Business Accountant - Excemptions, Standard Deductions and Filing Information

Business Accountant - CPA Accounting & Business Services

Business Accountant - Home

Call the Business Accountant

FREE Consultation
FREE Federal Tax Review
FREE State Tax Review
UNCOVER TAX SAVINGS!
FOR FREE - CALL US NOW!

818 753 1945
________ more information

Taxes ________________
Tax Tips
Income Tax
Tax Information
US Tax Treaties
Taxpayers Rights
Personal Deductions

Business _____________
Corporations
Partnerships
Business Expenses
Employers Tax Guide
Small Business Tax Guide

Real Estate ___________
Selling Home
Home Morgage Deduction

News ________________
Business News
Financial News
Real Estate News

Retirement ___________
Retirement Plans
for Small Business
IRA

Foreign Investors ______
Foreign Investors
Tax Guide for Aliens
Informacion en Espanol
English/Spanish Glossary

Information ___________
About Us
F.A.Q. Terms
F.A.Q. Accounting
City and Zip Codes
Contact Business Accountant

Questions?
CALL US
1 818 753 1945
Email - click here

You are here:
Excemptions, Standard Deductions and Filing Information

501 15000U Exemptions, Standard Deduction, and Filing Information What's New for 20051 Reminders2 Introduction2 Who Must File2 Who Should File4 Filing Status5 Exemptions9 Exemptions for Dependents10 Phaseout of Exemptions19 Standard Deduction19 2005 Standard Deduction Tables22 How To Get Tax Help23 Index25 What's New for 2005 Exemption for dependent.

Beginning in 2005, you will use new rules to determine whether you can claim an exemption for a dependent. You can claim an exemption for a qualifying child or a qualifying relative. See Exemptions for Dependents.

Head of household filing status.

Beginning in 2005, you will use new rules to determine whether someone is your qualifying person so you can claim head of household filing status. To be your qualifying person, a child generally must be your qualifying child. See Head of Household.

Who must file. Filing requirements: What's New for 2005 Filing requirements: Who must file What's New for 2005 Who must file Tax returns: Who must file

Generally, the amount of income you can receive before you must file a return has increased. Table 1 shows the filing requirements for most taxpayers.

Exemption amount. Exemptions: Amount What's New for 2005 What's New for 2005: Exemption amount

The amount you can deduct for each exemption has increased from $3,100 in 2004 to $3,200 in 2005.

Exemption for individual displaced by Hurricane Katrina.

You may be able to claim a $500 exemption if you provided housing to a person displaced by Hurricane Katrina. For details, see Exemption for Individual Displaced by Hurricane Katrina.

Exemption phaseout. Exemptions: Phaseout What's New for 2005: Exemption phaseout Personal exemption: What's New for 2005 Personal exemption: Phaseout Phaseout of exemptions

You lose all or part of the benefit of your exemptions if your adjusted gross income is above a certain amount. The amount at which this phaseout begins depends on your filing status. For 2005, the phaseout begins at $109,475 for married persons filing separately; $145,950 for single individuals; $182,450 for heads of household; and $218,950 for married persons filing jointly or qualifying widow(er)s. See Phaseout of Exemptions, later.

Standard deduction. Important changes: Standard deduction Standard deduction: What's New for 2005

The standard deduction for most taxpayers who do not itemize deductions on Schedule A of Form 1040 is higher in 2005 than it was in 2004. The amount depends on your filing status. The 2005 Standard Deduction Tables are shown near the end of this publication as Tables 7, 8, and 9.

Itemized deductions. What's New for 2005: Limit on itemized deduction Itemized deductions: Limits on Itemized deductions: Limits on: What's New for 2005 Limit on itemized deductions: What's New for 2005

Some of your itemized deductions may be limited if your adjusted gross income is more than $145,950 ($72,975 if you are married filing separately). See Who Should Itemize, later.

Reminders Election to report child's unearned income on parent's return. Children Dividends of this heading: Investment income of child under age 14 Children: Investment income of child under age 14 Children: Investment income of child under age 14: Parents' election to report on Form 8814 Dependents: Child's earnings: Children, subheading: Investment income of child under age 14 Form 8814: Parents' election to report child's interest and dividends Unearned income of child Children, subheading: Investment income of child under age 14

You may be able to include your child's interest and dividend income on your tax return by using Form 8814, Parents' Election To Report Child's Interest and Dividends. If you choose to do this, your child will not have to file a return.

Photographs of missing children. Missing children: Photographs of, included in IRS publications Photographs: Missing children, included in IRS publications

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

This publication discusses some tax rules that affect every person who may have to file a federal income tax return. It answers some basic questions: who must file; who should file; what filing status to use; how many exemptions to claim; and the amount of the standard deduction.

The first section of this publication explains who must file an income tax return. If you have little or no gross income, reading this section will help you decide if you have to file a return.

<ROM>Table 1.</ROM> 2005 Filing Requirements Chart for Most Taxpayers IF your filing status is... AND at the end of 2005 you were... ^* THEN file a return if your gross income was at least... ^** single under 65 $ 8,200 65 or older $ 9,450 head of household under 65 $10,500 65 or older $11,750 married, filing jointly ^*** under 65 (both spouses) $16,400 65 or older (one spouse) $17,400 65 or older (both spouses) $18,400 married, filing separately any age $ 3,200 qualifying widow(er) with dependent child under 65 $13,200 65 or older $14,200

Age: Gross income and filing requirements (Table 1) Filing requirements: Generally (Table 1) Filing requirements: Gross income levels (Table 1) Gross income: Defined: Filing requirements (Table 1) Head of household: Filing requirements (Table 1) Single taxpayers: Gross income filing requirements (Table 1) Surviving spouse: Gross income filing requirements (Table 1) Tables and figures: Filing requirements: Gross income levels (Table 1) * If you were born before January 2, 1941, you are considered to be 65 or older at the end of 2005. ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you may exclude part or all of it). Do not include social security benefits unless you are married filing a separate return and you lived with your spouse at any time during 2005. *** If you didn't live with your spouse at the end of 2005 (or on the date your spouse died) and your gross income was at least $3,200, you must file a return regardless of your age.

The second section is about who should file a return. Reading this section will help you decide if you should file a return, even if you are not required to do so.

The third section helps you determine which filing status to use. Filing status is important in determining whether you must file a return, your standard deduction, and your tax rate. It also helps determine what credits you may be entitled to.

The fourth section discusses exemptions, which reduce your taxable income.

The fifth section is about exemptions for dependents. It explains the difference between a qualifying child and a qualifying relative. Other topics include the social security number requirement for dependents, the rules for multiple support agreements, and the rules for divorced or separated parents.

