Personal exemptions

From Wikicpa

Each person is allowed a deduction for personal exemption. This amount is $3,650 in 2009 adjusted for inflation (in 2008, the exemption is worth $3,500). What this means is that if a person has $3,650 of taxable income (less deductions), she or he pays no tax. In addition, a taxpayer is allowed an additional personal exemption for each dependent.

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Dependent defined

Beginning in 2005, a dependent is either a qualifying child or a qualifying relative. Generally, a qualifying child is: (a) a child (including stepchild, adopted child, or eligible foster child), or a sibling (or step sibling) of the taxpayer, or a descendant of either; (b) has resided in the principal abode of the taxpayer for more than half of the relevant calendar year; (c) has not attained age 19 (or is a student who has not attained age 24 as of the end of the year); and (d) has not provided more than half of his or her support for that year. A child who does not satisfy the qualifying child definition may be a qualifying relative.

Generally, a qualifying relative is an individual who: (a) is a child (including stepchild, adopted child, or eligible foster child), a sibling (including step siblings), the taxpayer's father or mother or an ancestor of either of them, a stepparent, a niece or nephew, an aunt or uncle, certain in-laws of the taxpayer, or an individual, other than a spouse, who resides in the principal abode of the taxpayer and is a member of the household; (b) has gross income in the relevant calendar year not exceeding the exemption amount ($3,650 for 2009, $3,500 for 2008); (c) receives more than half of his or her support for the year from the taxpayer; and (d) is not a qualifying child of any other taxpayer for the calendar year.

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