Publication 504 |
2001 Tax Year |
Exemptions
Generally, you can deduct $2,900 for each exemption you claim in
2001. However, if your adjusted gross income is more than $99,725, see
Phaseout of Exemptions, later.
There are two types of exemptions: personal exemptions and
exemptions for dependents. If you are entitled to claim an exemption
for a dependent (such as your child), that dependent cannot claim his
or her personal exemption on his or her own tax return.
Personal Exemptions
You can claim your own exemption unless someone else can claim it.
If you are married, you may be able to take an exemption for your
spouse. These are called personal exemptions.
Exemption for Your Spouse
Your spouse is never considered your dependent. You may be able to
take an exemption for your spouse only because you are married.
Joint return.
On a joint return, you can claim one exemption for yourself and one
for your spouse.
If your spouse had any gross income, you can claim his
or her exemption only if you file a joint return.
Separate return.
If you file a separate return, you can take an exemption for your
spouse only if your spouse had no gross income and was not
the dependent of another taxpayer. If your spouse is the dependent of
another taxpayer, you cannot claim an exemption for your spouse even
if the other taxpayer does not actually claim your spouse's exemption.
Alimony paid.
If you paid alimony to your spouse, you cannot take an exemption
for your spouse. This is because alimony is gross income to the spouse
who received it.
Divorced or separated spouse.
You cannot take an exemption for your former spouse for the year in
which you were divorced or legally separated under a final decree.
This rule applies even if you paid all your former spouse's support
that year.
Exemptions for Dependents
You can take an exemption for each person who meets all five
of the dependency tests discussed later.
If you can claim an exemption for your dependent, the dependent
cannot claim his or her own exemption on his or her own tax return.
This is true even if you do not claim the dependent's exemption on
your return or if the exemption will be reduced or eliminated under
the phaseout rule for high-income individuals.
Dependency Tests
The following five tests must be met for you to claim an exemption
for a person (dependent) other than yourself or your spouse.
- Member of Household or Relationship Test.
- Citizen or Resident Test.
- Joint Return Test.
- Gross Income Test.
- Support Test.
1. Member of Household
or Relationship Test
To meet this test, the person must either:
- Be related to you, or
- Live with you for the entire year as a member of your
household.
Related.
A person related to you in any of the following ways meets this
test even if he or she did not live with you for the entire year as a
member of your household.
Child |
Stepmother |
Stepchild |
Stepfather |
Mother |
Mother-in-law |
Father |
Father-in-law |
Grandparent |
Brother-in-law |
Great-grandparent |
Sister-in-law |
Brother |
Son-in-law |
Sister |
Daughter-in-law |
Grandchild |
If related by blood: |
Great-grandchild |
Uncle |
Half-brother |
Aunt |
Half-sister |
Nephew |
Stepbrother |
Niece |
Stepsister |
|
Any relationships that have been established by marriage are
not considered ended by death or divorce.
Child.
Your child is:
- Your son, daughter, stepson, stepdaughter, or legally
adopted son or daughter,
- A child who lived with you in your home as a member of your
family, if placed with you by an authorized placement agency for legal
adoption, or
- A foster child (any child who lived with you in your home as
a member of your family for the entire year).
Authorized placement agency.
An authorized placement agency includes any person authorized by
state law to place children for legal adoption.
Member of household.
If the person is not related to you, he or she must have lived in
your home as a member of your household for the entire year (except
for temporary absences, such as for vacation or school). A person is
not a member of your household if at any time during your tax year the
relationship between you and that person violates local law.
2. 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 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, the child is your dependent
and you may take the exemption. It does not matter if the child lives
abroad with the nonresident alien parent.
Special rule for your adopted child.
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 the entire year.
3. Joint Return Test
Even if the other dependency tests are met, you are generally not
allowed an exemption for a person other than yourself or your spouse
if he or she files a joint return. However, this test does not apply
if a joint return is filed by a dependent and his or her spouse merely
as a claim for refund and no tax liability would exist for either
spouse on separate returns.
4. Gross Income Test
Generally, you cannot take an exemption for a person other than
yourself or your spouse if that person had gross income of $2,900 or
more for the year. All income in the form of money, property, and
services that is not exempt from tax is gross income. Gross income
does not include nontaxable income, such as welfare benefits or
nontaxable social security benefits.
Special rules for your child.
The gross income test does not apply if your child:
- Is under age 19 at the end of the year, or
- Is a student under age 24 at the end of the year.
Child.
See 1. Member of Household or Relationship Test,
earlier, for the definition of "child."
Student.
To qualify as a student, your child must be, during some part of
each of 5 calendar months during the year (not necessarily
consecutive):
- A full-time student at a school that has a regular teaching
staff and course of study, and a regularly enrolled body of students
in attendance, or
- A student taking a full-time, on-farm training course given
by a school described in (1) above or by a state, county, or local
government.