The sixth section gives the rules and dollar amounts for the standard deduction — a benefit for taxpayers who do not itemize their deductions. This section also discusses the standard deduction for taxpayers who are blind or age 65 or older, and special rules for dependents. In addition, this section should help you decide whether you would be better off taking the standard deduction or itemizing your deductions.

The last section explains how to get tax help from the IRS.

This publication is for U.S. citizens and resident aliens only. If you are a resident alien for the entire year, you must follow the same tax rules that apply to U.S. citizens. The rules to determine if you are a resident or nonresident alien are discussed in chapter 1 of Publication 519, U.S. Tax Guide for Aliens.

Nonresident aliens. Aliens Nonresident Nonresident aliens Nonresident aliens

If you were a nonresident alien at any time during the year, the rules and tax forms that apply to you may be different from those that apply to U.S. citizens. See Publication 519.

Comments and suggestions. Comments on publication Suggestions for publication

We welcome your comments about this publication and your suggestions for future editions.

You can write to us at the following address: Internal Revenue Service Individual Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. NW, IR-6406 Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

You can email us at *taxforms@irs.gov. (The asterisk must be included in the address.) Please put Publications Comment on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.

Tax questions.

If you have a tax question, visit www.irs.gov or call 1-800-829-1040. We cannot answer tax questions at either of the addresses listed above.

Ordering forms and publications.

Visit www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the National Distribution Center at the address shown under How To Get Tax Help in the back of this publication.

Publication 559 Survivors, Executors, and Administrators 929 Tax Rules for Children and Dependents Form (and Instructions) Amended U.S. Individual Income Tax Return Power of Attorney and Declaration of Representative Release of Claim to Exemption for Child of Divorced or Separated Parents Parents' Election To Report Child's Interest and Dividends Exemption Amount for Taxpayers Housing Individuals Displaced by Hurricane Katrina Who Must File Filing requirements: Who must file Tax returns: Who must file

If you are a U.S. citizen or resident, whether you must file a federal income tax return depends upon your gross income, your filing status, your age, and whether you are a dependent. For details, see Table 1 and Table 2. You also must file if one of the situations described in Table 3 applies. The filing requirements apply even if you owe no tax.

Filing requirements: Penalty for failure to file Penalties: Failure to fileYou may have to pay a penalty if you are required to file a return but fail to. If you willfully fail to file a return, you may be subject to criminal prosecution.

For information on what form to use — Form 1040EZ, Form 1040A, or Form 1040 — see the instructions in your tax package.

Gross income. Gross income: Defined

Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. For a list of community property states, see Community property states under Married Filing Separately, later.

Self-employed persons. Gross income: Self-employed persons Self-employed persons: Gross income

If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. To this figure, you add any income from investments and from incidental or outside operations or sources.

You must file Form 1040 if you owe any self-employment tax.

Filing status. Filing status: Determination of

Your filing status generally depends on whether you are single or married. In some cases, it depends on other factors as well. Whether you are single or married is determined as of the last day of your tax year, which is December 31 for most taxpayers. Filing status is discussed in detail later in this publication.

Age. Age: Filing status determination Filing status: Age 65 and older

Age is a factor in determining if you must file a return only if you are 65 or older at the end of your tax year. For 2005, you are 65 or older if you were born before January 2, 1941.

Filing Requirements for Most Taxpayers Filing requirements: Who must file Tax returns: Who must file

You must file a return if your gross income for the year was at least the amount shown on the appropriate line in Table 1. Dependents should see Table 2 instead.

Deceased Persons Decedents: Filing requirements Filing requirements: Deceased taxpayer

You must file an income tax return for a decedent (a person who died) if both of the following are true.

You are the surviving spouse, executor, administrator, or legal representative.

The decedent met the filing requirements described in this publication at the time of his or her death.

For more information, see Final Return for Decedent in Publication 559.

<ROM>Table 2.</ROM> <IMARK>2005 Filing Requirements for Dependents See Exemptions for Dependents to find out if you are a dependent. If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. In this table, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. Earned income includes wages, tips, and taxable scholarship and fellowship grants. Gross income is the total of your unearned and earned income. Caution: If your gross income was $3,200 or more, you usually cannot be claimed as a dependent unless you are a qualifying child. For details, see Exemptions for Dependents. Single dependents— Were you either age 65 or older or blind? □ No. You must file a return if any of the following apply.

Your unearned income was more than $800.

Your earned income was more than $5,000.

Your gross income was more than the larger of —

$800, or

Your earned income (up to $4,750) plus $250.

□ Yes. You must file a return if any of the following apply.

Your unearned income was more than $2,050 ($3,300 if 65 or older and blind).

Your earned income was more than $6,250 ($7,500 if 65 or older and blind).

Your gross income was more than $1,250 ($2,500 if 65 or older and blind) plus the larger of:

$800, or

Your earned income (up to $4,750) plus $250.

Married dependents—Were you either age 65 or older or blind? □ No. You must file a return if any of the following apply.

Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.

Your unearned income was more than $800.

Your earned income was more than $5,000.

Your gross income was more than the larger of —

$800, or

Your earned income (up to $4,750) plus $250.

□ Yes. You must file a return if any of the following apply.

Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.

Your unearned income was more than $1,800 ($2,800 if 65 or older and blind).

Your earned income was more than $6,000 ($7,000 if 65 or older and blind).

Your gross income was more than $1,000 ($2,000 if 65 or older and blind) plus the larger of:

$800 or

Your earned income (up to $4,750) plus $250.

Children: Filing requirements as dependents (Table 2) Children: Investment income of child under age 14: Dependent filing requirements (Table 2) Dependents: Filing requirements: Earned income, unearned income, and gross income levels (Table 2) Earned income: Dependent filing requirements (Table 2) Figures Tables and figures Filing requirements: Dependents: Table 2 Gross income: Dependent filing requirements (Table 2) Tables and figures: Filing requirements: Dependents (Table 2)

U.S. Citizens or Residents Living Abroad Abroad, citizens traveling or working: Filing requirements American citizens abroad Citizens outside U.S.: Filing requirements Filing requirements: Citizens outside U.S. Foreign employment: Citizens outside U.S., filing requirements Overseas taxpayers Tax returns Filing of Filing requirements U.S. citizens abroad: Filing requirements

For purposes of determining whether you must file a return, you must include in your gross income all of the income you earned abroad, including any income you can exclude under the foreign earned income exclusion. For more information on special tax rules that may apply to you, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

Residents of Puerto Rico Filing requirements: Puerto Rico, residents of Puerto Rico: Residents of

Generally, if you are a U.S. citizen and a bona fide resident of Puerto Rico, you must file a U.S. income tax return if you meet the income requirements. This is in addition to any legal requirement you may have to file an income tax return with Puerto Rico.

