Tax Prep Explained: Dependents and Exemptions
January 16, 2012 | 
Subscribe to our RSS Feed
The IRS has a couple important rules to help you understand “dependents” and “exemptions.” These will guide you when you are filing your 2011 individual tax return.
- Exemptions directly reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for each person you can claim as a dependent. You can claim a personal exemption for yourself as long as no one else is claiming you as a dependent. In 2011, you can deduct $3,700 for each exemption.
- What about my spouse? When filing jointly, you can generally claim an exemption for both yourself and your spouse. If you are filing separately however, you can only claim an exemption for your spouse if he/she had no gross income and was not a dependent of another taxpayer.
- What is a “dependent”? Generally, you can claim an exemption for EACH of your dependents. A dependent is a qualifying child or relative. You can find more information about what qualifies a person as a dependent in this IRS publication. Generally, you cannot claim a married person as dependent if they file jointly, and there are residency requirements, with certain exceptions for adopted children.
- Do “dependents” have to file a tax return? The answer is “sometimes.” Just because someone claims you as a dependent, does not mean you won’t be required to file a personal tax return. It depends on your income level and marital status.
- Dependent and exemption don’t mix. If someone else, like a parent, claims you as a dependent, you MAY NOT claim your personal exemption.
Glass Jacobson’s Tax Team doesn’t just report your taxes, we serve as your advisor to influence your overall tax picture and understand the tax implications of every financial move you make. If you have questions, or want “second opinion” on your tax strategy to make sure you are capitalizing on all opportunities, contact us.
Your Investments: 4th Quarter Recap and Some Perspective
January 9, 2012 | Subscribe to our RSS Feed
Anxiety over recent market developments is completely understandable, and it is quite human to feel concerned about events in Europe. But amid all the bad news, it is also clear that the world is changing in positive ways that provide plenty of cause for hope and, at the very least, gratitude for what we already have.
If you have questions about your investments, or want to discuss your financial plan, contact us today. The beginning of the year is a good time to set some goals!
Tax Changes in 2012
January 4, 2012 | Subscribe to our RSS Feed
Here are a few changes you should be aware of taking place in 2012 when thinking about filing your individual return:
- Unless Congress institutes another “patch,” we will see reduced alternative minimum tax exemption amounts. Beginning in 2012, AMT exemption amounts revert to the much lower “permanent” amounts: $33,750 for unmarried taxpayers, $45,000 for joint filers and $22,500 for marrieds filing separately. What is the AMT and what does this change mean to you?
- The adoption credit will go down in 2012, to $12,650 (from $13,360 in 2011)
- Beginning in 2012, U.S. taxpayers with specified foreign financial assets will be required to report these assets to the IRS on Form 8938 (if the aggregate value exceeds $50,000).
Some of these changes may be affected by new legislation, so we’ll be sure to keep you posted. Meanwhile, start watching for your tax documents, and if you have any questions about filing your 2011 individual return, contact us!