What Are Personal Tax Exemptions and How do They Work?
Filing your taxes can be stressful and difficult. It can also be expensive if your tax liability is high. However, personal exemptions can help you save money on your taxes. What are personal exemptions and how do they work?
Personal exemptions are designed to reduce the amount of money that you owe at the end of the year. You are allowed one exemption on your taxes for yourself, which equates to a savings of $3,650. You are also allowed an exemption on your taxes for your spouse. In addition, you can take one exemption for each of your qualifying dependents.
However, you cannot simply claim a random number of dependents, such as nieces, nephews, and so on. You need to be able to meet certain criteria
to do this. For instance, you will have to show on your taxes that your dependents lived with you for the duration of the year, that they received less than $3,650 in compensation during that time, and that your dependents are citizens of the US, Canada or Mexico.
You can also claim deductions on your taxes if you helped to support a family member. You can claim this on your taxes if you paid more than ten percent of the person's support, or each contributor who paid more than ten percent agrees that you can claim the exemption on your taxes.
Tax exemptions can be complex, so if you need help filing your taxes, consider using a professional tax preparation service rather than doing it yourself.Source: www.local.com