If you are a bona fide resident of Puerto Rico for the whole year, your U.S. gross income does not include income from sources within Puerto Rico. However, include in your U.S. gross income any income you received for your services as an employee of the United States or any U.S. agency. If you receive income from Puerto Rican sources that is not subject to U.S. tax, you must reduce your standard deduction, which reduces the amount of income you can have before you must file a U.S. income tax return.

For more information, see Publication 570, Tax Guide for Individuals With Income From U.S. Possessions.

Individuals With Income From U.S. Possessions U.S. possessions: Income from

If you had income from Guam, the Commonwealth of Northern Mariana Islands, American Samoa, or the U. S. Virgin Islands, special rules may apply when determining whether you must file a U.S. federal income tax return. In addition, you may have to file a return with the individual island government. See Publication 570 for more information.

Dependents Dependents: Filing requirements Filing requirements: Dependents

A person who is a dependent may still have to file a return. This depends on the amount of the dependent's earned income, unearned income, and gross income. For details, see Table 2. A dependent may also have to file if one of the situations described in Table 3 applies.

Responsibility of parent.

If a dependent child who must file an income tax return cannot file it for any reason, such as age, a parent, guardian, or other legally responsible person must file it for the child. If the child cannot sign the return, the parent or guardian must sign the child's name followed by the words By (your signature), parent for minor child.

Earned income. Dependents: Earned income

ScholarshipsThis is salaries, wages, professional fees, and other amounts received as pay for work you actually perform. Earned income (only for purposes of filing requirements and the standard deduction) also includes any part of a scholarship that you must include in your gross income. See chapter 1 of Publication 970, Tax Benefits for Education, for more information on taxable and nontaxable scholarships.

Child's earnings. Dependents: Child's earnings

Amounts a child earns by performing services are his or her gross income. This is true even if under local law the child's parents have the right to the earnings and may actually have received them. If the child does not pay the tax due on this income, the parent is liable for the tax.

Unearned income. Children Dividends of this heading: Investment income of child under age 14 Children: Investment income of child under age 14 Children: Investment income of child under age 14: Interest and dividends Dependents: Unearned income

This is income such as interest, dividends, and capital gains. Trust distributions of interest, dividends, capital gains, and survivor annuities are considered unearned income also.

Election to report child's unearned income on parent's return.

Children: Investment income of child under age 14: Parents' election to report on Form 8814 Form 8814: Parents' election to report child's interest and dividendsYou may be able to include your child's interest and dividend income on your tax return. If you choose to do this, your child will not have to file a return. However, all of the following conditions must be met.

Your child was under age 14 at the end of 2005. (A child born on January 1, 1992, is considered to be age 14 at the end of 2005; you cannot make the election for this child.)

Your child is required to file a return for 2005 unless you make this election.

Your child had gross income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).

The interest and dividend income was less than $8,000.

No estimated tax payment was made for 2005 and no 2004 overpayment was applied to 2005 under your child's name and social security number.

No federal income tax was withheld from your child's income under the backup withholding rules.

You are the parent whose return must be used when making the election to report your child's unearned income.

For more information, see Parent's Election To Report Child's Interest and Dividends in Publication 929, and Form 8814.

Other Situations

You may have to file a tax return even if your gross income is less than the amount shown in Table 1 or Table 2 for your filing status. See Table 3 for those other situations when you must file.

<ROM>Table 3.</ROM> Other Situations When You Must File a 2005 Return If any of the four conditions listed below applied to you for 2005, you must file a return. 1. You owe any special taxes, such as: • Alternative minimum tax. (See the Form 1040 instructions for line 45.) • Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. (See Publication 590, Individual Retirement Arrangements (IRAs), and Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.) But if you are filing a return only because you owe this tax, you can file Form 5329 by itself. • Social security or Medicare tax on tips you did not report to your employer. (See Publication 531, Reporting Tip Income.) • Write-in taxes, including uncollected social security, Medicare, or railroad retirement tax on tips you reported to your employer or on group-term life insurance. (See Publication 531 and the Form 1040 instructions for line 63.) • Household employment taxes. But if you are filing a return only because you owe these taxes, you can file Schedule H by itself. • Recapture taxes. (See the Form 1040 instructions for lines 44 and 62.) 2. You received any advance earned income credit (EIC) payments from your employer. These payments should be shown in box 9 of your Form W–2. (See Publication 596, Earned Income Credit.) 3. You had net earnings from self-employment of at least $400. (See Schedule SE (Form 1040) and its instructions.) 4. You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. (See Schedule SE (Form 1040) and its instructions.)

Advance earned income credit: Filing requirements (Table 3) Alternative minimum tax (AMT): Filing requirements (Table 3) Church employees: Filing requirements (Table 3) Earned income credit: Advance filing requirements (Table 3) Filing requirements: Other situations requiring filing (Table 3) Group-term life insurance: Uncollected social security/Medicare taxes: Reporting of (Table 3) Individual retirement arrangements (IRAs): Filing requirements (Table 3) Medical savings accounts (MSAs): Filing requirements (Table 3) Recapture taxes Self-employed persons: Filing requirements (Table 3) Social security and Medicare taxes: Reporting of (Table 3) Tables and figures: Filing requirements: Other situations requiring filing (Table 3) Tips: Reporting of (Table 3)

Who Should File Filing requirements: Who must file Tax returns: Who must file

Even if you do not have to file, you should file a tax return if you can get money back. For example, you should file if one of the following applies.

You had income tax withheld from your pay.

You made estimated tax payments for the year or had any of your overpayment for last year applied to this year's estimated tax.

You qualify for the earned income credit. See Publication 596, Earned Income Credit (EIC), for more information.

You qualify for the additional child tax credit. See the instructions in your tax forms package for more information on this credit.

You qualify for the health coverage tax credit. For information about this credit, see Form 8885, Health Coverage Tax Credit.

Filing Status Filing status: Determination of Filing status

You must determine your filing status before you can determine your filing requirements, standard deduction (discussed later), and correct tax. You figure your correct tax by using the Tax Computation Worksheet or the column in the Tax Table that applies to your filing status.

You also use your filing status in determining whether you are eligible to claim certain other deductions and credits.

There are five filing statuses:

Single,

Married Filing Jointly,

Married Filing Separately,

Head of Household, and

Qualifying Widow(er) With Dependent Child.

