PERSONAL EXEMPTION & DEPENDENTS

There are two types of exemptions: personal exemptions and exemptions for dependents. While each is worth the same amount ($3,400 for 2007), different rules apply to each type.

PERSONAL EXEMPTION:

You are generally allowed one exemption for yourself and, if you are married, one exemption for your spouse. These are called personal exemptions.

YOUR OWN EXEMPTION:

You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer does not actually claim you as a dependent.

YOUR SPOUSE EXEMPTION:

Your spouse is never considered your dependent.

Joint return. On a joint return you can claim one exemption for yourself and one for your spouse.

Separate return. If you file a separate return, you can claim the exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer. This is true even if the other taxpayer does not actually claim your spouse as a dependent. This is also true if your spouse is a nonresident alien.

Death of spouse. If your spouse died during the year, you generally can claim your spouse's exemption under the rules just explained under Joint return. If you file a separate return for the year, you may be able to claim your spouse's exemption under the rules just described in Separate return.

NOTE: If you remarried during the year, you cannot take an exemption for your deceased spouse.

If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed as an exemption on both the final separate return of your deceased spouse and the separate return of your new spouse for that year. If you file a joint return with your new spouse, you can be claimed as an exemption only on that return.

Divorced or separated spouse. If you obtained a final decree of divorce or separate maintenance by the end of the year, you cannot take your former spouse's exemption. This rule applies even if you provided all of your former spouse's support.

EXEMPTION FOR DEPENDENTS:

You are allowed one exemption for each person you can claim as a dependent. You can claim an exemption for a dependent even if your dependent files a return.

Dependent not allowed a personal exemption. If you can claim an exemption for your dependent, the dependent cannot claim his or her own exemption on his or her own tax return. This is true even if you do not claim the dependent's exemption on your return