Personal Exemptions and Dependents
The amount you can deduct for each exemption has increased from $2,900 in 2001 to $3,000 in 2002.
You will lose all or part of the benefit of your exemptions if your adjusted gross income is above a certain amount. The amount at which this
phaseout begins depends on your filing status. For 2002, the phaseout begins at $103,000 for married persons filing separately, $137,300 for unmarried
individuals, $171,650 for heads of household, and $206,000 for married persons filing jointly. See Phaseout of Exemptions, later.
This chapter discusses exemptions. The following topics will be explained.
- Personal exemptions - You generally can take one for yourself and, if you are married, one for your spouse.
- Exemptions for dependents - You must meet five exemption tests for each exemption you claim. If you are entitled to claim an exemption
for a dependent, that dependent cannot claim a personal exemption on his or her own tax return.
- Phaseout of exemptions - You get less of a deduction when your adjusted gross income goes above a certain amount.
- Social security number (SSN) requirement for dependents - You must list the social security number of any dependent for whom you claim
Exemptions reduce your taxable income. Generally, you can deduct $3,000 for each exemption you claim in 2002. But, you may lose the benefit of part
or all of your exemption if your adjusted gross income is above a certain amount. See Phaseout of Exemptions, later.
How you claim an exemption.
How you claim an exemption on your tax return depends on which form you file.
If you file Form 1040EZ, the exemption amount is combined with the standard deduction amount and entered on line 5.
If you file Form 1040A or Form 1040, follow the instructions for the form. The total number of exemptions you can claim is the total in
the box on line 6d. Also complete line 26 (Form 1040A) or line 40 (Form 1040) by multiplying the total number of exemptions shown in the box on line
6d by $3,000.
If your adjusted gross income is more than $103,000, see Phaseout of Exemptions, later.
Useful Items You may want to see:
Exemptions, Standard Deduction, and Filing Information
Form (and Instructions)
Multiple Support Declaration
Release of Claim to Exemption for Child of Divorced or Separated Parents
There are two types of exemptions: personal exemptions and exemptions for dependents. While these are both worth the same amount, different rules
apply to each type.
You are generally allowed one exemption for yourself and, if you are married, one exemption for your spouse. These are called personal exemptions.
Your Own Exemption
You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer.
If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself. This is true even if the other taxpayer
does not actually claim your exemption.
If you file a joint return, you can take your own exemption. If you file a separate return, you can take your own exemption only if another
taxpayer is not entitled to claim you as a dependent.
Your Spouse's Exemption
Your spouse is never considered your dependent. You may be able to take one exemption for your spouse only because you are married.
On a joint return you can claim one exemption for yourself and one for your spouse.
If you file a separate return, you can claim the exemption for your spouse only if your spouse had no gross income and was not the
dependent of another taxpayer. This is true even if the other taxpayer does not actually claim your spouse's exemption. This is also true if your
spouse is a nonresident alien.
Death of spouse.
If your spouse died during the year, you can generally claim your spouse's exemption under the rules just explained under Joint return
and Separate return.
If you remarried during the year, you cannot take an exemption for your deceased spouse.
If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed as an exemption on both the
final separate return of your deceased spouse and the separate return of your new spouse for that year. If you file a joint return with your new
spouse, you can be claimed as an exemption only on that return.
Divorced or separated spouse.
If you obtained a final decree of divorce or separate maintenance by the end of the year, you cannot take your former spouse's exemption. This rule
applies even if you provided all of your former spouse's support.
Exemptions for Dependents
You are allowed one exemption for each person you can claim as a dependent. To claim the exemption for a dependent, you must meet all five
of the dependency tests, discussed later. You can claim an exemption for your dependent even if your dependent files a return. But that
dependent cannot claim his or her own personal exemption if you are entitled to do so. However, see Joint Return Test, later in this
You may be eligible to claim the exemption for a child, even if the child has been kidnapped. For more information, see Publication 501.
Child born alive.
If your child was born alive during the year, and the dependency tests are met, you can claim the exemption. This is true even if the child lived
only for a moment. State or local law must treat the child as having been born alive. There must be proof of a live birth shown by an official
document, such as a birth certificate.