If more than one filing status applies to you, choose the one that will give you the lowest tax.

Marital Status Filing status: Marital status, determination of Marital status: Determination of

In general, your filing status depends on whether you are considered unmarried or married. A marriage means only a legal union between a man and a woman as husband and wife.

Unmarried persons. Filing status Unmarried persons Single taxpayers Single taxpayers: Filing status Unmarried persons Single taxpayers

You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree.

State law governs whether you are married or legally separated under a divorce or separate maintenance decree.

Divorced persons. Divorced taxpayers: Filing status

If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year.

Divorce and remarriage. Divorced taxpayers: Filing status: Divorce and remarriage to same person Remarriage after divorce

If you obtain a divorce in one year for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intended to and did remarry each other in the next tax year, you and your spouse must file as married individuals.

Annulled marriages. Annulled marriages: Filing status Filing status: Annulled marriages

If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. You must file amended returns (Form 1040X) claiming single or head of household status for all tax years affected by the annulment that are not closed by the statute of limitations for filing a tax return. The statute of limitations generally does not expire until 3 years after your original return was filed.

Head of household or qualifying widow(er) with dependent child. Filing status: Head of household Head of household: Qualifying person to file as Head of household: Qualifying surviving spouse with dependent child

If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify.

Married persons. Married taxpayers: Filing status

If you are considered married for the whole year, you and your spouse can file a joint return, or you can file separate returns.

Considered married. Separated taxpayers: Filing status

You are considered married for the whole year if on the last day of your tax year you and your spouse meet any one of the following tests.

You are married and living together as husband and wife.

You are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began.

Common law marriage

You are married and living apart, but not legally separated under a decree of divorce or separate maintenance.

Separated taxpayers: Living apart but not legally separated

You are separated under an interlocutory (not final) decree of divorce. For purposes of filing a joint return, you are not considered divorced.

Spouse died during the year. Death: Of spouse Decedents: Death of spouse Surviving spouse Death of spouse Death of spouse

If your spouse died during the year, you are considered married for the whole year for filing status purposes.

If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child.

If you remarried before the end of the tax year, you can file a joint return with your new spouse. Your deceased spouse's filing status is married filing separately for that year.

Married persons living apart. Separated taxpayers: Filing status

If you live apart from your spouse and meet certain tests, you may be considered unmarried. If this applies to you, you can file as head of household even though you are not divorced or legally separated. If you qualify to file as head of household instead of as married filing separately, your standard deduction will be higher. Also, your tax may be lower, and you may be able to claim the earned income credit. See Head of Household, later.

Single Single taxpayers: Filing status

Your filing status is single if, on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree, and you do not qualify for another filing status. To determine your marital status on the last day of the year, see Marital Status, earlier.

Your filing status may be single if you were widowed before January 1, 2005, and did not remarry in 2005. However, you might be able to use another filing status that will give you a lower tax. See Head of Household and Qualifying Widow(er) With Dependent Child, later, to see if you qualify.

How to file. Form 1040: Use of Form 1040A: Use of Form 1040EZ: Use of Single taxpayers: How to file and forms

You can file Form 1040EZ (if you have no dependents, are under 65 and not blind, and meet other requirements), Form 1040A, or Form 1040. If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Use the Single column of the Tax Table, or Section A of the Tax Computation Worksheet, to figure your tax.

Married Filing Jointly Joint returns: Filing status Married filing jointly Joint returns Married taxpayers: Joint returns Tax returns Joint returns Joint returns

You can choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions.

Standard deduction: Married filing jointlyIf you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.

If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). You can choose the method that gives the two of you the lower combined tax.

How to file. Form 1040: Use of Form 1040A: Use of Form 1040EZ: Use of Joint returns: How to file and forms

If you file as married filing jointly, you can use Form 1040 or Form 1040A. If you have no dependents, are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Use the Married filing jointly column of the Tax Table, or Section B of the Tax Computation Worksheet, to figure your tax.

Spouse died during the year. Death: Of spouse Joint returns: Death of spouse during year Spouse: Joint returns

If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. See Spouse died during the year, under Married persons, earlier.

Divorced persons. Divorced taxpayers: Filing status Joint returns: Divorced taxpayers

If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status.

Filing a Joint Return

Both you and your spouse must include all of your income, exemptions, and deductions on your joint return.

Accounting period. Accounting periods: Joint returns Filing status Married filing jointly Joint returns Joint returns: Accounting period

Both of you must use the same accounting period, but you can use different accounting methods.

Joint responsibility. Joint returns: Responsibility for

Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

Divorced taxpayer. Divorced taxpayers: Joint returns, responsibility for

You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns.

Relief from joint responsibility. Divorced taxpayers: Joint returns, responsibility for: Relief from

In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint return for items of the other spouse which were incorrectly reported on the joint return. You can ask for relief no matter how small the liability.

There are three types of relief available.

Innocent spouse relief, which applies to all joint filers.

Equitable relief: Innocent spouse relief Innocent spouse relief: Joint returns Joint returns: Innocent spouse Spouse: Innocent spouse relief

Separation of liability, which applies to joint filers who are divorced, widowed, legally separated, or who have not lived together for the 12 months ending on the date election of this relief is filed.

Equitable relief, which applies to all joint filers who do not qualify for innocent spouse relief or separation of liability and to married couples filing separate returns in community property states.

Form 8857: Innocent spouse relief Innocent spouse relief: Form 8857You must file Form 8857, Request for Innocent Spouse Relief, to request any of these kinds of relief. Publication 971, Innocent Spouse Relief, explains these kinds of relief and who may qualify for them.

Signing a joint return. Joint returns: Signing Signatures: Joint returns Spouse: Signing joint returns

For a return to be considered a joint return, both husband and wife generally must sign the return.

Spouse died before signing. Death: Of spouse Spouse: Deceased

If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. If neither you nor anyone else has yet been appointed as executor or administrator, you can sign the return for your spouse and enter Filing as surviving spouse in the area where you sign the return.

Spouse away from home.

If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so that it can be filed on time.

Injury or disease prevents signing.

If your spouse cannot sign because of injury or disease and tells you to sign, you can sign your spouse's name in the proper space on the return followed by the words By (your name), Husband (or Wife). Be sure to also sign in the space provided for your signature. Attach a dated statement, signed by you, to the return. The statement should include the form number of the return you are filing, the tax year, the reason your spouse cannot sign, and that your spouse has agreed to your signing for him or her.

Signing as guardian of spouse. Joint returns: Guardian of spouse, signing as

If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian.

