5 Tax Tips About Dependents

Who can you claim as a dependent on your 2008 tax returns? What exemptions are you eligible for? Is your spouse a dependent?

One of the best ways to save money this tax season is to claim the right deductions, but it can be confusing trying to figure them out. To help you start thinking about exemptions for dependents you are claiming this year, here are 5 tax tips about dependents.

1. Dependents may have to file their own tax return. Just because someone is claimed as a dependent does not necessarily mean they are out of the woods tax-wise. Despite being claimed as a dependent on someone else’s tax return, some people will still be required to file their own tax return. The IRS states that whether or not dependents need to file is based on the following criteria: the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and any advance Earned Income Credit payments you received.

2. Exemptions for dependents reduce your taxable income. You can claim both personal exemptions and exemptions for dependents. For each dependent you have, you can deduct $3,500 on your 2008 tax return. If your adjusted gross income is above a certain level, your deductions may be reduced.

3. Dependents cannot claim exemptions. If you are claimed as a dependent on someone else’s tax return, you cannot claim a personal exemption on your own tax return, if you are required to file one.

4. Spouses are not considered dependents. If you are filing a joint return, you may claim one exemption for you and for your spouse, for a total of two. If you are filing a separate return, you can claim an exemption for your spouse only if they have no gross income, are not filing a joint return and are not claimed as a dependent for any other taxpayer.

5. Not everyone is eligible to be claimed as a dependent. In order to claim someone as a dependent, that person must be a U.S. citizen, resident alien, U.S. national or resident of Canada or Mexico. Some exceptions to these rules apply for adopted children. Additionally, under most circumstances, you cannot claim a married person as your dependent if they are filing a joint return with their spouse.

Making sure you understand the exemptions on your tax return is a good way to save money. As always, consult your tax advisor for full and complete information about what you are eligible to deduct and who you may be able to claim as a dependent on your returns.

Each Dependent May Be Worth a $3500 Deduction
Each Dependent May Be Worth a $3500 Deduction

Shoeboxed Grabbing Some Attention This Week

Shoeboxed has been generating a lot of buzz this week, and I just wanted to alert you to some of the more notable pieces of news.

As you might know, SELF magazine wrote about us in their April edition, which came out this week. Flip to page 40 to read the article about us.

On Wednesday, Taylor was interviewed by Gordon Deal of the Wall Street Journal for their morning radio show. Listen to it here.

Friday, Taylor was on the radio again. This time he was interviewed by KOMO in Seattle, where he talked about taxes and how Shoeboxed can help speed up this year’s tax paperwork by organizing all your receipts.

Last night, the Arizona Republic put up a story about record keeping, and mentioned Shoeboxed as a great way to keep all your receipts in one place and organized. Read the article here.

This time of year, people all of the sudden tend to get interested in organizing their paperwork and receipts, and Shoeboxed can really help. Apparently a lot of writers seem to like our story!

Updated: Oct. 14, 2008 — Dead to Arizona Republic link updated.