What Does Exemption Mean on the 1040 Tax Form?

by Mark Kennan

    When you're filing your taxes, you can reduce your taxes by claiming deductions or claiming exemptions. You get an exemption for each person you can claim as a dependent, including yourself. The more you claim, the larger the tax break -- as long as you're claiming exemptions to which you're entitled.

    Taxpayer and Spouse Exemptions

    When you file your taxes, you can claim an exemption for yourself as long as no one else can claim you as their dependent. When you file a joint return, you can also claim an exemption for your spouse. If you file separately, the only way you can claim an exemption for your spouse is if your spouse has no gross income, isn't filing a return, and isn't anyone else's dependent.

    Dependent Children

    You also get an exemption for dependent child you claim. To claim someone as a dependent child, the person must be child, stepchild, foster child, your sibling or a descendant of any of them. The person must usually be under 19 years old, but the age cutoff goes up to 24 if he is a full-time student. There's no age limit for permanently disabled people. Plus, the child must live with you for at least half the year and can't have paid more than half his own expenses.

    Dependent Relatives

    You can also get extra exemptions for people who meet the dependent relative criteria. There's no age limits for dependent relatives, but you can't claim anyone as a dependent relative if she could be claimed by someone else as a dependent child. Plus, the person must either be related to you in certain ways, including parents, grandparents, children, nieces, nephews, aunts and uncles, or live with you for the entire year. The dependent relative can't have more than $3,900 in gross income and you must pay for more than half the person's support.

    Tax Effects

    The amount you save on your taxes depends on your tax bracket -- the higher the taxes, the bigger the savings. To figure your savings, multiple the value of each exemption by the number of exemptions you're claiming. Then, multiply the result by your rate. For example, in 2013, each exemption reduces your taxable income by $3,900. So, if you have three exemptions, multiply $3,900 by 3 to find the exemptions reduce your taxable income by $11,700. If you're in the 28 percent tax bracket, multiply $11,700 by 0.28 to find you save yourself $3,276 on your taxes.

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    About the Author

    Mark Kennan is a freelance writer specializing in finance-related articles. He has worked as a sports editor for "Ring-Tum Phi" and published articles on a number of online outlets. Kennan holds a Bachelor of Arts in history and politics from Washington and Lee University.

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