A full-time student is one 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, or night schools.
5. Support Test
You must provide more than half of a person's total support for the
calendar year to meet the support test. If you file a joint return,
the support could have come from you or your spouse. Even if you did
not provide over half the person's support, you will be treated as
having provided over half the support if you meet the tests explained
later under Multiple Support Agreement.
If you are divorced or separated and you or the other parent, or
both together, provided over half your child's support for the year,
the support test for your child may be based on a special rule. See
Support Test for Children of Divorced or Separated Parents,
later.
In figuring total support, you must include money the person
provided for his or her own support, even if this money was not
taxable (for example, gifts, savings, and welfare benefits). If your
child was a student, do not include amounts he or she received as
scholarships while a full-time student.
Support includes food, a place to live, clothes, medical and dental
care, recreation, and education. In figuring support, use the actual
cost of these items. However, the cost of a place to live is figured
at its fair rental value.
Support does not include income tax, social security and Medicare
taxes, premiums for life insurance, or funeral expenses.
Joint ownership of home.
If the person lives with you in a home that is jointly owned by you
and your spouse or former spouse, and each of you has the right to use
and live in the home, each of you is considered to provide half of the
person's lodging. However, if your decree of divorce gives only you
the right to use and live in the home, you are considered to provide
the person's entire lodging. This is true even though legal title to
the home remains in the names of both you and your former spouse.
Capital items.
You must include capital items such as a car or furniture in
figuring support, but only if they were actually given to, or bought
by, the person for his or her use or benefit. Do not include the cost
of a capital item for the use or benefit of other members of the
household. For example, include in support a bicycle purchased by and
used solely by the person for transportation; do not include a lawn
mower you purchase that is occasionally used by the person.
Support Test for Child of Divorced or Separated Parents
The support test for a child of divorced or separated parents is
based on the special rule explained here and in Figure 1.
However, the special rule applies only if the parents meet all
three of the following requirements.
- The parents are:
- Divorced or legally separated under a decree of divorce or
separate maintenance,
- Separated under a written separation agreement, or
- Lived apart at all times during the last 6 months of the
calendar year.
- One or both parents provide more than half the child's total
support for the calendar year.
- One or both parents have custody of the child for more than
half the calendar year.
Figure 1. Support test for child of divorced or separated parents
The special rule does not apply if:
- The child's support is determined under a multiple support
agreement discussed later, or
- The child's parents never married each other.
Child is defined earlier under 1. Member of
Household or Relationship Test.
Support provided by others.
Support provided to a child of a divorced or separated parent by a
relative or friend is not included as support provided by the parent.
However, if you remarried, the support your new spouse provided is
treated as provided by you.
Example 1.
You are divorced. During the whole year, you and your child lived
with your mother in a house she owns. You must include your child's
share of the fair rental value of the home in figuring total support,
but not as part of the support provided by you.
Example 2.
You have two children from a former marriage who lived with you.
You remarried and lived in a home owned by your present spouse. Your
child's share of the fair rental value of the home is treated as
provided by you.
Custodial parent.
Under the special rule, the parent who had custody of the child for
the greater part of the year (the custodial parent) is generally
treated as the parent who provided more than half of the child's
support. This parent is usually allowed to claim the exemption for the
child if the other dependency tests are met. However, see
Noncustodial parent, later.
Custody.
Custody is usually determined by the terms of the most recent
decree of divorce or separate maintenance, or a later custody decree.
If there is no decree, it will be determined by the written separation
agreement.
If neither a decree nor an agreement establishes custody, then the
parent who had physical custody of the child for the greater part of
the year is considered to have custody of the child. This also applies
if a decree or agreement calls for "split" custody, or if the
validity of a decree or agreement awarding custody is uncertain
because of legal proceedings pending on the last day of the calendar
year.
If the parents were divorced or separated during the year after
having had joint custody of the child before the separation, the
parent who had custody for the greater part of the rest of the year is
considered the custodial parent.
Example 1.
Under the terms of your divorce decree, you had custody of your
child for 10 months of the year. Your former spouse had custody for
the other 2 months. You and your former spouse provided the child's
total support. You are considered to have provided more than half the
child's support because you are the custodial parent.
Example 2.
You and your former spouse provided your child's total support for
the year. You had custody of your child under your 1990 divorce
decree, but in October 2001, a new custody decree granted custody to
your former spouse. Because you had custody for the greater part of
the year, you are the custodial parent and are considered to have
provided more than half of your child's support.
Example 3.
You were separated on June 1. Before the separation, you and your
spouse had joint custody of your child. Your spouse had custody from
June through September and you had custody from October through
December. Because your spouse had custody for 4 of the 7 months
following the separation, your spouse was the custodial parent for the
year and is treated as having provided more than half of the child's
support for the year.
Noncustodial parent.