Spouse in combat zone. Armed forces: Combat zone, signing return for spouse

If your spouse is unable to sign the return because he or she is serving in a combat zone (such as the Persian Gulf area, Yugoslavia, or Afghanistan), or a qualified hazardous duty area (Bosnia and Herzegovina, Croatia, or Macedonia), and you do not have a power of attorney or other statement, you can sign for your spouse. Attach a signed statement to your return that explains that your spouse is serving in a combat zone. For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, get Publication 3, Armed Forces' Tax Guide.

Other reasons spouse cannot sign.

If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). Attach the power of attorney (or a copy of it) to your tax return. You can use Form 2848.

Nonresident alien or dual-status alien. Aliens Dual-status Dual-status taxpayers Dual-status taxpayers: Joint returns not available Joint returns: Nonresident or dual-status alien spouse Married taxpayers: Dual-status alien spouse Spouse: Dual-status alien spouse

A joint return generally cannot be filed if either spouse is a nonresident alien at any time during the tax year. However, if one spouse was a nonresident alien or dual-status alien who was married to a U.S. citizen or resident at the end of the year, the spouses can choose to file a joint return. If you do file a joint return, you and your spouse are both treated as U.S. residents for the entire tax year. See chapter 1 of Publication 519.

Married Filing Separately Married filing separately: Filing status Separate returns Married filing separately

You can choose married filing separately as your filing status if you are married. This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return.

If you and your spouse do not agree to file a joint return, you have to use this filing status unless you qualify for head of household status, discussed next.

You may be able to choose head of household filing status if you live apart from your spouse, meet certain tests, and are considered unmarried (explained later, under Head of Household). This can apply to you even if you are not divorced or legally separated. If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. See Head of Household, later, for more information.

Unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). This way you can make sure you are using the filing status that results in the lowest combined tax. However, you will generally pay more combined tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later.

How to file. Form 1040: Use of Form 1040A: Use of Married filing separately: How to file

If you file a separate return, you generally report only your own income, exemptions, credits, and deductions on your individual return. You can claim an exemption for your spouse if your spouse had no gross income and was not the dependent of another person. However, if your spouse had any gross income or was the dependent of someone else, you cannot claim an exemption for him or her on your separate return.

If you file as married filing separately, you can use Form 1040A or Form 1040. Select this filing status by checking the box on line 3 of either form. You also must enter your spouse's social security number and full name in the spaces provided. Use the Married filing separately column of the Tax Table or Section C of the Tax Computation Worksheet to figure your tax.

Special Rules Married filing separately: Special rules

If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you will usually pay more tax on a separate return than if you used another filing status that you qualify for.

Your tax rate generally will be higher than it would be on a joint return.

Your exemption amount for figuring the alternative minimum tax will be half that allowed to a joint return filer.

You cannot take the credit for child and dependent care expenses in most cases, and the amount that you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000 if you filed a joint return).

You cannot take the earned income credit.

You cannot take the exclusion or credit for adoption expenses in most cases.

You cannot take the education credits (the Hope credit and the lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction.

You cannot exclude any interest income from qualified U.S. savings bonds that you used for higher education expenses.

If you lived with your spouse at any time during the tax year:

You cannot claim the credit for the elderly or the disabled.

You will have to include in income more (up to 85%) of any social security or equivalent railroad retirement benefits you received, and

You cannot roll over amounts from a traditional IRA into a Roth IRA.

The following credits and deductions are reduced at income levels that are half of those for a joint return:

The child tax credit,

The retirement savings contributions credit,

Itemized deductions, and

The deduction for personal exemptions.

Your capital loss deduction limit is $1,500 (instead of $3,000 if you filed a joint return).

If your spouse itemizes deductions, you cannot claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.

Individual retirement arrangements (IRAs). Individual retirement arrangements (IRAs): Married filing separately IRAs Individual retirement arrangements (IRAs) Married filing separately: Individual retirement arrangements (IRAs)

You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse was covered by an employee retirement plan at work during the year. Your deduction is reduced or eliminated if your income is more than a certain amount. This amount is much lower for married individuals who file separately and lived together at any time during the year. For more information, see How Much Can You Deduct? in chapter 1 of Publication 590, Individual Retirement Arrangements (IRAs).

Rental activity losses. Losses: Rental real estate activities Married filing separately: Rental activity losses Rental income and expenses: Losses from rental real estate activities

If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income up to $25,000. This is called a special allowance. However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. See Rental Activities in Publication 925, Passive Activity and At-Risk Rules.

Community property states. Community property states: Married filing separately, treatment of income Filing status Married filing separately Married filing separately Married filing separately: Community property states

If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. See Publication 555, Community Property.

Joint Return After Separate Returns Amended returns: Form 1040X Filing status: Change to: Joint return after separate returns Form 1040X: Change of filing status Married filing separately: Filing status: Change to Tax returns Amended Form 1040X

You can change your filing status by filing an amended return using Form 1040X.

If you or your spouse (or both of you) file a separate return, you generally can change to a joint return any time within 3 years from the due date of the separate return or returns. This does not include any extensions. A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status.

Separate Returns After Joint Return Filing status: Change to: Separate returns after joint return

Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return.

Exception.

A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. The personal representative has 1 year from the due date of the return to make the change. See Publication 559 for more information on filing income tax returns for a decedent.

Head of Household Filing status: Head of household

You may be able to file as head of household if you meet all the following requirements.

You are unmarried or considered unmarried on the last day of the year.

You paid more than half the cost of keeping up a home for the year.

A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the qualifying person is your dependent parent, he or she does not have to live with you. See Special rule for parent, later, under Qualifying Person.

Head of household: Qualifying person

If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. You will also receive a higher standard deduction than if you file as single or married filing separately.

How to file. Head of household: How to file

If you file as head of household, you can use either Form 1040A or Form 1040. Indicate your choice of this filing status by checking the box on line 4 of either form. Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax.

Considered Unmarried Head of household: Considered unmarried

To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. You are considered unmarried on the last day of the tax year if you meet all the following tests.

You file a separate return (defined, earlier, under Joint Return After Separate Returns).

You paid more than half the cost of keeping up your home for the tax year.

Your spouse did not live in your home during the last 6 months of the tax year. Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. See Temporary absences, later.

Your home was the main home of your child, stepchild, or eligible foster child for more than half the year. (See Home of qualifying person, later, for rules applying to a child's birth, death, or temporary absence during the year.)

You must be able to claim an exemption for the child. However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rules described later in Children of divorced or separated parents under Qualifying Child or in Support Test for Children of Divorced or Separated Parents under Qualifying Relative. The general rules for claiming an exemption for a dependent are explained later under Exemptions for Dependents.

