Income Tax Exemption

June 15, 2013 sarah Uncategorized

A tax exemption is an exemption on all or some state or national taxes which would otherwise be collected by an organization or individual. The idea is that the tax burden can be lightened or increased for different segments of society. You may qualify for income tax exemption.

Typical criteria are the age of the taxpayer, public services which the individual has performed, ownership of property, and income levels.

Each personal tax exemption you claim on your tax return is the equivalent of a $3,650 deduction. Generally, you are allowed one for you, your spouse, and any dependents you have claimed.

To qualify as your dependent, a person must:

 

Be your child, stepchild, grandchild, adopted child, great grandchild, son-in-law or daughter-in-law, father-in-law or mother-in-law, brother-in-law or sister-in-law, parent, brother, sister, grand parent, stepbrother or sister, half brother or sister, and if blood related then your aunt, uncle, cousin, niece or nephew

 

 

Receive less than $3,650 gross income unless the dependent is your child or under the age of nineteen

 

 

Receive more than one-half of his or her financial support from you

 

 

Not file a joint return with his or her spouse

 

 

Be a resident of the US, Canada, or Mexico

 

To a limited point, there are many types of income and benefits that can be exempt from income taxes, depending on how they were received. Educational scholarships, gifts, inheritances, combat pay for military personnel, income from local bonds, employee discounts, payments for personal injuries, and life insurance policies are all examples of potential exemptions.

Many types of non-profit organizations like schools, churches, and charities are exempt from paying income taxes. The purpose and type of the entity as well as sources of income and other factors will affect the amount of income tax exemption.

If you file your tax return with a tax service like TurboTax Online, you’ll be asked questions that determine any and every exemption and deduction you’re eligible for. With their 100% accuracy guarantee they remain the number one ranked online tax service in the country. Find out for yourself how you can get the most out of your financial situation while still knowing very little about it.

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