The two most important factors determining your tax bill - or tax refund - each April 15th are exemptions and dependents. Qualified exemptions reduce your taxable income. Your military children and other military dependents reduce your gross income and thus the amount of taxes you owe each year.
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Exemptions That Reduce Your Military Taxes

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The two most important factors determining your tax bill - or tax refund - each April 15th are exemptions and dependents. Although it may seem like two simple categories, there is a world of nuances and information regarding how to file properly to claim your maximum allowances for dependents and exemptions. And each tax year brings the potential for new tax rules.

Below are some guidelines from the IRS on filing correctly for dependents and exemptions. Seek the support of a qualified tax preparer if you'd like to understand more about the benefits available through exemptions and dependents.

EXEMPTIONS REDUCE TAXABLE INCOME

Qualified exemptions reduce your taxable income. Your military children and other military dependents reduce your gross income and thus the amount of taxes you owe each year.

The two kinds of exemptions are personal exemptions and exemptions for dependents. Each dependent exemption allows a $3,650 deduction on your taxpayers, except for taxpayers whose adjusted gross income is above a certain amount. For these taxpayers, the amount of the exemption is reduced.

WHO IS A TAX DEPENDENT?

A dependent is a child or other person for whom you can claim an exemption on your tax returns. On a joint tax return, you may claim one exemption for yourself and one for a spouse only if the spouse had no gross income, did not file a joint return, or is not already claimed as a dependent by another taxpayer. In general, a spouse cannot be claimed as your dependent.

A dependent must be a U.S. Citizen, a U.S. resident alien, a U.S. national or resident of Canada or Mexico. An exception can sometimes apply to adopted children.

DEPENDENTS MAY ALSO FILE TAX RETURNS

Just because a person is filed as a dependent doesn't mean his or her tax situation doesn't require separate filing.

Separate tax filing status depends on amount of gross income earned, marital status, special taxes owed, or advance Earned Income Tax Credit payments received. If a parent or someone else files a person as a dependent, and that dependent fills out separate a tax form as well, he or she may not claim a personal exemption on their own tax form.



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