If you were considered married for part of the year and lived in a community property state (listed earlier under Married Filing Separately), special rules may apply in determining your income and expenses. See Publication 555 for more information.

Nonresident alien spouse. Aliens Nonresident Nonresident aliens Head of household: Nonresident alien spouse Nonresident aliens: Spouse Spouse: Nonresident alien

You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. However, your spouse is not a qualifying person for head of household purposes. You must have another qualifying person and meet the other tests to be eligible to file as a head of household.

Earned income credit. Nonresident aliens: Spouse: Earned income credit

Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you are still considered married for purposes of the earned income credit (unless you meet the five tests listed earlier under Considered Unmarried). You are not entitled to the credit unless you file a joint return with your spouse and meet other qualifications.

See Publication 596 for more information.

Choice to treat spouse as resident.

You are considered married if you choose to treat your spouse as a resident alien. See chapter 1 of Publication 519.

Keeping Up a Home Head of household: Cost of keeping up home Home: Cost of keeping up

To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. You can determine whether you paid more than half of the cost of keeping up a home by using the following worksheet.

Cost of Keeping Up a Home Amount You Paid Total Cost Property taxes $ $ Mortgage interest expense Rent Utility charges Upkeep and repairs Property insurance Food consumed on the premises Other household expenses Totals $ $ Minus total amount you paid ( ) Amount others paid $ If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home.

Worksheets: Head of household status and cost of keeping up home Costs you include.

Include in the cost of upkeep expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home.

Costs you do not include.

Do not include in the cost of upkeep expenses such as clothing, education, medical treatment, vacations, life insurance, or transportation. Also, do not include the rental value of a home you own or the value of your services or those of a member of your household.

Hurricane Katrina

Also do not include any government or charitable assistance you received because of your temporary relocation due to Hurricane Katrina.

Qualifying Person Head of household: Qualifying person to file as Qualifying: Person

See Table 4 to see who is a qualifying person.

Any person not described in Table 4 is not a qualifying person.

Home of qualifying person.

Generally, the qualifying person must live with you for more than half of the year.

Special rule for parent. Children: Claiming parent, when child is head of household Parent: Head of household, claim for

If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. However, you must be able to claim an exemption for your father or mother. Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly.

Death or birth. Birth: Of child Of dependent Children: Birth of child: Head of household, qualifying person to file as Children: Death of child: Head of household, qualifying person to file as Death: Of dependent

You may be eligible to file as head of household if the individual who qualifies you for this filing status is born or dies during the year. You must have provided more than half of the cost of keeping up a home that was the individual's main home for more than half of the year, or, if less, the period during which the individual lived.

Example.

You are unmarried. Your mother, for whom you can claim an exemption, lived in an apartment by herself. She died on September 2. The cost of the upkeep of her apartment for the year until her death was $6,000. You paid $4,000 and your brother paid $2,000. Your brother made no other payments towards your mother's support. Your mother had no income. Because you paid more than half of the cost of keeping up your mother's apartment from January 1 until her death, and you can claim an exemption for her, you can file as a head of household.

Temporary absences. Absence, temporary

You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. It must be reasonable to assume that the absent person will return to the home after the temporary absence. You must continue to keep up the home during the absence.

Kidnapped child. Kidnapped children: Head of household status and

You may be eligible to file as head of household, even if the child who is your qualifying person has been kidnapped. You can claim head of household filing status if all the following statements are true.

The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family.

In the year of the kidnapping, the child lived with you for more than half the part of the year before the kidnapping.

You would have qualified for head of household filing status if the child had not been kidnapped.

This treatment applies for all years until the child is returned. However, the last year this treatment can apply is the earlier of:

The year there is a determination that the child is dead, or

The year the child would have reached age 18.

Filing status: Change to: Separate returns after joint return

Married child.

Your child who is married at the end of the year generally cannot be your qualifying person unless you can claim the child as a dependent. However, the child is a qualifying person if all three of the following requirements are met.

The child is your qualifying child (as defined under Exemptions for Dependents), later.

The child does not file a joint return, unless the return is filed only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns.

The child is a U.S. citizen or resident, or a resident of Canada or Mexico. (This requirement is met if you are a U.S. citizen and the child is an adopted child who lived with you all year as a member of your household.)

Qualifying Widow(er) With Dependent Child Head of household: Qualifying surviving spouse with dependent child Qualifying: Surviving spouse Widow/widower Spouse Surviving Surviving spouse Surviving spouse: Widow(er) with dependent child Widow/widower Surviving spouse

If your spouse died in 2005, you can use married filing jointly as your filing status for 2005 if you otherwise qualify to use that status. The year of death is the last year for which you can file jointly with your deceased spouse. See Married Filing Jointly, earlier.

You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. For example, if your spouse died in 2004 and you have not remarried, you may be able to use this filing status for 2005 and 2006. The rules for using this filing status are explained in detail here.

This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). This status does not entitle you to file a joint return.

How to file. Surviving spouse: Widow(er) with dependent child: How to file

If you file as a qualifying widow(er) with dependent child, you can use either Form 1040A or Form 1040. Indicate your filing status by checking the box on line 5 of either form. Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax.

<ROM>Table 4.</ROM> <IMARK> Who Is a Qualifying Person for Filing as Head of Household? <SUP>1</SUP>Caution: See the text of this publication for the other requirements you must meet to claim head of household filing status. IF the person is your . . . AND . . . THEN that person is . . . qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests) ² he or she is single a qualifying person, whether or not you can claim an exemption for the person. he or she is married and you can claim an exemption for him or her a qualifying person. he or she is married and you cannot claim an exemption for him or her not a qualifying person. ³ qualifying relative ⁴ who is your father or mother you can claim an exemption for him or her a qualifying person. ⁵ you cannot claim an exemption for him or her not a qualifying person. qualifying relative ⁴ other than your father or mother (such as a grandparent, brother, or sister who meets certain tests) ⁶ he or she lived with you more than half the year, and you can claim an exemption for him or her ⁷ a qualifying person. he or she did not live with you more than half the year not a qualifying person. you cannot claim an exemption for him or her not a qualifying person. ¹A person cannot qualify more than one taxpayer to use the head of household filing status for the year. ²The term qualifying child is defined under Exemptions for Dependents, later. Note: If you are a noncustodial parent, the term qualifying child for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of divorced or separated parents under Qualifying Child, later. If you are the custodial parent and those rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. ³ This person is a qualifying person if the requirements described under Married child are met. ⁴The term qualifying relative is defined under Exemptions for Dependents, later. ⁵See Special rule for parent for an additional requirement. ⁶A person who is your qualifying relative only because he or she lived with you all year as a member of your household is not a qualifying person. ⁷If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. See Multiple Support Agreement.

