Under the United States tax law, a personal exemption is the amount that a resident taxpayer is entitled to claim as a tax deduction of personal income in calculating taxable income and consequently federal income tax. By 2017, the amount of personal exemption is $ 4,050, even though his release is subject to the termination limits. The amount of personal exemption is adjusted annually for inflation. The Tax Cuts and Jobs Act of 2017 eliminate personal exclusions for fiscal years 2018 to 2025.
Exceptions comprise personal release to individual taxpayers and, as appropriate, their spouses and dependents, as set forth in the Internal Revenue Code at 26 U.S.C.Ã,§Ã, 151.
Video Personal exemption
Overview
Section 151 of the Internal Revenue Code entered into force in August 1954, and provided for a deduction equal to the amount of "personal exemption" in calculating taxable income. Exceptions are meant to isolate from taxation the minimum amount of income a person will need to receive for subsistence level living (ie, sufficient income for food, clothing, shelter, etc.). In addition to personal exclusions, taxpayers may claim other deductions that reduce the level of taxable income.
In general, for the tax year prior to 2018, personal exemptions may be claimed by eligible taxpayers and dependents. Personal exclusions can also be claimed for spouses if (1) file pair separately, (2) spouse has no gross income, and (3) spouse is independent of others, Ã,§151 (b). For taxpayers applying for a return together with a spouse, the Regulation of the Minister of Finance also allows two personal exemptions.
If a taxpayer can be claimed as a liability by other taxpayers (regardless of whether someone actually claims it), he can not claim personal release for himself.
In calculating taxable income, the taxpayer may claim all eligible personal exemptions under Ã,§151, and subtract the amount from adjusted gross income (AGI).
Maps Personal exemption
Phase-out
Personal exclusions begin to stop when AGI exceeds $ 309,900 for a combined tax return of 2017 and $ 258,250 for a single tax return of 2017. Any tax exemption is reduced 2% for every $ 2,500 where AGI taxpayer exceeds the threshold amount until the benefits of all personal exceptions are omitted.
By 2017, the amount of personal exemption is $ 4,050, and it starts being laid off, and reaches the maximum phaseout amount after, the following customized gross income:
Dependent requirements
Section 152 of the code contains nuanced requirements that must be met before a taxpayer can claim another as dependent for the purposes of personal exemption. A general rule of thumb is that private exemptions may be taken for dependents who are eligible or qualified members. Ã,§ 152 (a). However, there are some exceptions to this rule.
Taxpayers who are claimed to be dependents of another person can not personally claim a personal exemption for their eligible dependents. Ã,§ 152 (b) (1). Married individuals who apply for a joint refund can not also be claimed as dependents of other taxpayers. Ã,§ 152 (b) (2). Non-U.S. Citizen or citizens of other countries can not be claimed as dependents unless they also reside in the US or in adjacent countries. Ã,§ 152 (b) (3). However, taxpayers who are also citizens or US citizens can claim as dependents of every child who shares the residence of the taxpayer and is a member of the taxpayer's household. Id.
Qualify child as dependent
Qualified children should first be "children" in the sense of Ã, § 152 (f) (1). The term "children" includes adopted children, children are placed for adoption, stepchildren, and foster children. ID. Eligible children must have the same primary place as taxpayers for more than half a year and should not provide more than half of their own support. Ã, § 152 (c) (1). They may include taxpayer children, relatives of taxpayers, half-siblings, or siblings, or descendants of taxpayers, siblings, half-siblings, or siblings. Ã,§Ã,§ 152 (c) (2), (f) (4). They may not reach the age of 19 at the end of the year, unless they are students, in which case they do not have to reach the age of 24, or unless they are permanently and completely disabled. Ã,§ 152 (c) (3).
A child can not qualify as dependent on more than one tax return, so the code has a set of rules to prevent this from happening. Ã,§ 152 (c) (4). The first code attempts to break the bond by limiting the eligible taxpayer for the child's parent, followed by the parental taxpayer competing against the highest adjusted gross income. Id. If more than one parent tries to claim a child and they do not file a joint return, the first code tries to break the tie that benefits the parent with whom the child has lived the longest during the taxable year. Id. If that does not break the bond, the parent with the highest customized gross income wins the right to claim the child as a dependent. Id.
For the care of children of divorced parents, see Ã, § 152 (e). For cases where children are lost and allegedly kidnapped, see Ã, § 152 (f) (6)...
Other relatives who qualify as dependents
A qualified relative can not be a qualifying child of any taxpayer. Ã,§ 152 (d) (1). Individuals must have gross income less than the amount of personal exemption. Id. Taxpayers should provide more than half of individual support. Id.
The allowable relationship between taxpayers and eligible relatives is almost unaccounted for, but under no circumstances can such relationship be in violation of local law. Ã,§Ã,§ 152 (d) (2), (f) (3). Including children (in a broad sense § 152 (f) (1)), children's offspring, siblings, half-brothers, half-siblings, fathers, mothers, parents ancestors, step parents, nephews and nephews-lawyers, or other non-cousin individuals who share the residence of the taxpayer and the household. Ã,§ 152 (d) (2).
Specific rules relating to many support agreements, dependent defects, and child support are detailed in Ã, § 152 (d) (3) - (5).
History
The amount of personal exemption in 1894 was $ 4,000 ($ 109,277 in 2016 dollars). The income tax enacted in 1894 was declared unconstitutional in 1895. The modern income tax law - which began in 1913 - included provisions for a personal exemption amount of $ 3,000 ($ 71,764 in 2016 dollars), or $ 4,000 for married couples. ($ 95,686 in 2016 dollars)
Over time the number of exceptions has increased and decreased depending on political policy and the need for tax revenue. Since the Depression, exceptions have risen steadily, but not enough to keep up with inflation. Regardless of the intent of the exemption, the amount is also less than half the poverty line.
Total exemption for the year 1987 to 2018 as shown on the right.
Source
- 1987 to 2006, Internal Revenue Service, Instructions for Form 1040 (for each registered year)
- In 2007, Internal Revenue Service, Rev. Proc. 2006-53 (November 9, 2006).
- https://web.archive.org/web/20070102205348/http://www.taxpolicycenter.org/TaxFacts/TFDB/TFTemplate.cfm?Docid=169
- In 1913 and 1894, http://www.answers.com/topic/income-tax, the American History section
- https://web.archive.org/web/20110718031608/http://www.westegg.com/inflation/
- https://www.irs.gov/publications/p501/ar02.html#en_US_2015_publink1000195627
References
Source of the article : Wikipedia
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