If you prepare your own income taxes, this article will provide a simple solution for claiming tax exemptions for your dependents.
First, know that an exemption is an amount of money you can subtract from your Adjusted Gross Income. When you add a new child to your family, you can add one more exemption to your income taxes — called a “dependent exemption.” This means that you get an additional tax deduction every year until your child turns 19.
In terms of actual tax savings, the amount you save with the dependent exemption depends on your tax bracket. The higher your tax bracket, the more savings you get. For taxpayers in the 28% tax bracket, the dependent exemption would save you significantly more, than taxpayers in the 10% bracket.
There is a phase-out on the dependent exemption that applies once adjusted gross income (AGI) exceeds $254,200 (single), $305,050 (married filing jointly). Taxpayers are entitled to a personal exemption and for all the dependents they support.
On your 2014 tax return, you can claim a $3,950 exemption for each qualifying child, which may include your child or stepchild, foster child, sibling or step-sibling, or descendants of any of these, such as your grandchild. To qualify for the exemption, the child must live with you more than half of the year and be under 19 at the end of the year, or under 24 and a full-time student for the year (defined as attending school for at least part of five calendar months during the year).
If you file your taxes and wind up owing more than you are able to pay, Biz2Credit can help you take care of your tax obligation. Visit https://www.biz2credit.com and someone with expertise will be ready to guide you.