Eligibility rules. Surviving spouse: Widow(er) with dependent child: Eligibility rules

You are eligible to file your 2005 return as a qualifying widow(er) with dependent child if you meet all the following tests.

You were entitled to file a joint return with your spouse for the year your spouse died. It does not matter whether you actually filed a joint return.

Your spouse died in 2003 or 2004 and you did not remarry before the end of 2005.

You have a child or stepchild for whom you can claim an exemption. This does not include a foster child.

You paid more than half of the cost of keeping up a home that was the main home for you and that child for the entire year, except for temporary absences. See Temporary absences and Keeping Up a Home, discussed earlier under Head of Household.

Example.

John Reed's wife died in 2003. John has not remarried. He has continued during 2004 and 2005 to keep up a home for himself and his child for whom he can claim an exemption. For 2003 he was entitled to file a joint return for himself and his deceased wife. For 2004 and 2005, he can file as a qualifying widower with a dependent child. After 2005, he can file as head of household if he qualifies.

Death or birth. Children: Birth of child: Widow(er) with dependent child, qualifying person to file as Children: Death of child: Widow(er) with dependent child, qualifying person to file as Kidnapped children: Widow(er) with dependent child Surviving spouse: Widow(er) with dependent child: Death or birth of child

You may be eligible to file as a qualifying widow(er) with dependent child if the child who qualifies you for this filing status is born or dies during the year. You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive.

Kidnapped child. Surviving spouse: Widow(er) with dependent child: Kidnapped child

You may be eligible to file as a qualifying widow(er) with dependent child, even if the child who qualifies you for this filing status has been kidnapped. You can claim qualifying widow(er) with dependent child filing status if all the following statements are true.

The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family.

In the year of the kidnapping, the child lived with you for more than half the part of the year before the kidnapping.

You would have qualified for qualifying widow(er) with dependent child filing status if the child had not been kidnapped.

Filing statusAs mentioned earlier, this filing status is available for only 2 years following the year your spouse died.

Exemptions Exemptions

Exemptions reduce your taxable income. Generally, you can deduct $3,200 for each exemption you claim in 2005. If you are entitled to two exemptions for 2005, you would deduct $6,400 ($3,200 × 2). But you may lose the benefit of part or all of your exemptions if your adjusted gross income is above a certain amount. See Phaseout of Exemptions, later.

You usually can claim exemptions for yourself, your spouse, and each person you can claim as a dependent.

Types of exemptions. Exemptions: Types of

There are two types of exemptions: personal exemptions and exemptions for dependents. While each is worth the same amount ($3,200 for 2005), different rules, discussed later, apply to each type.

Who cannot claim a personal exemption. Personal exemption: Who cannot claim

If you are entitled to claim an exemption for a dependent (such as your child), that dependent cannot claim a personal exemption on his or her own tax return.

Exemption for individual displaced by Hurricane Katrina. Hurricane Katrina

You may be able to claim a $500 exemption if you provided housing to a person displaced by Hurricane Katrina. For details, see Exemption for Individual Displaced by Hurricane Katrina, later.

How to claim exemptions. Exemptions: How to claim Personal exemption: How to claim

How you claim an exemption on your tax return depends on which form you file.

Form 1040EZ filers. Form 1040EZ: Personal exemption

If you file Form 1040EZ, the exemption amount is combined with the standard deduction and entered on line 5.

Form 1040A filers. Form 1040A: Personal exemption

If you file Form 1040A, complete lines 6a through 6d. The total number of exemptions you can claim is the total in the box on line 6d. Also complete line 26 by multiplying the number in the box on line 6d by $3,200. If your adjusted gross income is more than $109,475, see Phaseout of Exemptions, later.

Form 1040 filers. Form 1040: Personal exemption

If you file Form 1040, complete lines 6a through 6d. On line 42, multiply the total exemptions shown in the box on line 6d by $3,200 and enter the result. If your adjusted gross income is more than $109,475, see Phaseout of Exemptions, later.

U.S. citizen or resident. Exemptions: U.S. citizen or resident

Canada, resident of Mexico, resident ofIf you are a U.S. citizen, U.S. resident, U.S. national (defined later) or a resident of Canada or Mexico, you may qualify for any of the exemptions discussed here.

Nonresident aliens.

Aliens Nonresident Nonresident aliens Exemptions: Nonresident aliens Nonresident aliens: ExemptionsGenerally, if you are a nonresident alien (other than a resident of Canada or Mexico, or certain residents of India, Japan, or Korea), you can qualify for only one personal exemption for yourself. You cannot claim exemptions for a spouse or dependents.

These restrictions do not apply if you are a nonresident alien married to a citizen or resident of the United States and have chosen to be treated as a resident of the United States.

Residents of Japan. Japan, residents of

Beginning in 2005, nonresident aliens who are residents of Japan generally cannot claim an exemption for a spouse or dependent. However, if you choose to have the old U.S.-Japan treaty apply in its entirety for 2005, you may be able to claim these exemptions for 2005.

More information.

For more information on exemptions if you are a nonresident alien, see chapter 5 in Publication 519.

Dual-status taxpayers. Aliens Dual-status Dual-status taxpayers Dual-status taxpayers: Exemptions Exemptions: Dual-status taxpayers

If you have been both a nonresident alien and a resident alien in the same tax year, you should get Publication 519 for information on determining your exemptions.

Personal Exemptions Deductions Personal exemption Exemptions Personal Personal exemption 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 Single taxpayers: Personal 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's Exemption Personal exemption: Spouse's exemption Spouse: Exemption for

Your spouse is never considered your dependent.

Joint return. Joint returns: Personal exemption Personal exemption: Joint return

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

Separate return. Married filing separately: Personal exemption Personal exemption: 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.

Head of household. Head of household: Personal exemption Personal exemption: Head of household

If you qualify for head of household filing status because you are considered unmarried, you can claim an exemption for your spouse if the conditions described in the preceding paragraph are satisfied.

To claim the exemption for your spouse, check the box on line 6b of Form 1040 or Form 1040A and enter the name of your spouse in the space to the right of the box. Enter the SSN or ITIN of your spouse in the space provided at the top of Form 1040 or Form 1040A.

Death of spouse. Personal exemption: Deceased spouse Spouse: Deceased

If your spouse died during the year, you generally can claim your spouse's exemption under the rules just explained in Joint return and Separate return.

