or part of $2,500 ($1,250 for married filing separately) that your AGI exceeds the level of your tax filing status. Continue to read the IRS Publicaton 17 for exemtions and dependents information.