How much of a tax deduction does the IRS allow for tax exemptions?
learn more about Dependents and Exemptions

Personal tax exemptions reduce your taxable income on your tax return. Each personal tax exemption you claim on your tax return is the equivalent of a $3,700 tax deduction. Generally, you are allowed one tax exemption for yourself and, if you are married, one tax exemption for your spouse, and, if you have dependents, one tax exemption for each dependent on your tax return.

You have to be married on the last day of the tax year to claim a tax exemption for your spouse on your tax return. If your child was born alive on or before December 31st, and all five of the tax exemption tests are met, you can take a dependency tax exemption on your tax return. You can also take the Child Tax Credit on your tax return.

The table below shows your allowed tax deduction based on the number of your tax exemptions on your tax return.
 

Number of Exemptions

Allowed Deduction

Number of Exemptions

Allowed Deduction

1

$3,700

3

$11,100

2

$7,400

4

$14,800

5

$18,500

   
You are allowed one tax exemption for each person you can claim as a dependent on your tax return. In order to claim a dependent on your tax return there are five tests you must meet:

 

Member of Household or Relationship Test

 

Gross Income Test

 

Support Test

 

Joint Return Test

 

Citizenship Test

A person qualifying as your dependent:

 

generally may be your child, stepchild, adopted child, grand child, great-grand child, son or daughter in law, father or mother in law, brother or sister in law, parent, brother, sister, grand parent, step-parent, stepbrother or sister, half brother or sister, and, if related by blood, uncle, aunt, niece, or nephew. The above relatives do not have to live with you.
Also, any person, whether or not you are related to them, who is a member of your household for the entire tax year, except for temporary absences;

 

 

must receive less than $3,700 of gross income unless the dependent is your child and either under age 19 or a full-time student under age 24;

 

must receive more than one-half of his or her support from you;

 

cannot file a joint tax return with his or her spouse, unless the joint tax return is filed solely to obtain a tax refund when neither the child nor the spouse is required to file a tax return; and

 

must be a U.S. citizen or national, or a resident of the U.S., Canada, or Mexico.

A child who is paying more than one-half of his or her own support may not be claimed as a dependent and you cannot take a tax exemption on your tax return.

To claim dependency tax exemptions for any child on your tax return, the child must have a Social Security or taxpayer identification number. A taxpayer identification number can be obtained by filing Form SS-5 with your local Social Security Administration office. An original birth certificate and one other document certifying the child's identity must be provided. It takes approximately two weeks to receive a Social Security or taxpayer identification number.

Divorce or Separation
The parent who has custody of the child for the greater part of the tax year generally may claim the child as a dependent on his/her tax return, regardless of who provides more financial support. This rule does not apply if:

 

the custodial parent gives up the tax deduction by signing a written declaration stating that he or she will not claim the child as a dependent on his/her tax return, and the non-custodial parent attaches this statement to his/her tax return;

 

there is a written agreement executed before 1985 specifying that the non-custodial parent gets the tax deduction on his/her tax return, and that parent provides at least $600 of support; or

 

a multiple-support agreement is in effect.

Multiple Support Agreements

Family circumstances are often more complex than one taxpayer providing support for a dependent. The law provides for multiple-support agreements. These multiple-support agreements usually exist when a family group collectively supports a relative, oftentimes a parent.

You can claim the dependent as a tax exemption on your tax return if:

 

you paid more than 10% of the support;

 

the amount paid by you and others for the dependent's support is more than one half the support;

 

each contributor could have claimed the tax exemption on his/her tax return, except that each gave less than one half of the support;

 

each contributor who paid more than 10% agrees that you can take the tax exemption on your tax return.

Each contributor must sign a Multiple Support Agreement, Form 2120. You then attach them to your tax return. A different person can claim the tax exemption on his/her tax return each tax year.

 

 

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