When you claim exemptions on your IRS form W-4, you are reducing the amount of taxable income that the IRS can take out of your paychecks. Reduced taxable income means that you will have to pay fewer taxes.
When you are going down the list for exemptions for taxes, you will see complexly worded questions that ask if you are qualified for tax exemptions. For example, a question may look like this: Do you have any dependents? If so, place the number of dependents on the line. If not, put a zero on the line. Many people overlook one exemption when they are filling out their W-4. You can actually claim yourself as an exemption!
If you’re using TurboTax to file your taxes, you’ll be prompted with questions to determine your exemption status. Be sure to check out our article on how to get a turbotax discount in 2014.
An exemption means that the IRS will take fewer taxes out of your paycheck because of special circumstances. The goal is to get as many exemptions from the IRS without owing them money in the end.
Here’s the catch, there are a few requirements to claim yourself as an exemption, but in turn you will have to pay fewer taxes out of your paycheck each payday.
You have to make at least 50% of the money that supports you. This means that you have to be self-supported. If you are in college, you have a job, and your parents aren’t sending you more money than you are making, then you are home free to claim yourself as an exemption! This means that your parents will no longer be able to claim you as a dependent any longer. As long as no one claims you as a dependent, you can claim yourself.
Starting in 2013 there will be a phase out restriction, which inhibits people from claiming themselves as an exemption within a certain range of income. Here is a table showing the phase out ranges for 2013.
|Married Filing Jointly
|Head of Household
|Married Filing Separately
Source (Revenue Procedure 2013-15)
That is pretty much it when it comes to claiming yourself on your taxes, but as far as claiming other people, you want to make sure you have the right to claim them before you try, or you may end up suffering some hefty penalties.