You cannot claim an exemption for a stillborn child.
Death of dependent.
If your dependent died during the year and otherwise met the dependency tests, you can claim the exemption for your dependent.
Your dependent mother died on January 15. The five dependency tests are met. You can claim the exemption for her on your return.
Housekeepers, maids, or servants.
If these people work for you, you cannot claim exemptions for them.
Child tax credit.
You may be entitled to a child tax credit for each of your qualifying children for whom you can claim an exemption. For more information, see
The following five tests must be met for you to claim an exemption for a dependent.
- Member of Household or Relationship Test.
- Citizen or Resident Test.
- Joint Return Test.
- Gross Income Test.
- Support Test.
Member of Household or Relationship Test
To meet this test, a person must either:
- Live with you for the entire year as a member of your household, or
- Be related to you in one of the ways listed later under Relatives who do not have to live with you.
If at any time during the year the person was your spouse, that person cannot be your dependent. However, see Personal Exemptions,
A person lives with you as a member of your household even if either (or both) of you are temporarily absent due to special circumstances.
Temporary absences due to special circumstances include absences because of illness, education, business, vacation, or military service.
If the person is placed in a nursing home for an indefinite period of time to receive constant medical care, the absence is considered temporary.
Death or birth.
A person who died during the year, but was a member of your household until death, will meet the member of household test. The same is true for a
child who was born during the year and was a member of your household for the rest of the year. The test is also met if a child would have been a
member except for any required hospital stay following birth.
Local law violated.
A person does not meet the member of household test if at any time during your tax year the relationship between you and that person violates local
Relatives who do not have to live with you.
A person related to you in any of the following ways does not have to live with you for the entire year as a member of your household to meet this
- Your child, grandchild, great grandchild, etc. (a legally adopted child is considered your child).
- Your stepchild.
- Your brother, sister, half brother, half sister, stepbrother, or stepsister.
- Your parent, grandparent, or other direct ancestor, but not foster parent.
- Your stepfather or stepmother.
- A brother or sister of your father or mother.
- A son or daughter of your brother or sister.
- Your father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law.
Any of these relationships that were established by marriage are not ended by death or divorce.
Even if your adoption of a child is not yet final, the child is considered to be your child if he or she was placed with you for legal adoption by
an authorized placement agency. Also, the child must have been a member of your household. An authorized placement agency includes any person
authorized by state law to place children for legal adoption.
If the child was not placed with you by an authorized placement agency, the child will meet this test only if he or she was a member of your
household for your entire tax year.
A foster child must live with you as a member of your household for the entire year to qualify as your dependent. For this test, a foster child is
one who is in your care that you care for as your own child. It does not matter how the child became a member of the household.
You can claim an exemption for your cousin only if he or she lives with you as a member of your household for the entire year. A cousin is a
descendant of a brother or sister of your father or mother.
If you file a joint return, you do not need to show that a person is related to both you and your spouse. You also do not need to show that a
person is related to the spouse who provides support.
For example, your spouse's uncle who receives more than half his support from you may be your dependent, even though he does not live with you.
However, if you and your spouse file separate returns, your spouse's uncle can be your dependent only if he is a member of your household
and lives with you for your entire tax year.
Citizen or Resident Test
To meet the citizen or resident test, a person must be a U.S. citizen or resident, or a resident of Canada or Mexico, for some part of the calendar
year in which your tax year begins.
Children's place of residence.
Children usually are citizens or residents of the country of their parents.
If you were a U.S. citizen when your child was born, the child may be a U.S. citizen although the other parent was a nonresident alien and the
child was born in a foreign country. If so, and the other dependency tests are met, you can take the exemption. It does not matter if the child lives
abroad with the nonresident alien parent.
If you are a U.S. citizen who has legally adopted a child who is not a U.S. citizen or resident, and the other dependency tests are met, you can
take the exemption if your home is the child's main home and the child is a member of your household for your entire tax year.
Foreign students' place of residence.
Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary
period generally are not U.S. residents and do not meet the citizen or resident test. You cannot claim exemptions for them. However, if you provided a
home for a foreign student, you may be able to take a charitable contribution deduction. See Expenses Paid for Student Living With You in
Joint Return Test
Even if the other dependency tests are met, you are generally not allowed an exemption for your dependent if he or she files a joint return.
You supported your daughter for the entire year while her husband was in the Armed Forces. The couple files a joint return. Even though all the
other tests are met, you cannot take an exemption for your daughter.
The joint return test does not apply if a joint return is filed by the dependent and his or her spouse merely as a claim for refund and no tax
liability would exist for either spouse on separate returns.
Your son and his wife each had less than $3,000 of wages and no unearned income. Neither is required to file a tax return. Taxes were taken out of
their pay, so they file a joint return to get a refund. You are allowed to take exemptions for your son and daughter-in-law if the other dependency
tests are met, even though they can also claim their personal exemptions on their joint return.
Gross Income Test
Generally, you cannot take an exemption for a dependent if that person had gross income of $3,000 or more for 2002. This test does not apply if the
person is your child and is either:
- Under age 19 at the end of the year, or
- A student under age 24 at the end of the year.
The exceptions for children under age 19 and students under age 24 are discussed in detail later.
If you file on a fiscal year basis, the gross income test applies to the calendar year in which your fiscal year begins.
Gross income defined.
All income in the form of money, property, and services that is not exempt from tax is gross income.
In a manufacturing, merchandising, or mining business, gross income is the total net sales minus the cost of goods sold, plus any miscellaneous
income from the business.
Gross receipts from rental property are gross income. Do not deduct taxes, repairs, etc., to determine the gross income from rental property.
Gross income includes a partner's share of the gross, not a share of the net, partnership income.
Gross income also includes all unemployment compensation and certain scholarship and fellowship grants. Scholarships received by degree candidates
that are used for tuition, fees, supplies, books, and equipment required for particular courses are not included in gross income. For more
information, see chapter 13.
Tax-exempt income, such as certain social security payments, is not included in gross income.
For this gross income test, gross income does not include income received by a permanently and totally disabled individual for services performed
at a sheltered workshop. The availability of medical care must be the main reason the individual is at the workshop. Also, the income must come solely
from activities at the workshop that are incident to this medical care. A sheltered workshop is a school operated by certain tax-exempt organizations,
or by a state, a U.S. possession, a political subdivision of a state or possession, the United States, or the District of Columbia, that provides
special instruction or training designed to alleviate the disability of the individual.
For purposes of the gross income test, your child is your son, stepson, daughter, stepdaughter, a legally adopted child, or a child who was placed
with you by an authorized placement agency for your legal adoption. A foster child who was a member of your household for your entire tax year is also
considered your child.
Child under age 19.
If your child is under 19 at the end of the year, the gross income test does not apply. Your child can have any amount of income and you can still
claim an exemption if the other dependency tests, including the support test, are met.
Marie, 18, earned $4,000. Her father provided more than half her support. Because Marie is under 19, the gross income test does not apply. If the
other dependency tests were met, Marie's father can claim an exemption for her.
Student under age 24.
The gross income test does not apply if your child is a student who is under age 24 at the end of the calendar year. The other dependency tests
must still be met.
To qualify as a student, your child must be, during some part of each of 5 calendar months during the calendar year (not necessarily consecutive):
- A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance,
- A student taking a full-time, on-farm training course given by a school described in (1) above or a state, county, or local government.
Full-time student defined.
A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance.
The term school includes elementary schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical
schools. It does not include on-the-job training courses, correspondence schools, and night schools.
James, 22, attends college as a full-time student. During the summer, James earned $4,000. If the other dependency tests are met, his parents can
take the exemption for James.
Vocational high school students.
People who work on co-op jobs in private industry as a part of the school's prescribed course of classroom and practical training are
considered full-time students.
Your child is not a full-time student while attending school only at night. However, full-time attendance at a school can include some attendance
at night as part of a full-time course of study.