Under the special rule, the parent who did not have custody, or who
had it for the shorter time, is the noncustodial parent. The
noncustodial parent is treated as the parent who provided more than
half of the child's support if any one of the following three
conditions is met.
- The custodial parent signs a written declaration that he or
she will not claim the exemption for the child, and the noncustodial
parent attaches this written declaration to his or her return.
- A decree or agreement went into effect after 1984
and states the noncustodial parent can claim the child as a
dependent without regard to any condition, such as payment of
support.
- A decree or agreement executed before 1985
provides that the noncustodial parent is entitled to the
exemption, and he or she gave at least $600 for the child's support
during the year. This is true unless the pre-1985 decree or agreement
was modified after 1984 to specify that this provision will not apply.
Example 1.
Under your 1984 divorce decree, your former spouse has custody of
your child. The decree specifically states that you can claim the
child's exemption. You provided $1,000 of your child's support during
the year and your spouse provided the rest. You are considered to have
provided over half the child's support. See item (3) above.
Example 2.
You and your spouse provided all of your child's support. Under
your 1988 written separation agreement, your spouse has custody of
your child. Because the agreement was made after 1984, you are
considered to have provided over half the child's support only if your
spouse agrees not to claim the child's exemption by signing a written
declaration. See item (1) above.
Written declaration.
The custodial parent should use Form 8332, or a similar
statement, to make the written declaration to release the exemption to
the noncustodial parent. The noncustodial parent must attach the form
or statement to his or her tax return.
The exemption can be released for a single year, for a number of
specified years (for example, alternate years), or for all future
years, as specified in the declaration. If the exemption is released
for more than one year, the original release must be attached to the
return of the noncustodial parent for the first year, and a copy of
the release must be attached to the return for each succeeding taxable
year for which the noncustodial parent claims the exemption.
Divorce decree or separation agreement made after 1984.
If your divorce decree or separation agreement went into effect
after 1984 and it states that you can claim the exemption for your
child without regard to any condition, such as payment of
support, you can attach a copy of the following pages from the decree
or agreement instead of Form 8332.
- The cover page (write the other parent's social security
number on this page).
- The page that states you can claim the exemption for your
child.
- The signature page with the other parent's signature and the
date of the agreement.
If your divorce decree or separation agreement went into effect
after 1984 and it states that you can claim the exemption for your
child if you meet certain conditions, you must attach to
your return Form 8332 or a similar statement from the custodial parent
releasing the exemption.
Divorce decree or separation agreement made before 1985.
If you are a noncustodial parent who claims a child's exemption
under a decree or agreement made before 1985, you must give at least
$600 for that child's support.
Child support.
Child support payments received from the noncustodial parent are
considered used for the child's support, even if actually spent on
things other than support.
Example.
Your 1982 divorce decree requires you to pay child support to the
custodial parent and states that you can claim your child's exemption.
The custodial parent paid for all support items and put the $1,000
child support you paid during the year into a savings account for the
child. Because your payments are considered used for support, you are
considered to have provided over half the child's support.
Back child support.
If you fail to pay child support in the year it is due, but pay it
in a later year, any payment of the overdue amount is not considered
child support either for the year it was due or for the year in which
it is paid. It is payment of an amount owed to the custodial parent,
but it is not child support provided by you.
Example.
You and your former spouse provide all your child's support. Your
1984 divorce decree requires you to pay $800 child support each year
to the custodial parent and allows you to claim your child's
exemption. Last year you paid only $500, but you made up the $300 you
owed by paying $1,100 this year. The $300 back child support you paid
this year is not considered support for last year or for this year.
Medical Expenses
A child of divorced or separated parents whose support test is
based on the special rule described in this section is treated as a
dependent of both parents for the medical expense deduction. A parent
can deduct medical expenses he or she paid for the child even if an
exemption for the child is claimed by the other parent.
Multiple Support Agreement
Sometimes no one individual provides more than half of the support
of a person. Instead, two or more people, each of whom would be able
to take the exemption but for the support test, together provide more
than half of the person's support. One of those people can claim an
exemption for that person if the requirements in Figure 2
are met.
Figure 2. Can You Claim an Exemption for a Dependent Under a Multiple Support Agreement?
Phaseout of Exemptions
The amount you can claim as a deduction for exemptions is phased
out if your adjusted gross income (AGI) for 2001 falls within the
range shown below for your filing status.
Filing Status |
AGI |
Single |
$132,950 - $255,450 |
Married filing jointly or qualifying
widow(er) |
$199,450 - $321,950 |
Married filing separately |
$99,725 - $160,975 |
Head of household |
$166,200 -
$288,700 |
If your AGI is more than the highest amount for your filing
status, your deduction for exemptions is zero. If your AGI falls
within the range, use the Deduction for Exemptions Worksheet
in the instructions for Form 1040 to figure your deduction.
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