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. Divorced taxpayers: Personal exemption Personal exemption: Divorced or separated spouse Separated taxpayers: Personal exemption

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 Individual Displaced by Hurricane Katrina Hurricane Katrina

You may be able to take an exemption amount of $500 for providing housing to a person displaced by Hurricane Katrina. You cannot claim this amount for housing your spouse or any of your dependents.

You can claim this exemption for up to four individuals. You may be able to take this exemption if all of the following are true.

You provided housing in your main home free of charge for at least 60 consecutive days in 2005 to a person displaced by Hurricane Katrina.

The person lived in the Hurricane Katrina disaster area on August 28, 2005.

You did not receive rent or any other amount for providing the housing.

To claim this amount, file Form 8914. For more information, see Publication 4492.

Exemptions for Dependents Exemptions: Dependents Dependents: Exemption for

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.

Beginning in 2005, the term dependent means:

A qualifying child, or

A qualifying relative.

The terms qualifying child and qualifying relative are defined later.

You can claim an exemption for a qualifying child or qualifying relative only if these three tests are met.

Dependent taxpayer test.

Joint return test.

Citizen or resident test.

These three tests are explained in detail later.

All the requirements for claiming an exemption for a dependent are summarized in Table 5.

<ROM>Table 5.</ROM> <IMARK> Overview of the Rules for Claiming an Exemption for a DependentCaution: This table is only an overview of the rules. For details, see the rest of this publication.

You cannot claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer.

You cannot claim a married person who files a joint return as a dependent unless that joint return is only a claim for refund and there would be no tax liability for either spouse on separate returns.

You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident, U.S. national, or a resident of Canada or Mexico, for some part of the year. ¹

You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative.

Tests To Be a Qualifying Child Tests To Be a Qualifying Relative

The child must be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student, or (c) any age if permanently and totally disabled.

The child must have lived with you for more than half of the year. ²

The child must not have provided more than half of his or her own support for the year.

If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child.

The person cannot be your qualifying child or the qualifying child of anyone else.

The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you, or (b) must live with you all year as a member of your household. ²

The person's gross income for the year must be less than $3,200. ³

You must provide more than half of the person's total support for the year. ⁴

¹There is an exception for certain adopted children. ²There are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents, and kidnapped children. ³There is an exception if the person is disabled and has income from a sheltered workshop. ⁴There is an exception for multiple support agreements.

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 or if the exemption will be reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later.

Housekeepers, maids, or servants. Domestic help, no exemption for Household workers, no exemption for

If these people work for you, you cannot claim exemptions for them.

Child tax credit. Child tax credit

You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year. For more information, see the instructions in your tax forms package.

Dependent Taxpayer Test Dependent taxpayer test Dependents: Not allowed to claim dependents

If you could be claimed as a dependent by another person, you cannot claim anyone else as a dependent. Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent.

If you are filing a joint return and your spouse could be claimed as a dependent by someone else, you and your spouse cannot claim any dependents on your joint return.

Joint Return Test Joint return test Married dependents, filing joint return Dependents: Married, filing joint return

You generally cannot claim a married person as a dependent if he or she files a joint return.

Example.

You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. The couple files a joint return. Even though your daughter is your qualifying child, you cannot take an exemption for her.

Exception.

The joint return test does not apply if a joint return is filed by the dependent and his or her spouse merely as a claim for refund and no tax liability would exist for either spouse on separate returns.

Example.

Your son and his wife each had less than $3,000 of wages and no unearned income. Neither is required to file a tax return. Taxes were taken out of their pay, so they filed a joint return to get a refund. You are not disqualified from claiming their exemptions just because they filed a joint return.

Citizen or Resident Test Citizen or resident test U.S. citizen or resident Canada, resident of Mexico, resident of

You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident, U.S. national, or a resident of Canada or Mexico, for some part of the year. However, there is an exception for certain adopted children, as explained next.

Adopted child. Adopted child Children Adoption Adopted child

If you are a U.S. citizen who has legally adopted a child who is not a U.S. citizen, U.S. resident, or U.S. national, this test is met if the child lived with you as a member of your household all year. This also applies if the child was lawfully placed with you for legal adoption.

Child's place of residence.

Children usually are citizens or residents of the country of their parents.

If you were a U.S. citizen when your child was born, the child may be a U.S. citizen even if the other parent was a nonresident alien and the child was born in a foreign country. If so, this test is met.

Foreign students' place of residence. Foreign students Students: Foreign

Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U.S. residents and do not meet this test. You cannot claim an exemption for them. However, if you provided a home for a foreign student, you may be able to take a charitable contribution deduction. See Expenses Paid for Student Living With You in Publication 526, Charitable Contributions.

U.S. national.

U.S. national National of the United States

A U.S. national is an individual who, although not a U.S. citizen, owes his or her allegiance to the United States. U.S. nationals include American Samoans and Northern Mariana Islanders who chose to become U.S. nationals instead of U.S. citizens.

Qualifying Child Qualifying: Child Child, qualifying Dependents: Qualifying child

There are five tests that must be met for a child to be your qualifying child. The five tests are:

Relationship,

Age,

Residency,

Support, and

Special test for qualifying child of more than one person.

These tests are explained next.

Relationship Test Relationship test

To meet this test, a child must be:

Your son, daughter, stepchild, eligible foster child, or a descendant (for example, your grandchild) of any of them, or

Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them.

Adopted child. Adopted child

An adopted child is always treated as your own child. The term adopted child includes a child who was lawfully placed with you for legal adoption.

Eligible foster child. Eligible foster child Foster child

An eligible foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

Age Test Age: Test

To meet this test, a child must be:

Under age 19 at the end of the year,

A full-time student under age 24 at the end of the year, or

Permanently and totally disabled at any time during the year, regardless of age.

Example.

Your son turned 19 on December 10. Unless he was disabled or a full-time student, he does not meet the age test because, at the end of the year, he was not under age 19.

Full-time student.

A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance.

Student defined. Students: Defined

To qualify as a student, your child must be, during some part of each of any 5 calendar months of the year:

A full-time student at a school that has a regular teaching staff, course of study, and a regularly enrolled student body at the school, or

A student taking a full-time, on-farm training course given by a school described in (1), or by a state, county, or local government agency.

The 5 calendar months do not have to be consecutive.

Hurricane Katrina. Hurricane Katrina

If your child enrolled in school before August 25, 2005, the child is treated as a student for any month of the enrollment period he or she was unable to attend classes because of Hurricane Katrina.

School defined.

A school can be an elementary school, junior and senior high school, college, university, or technical, trade, or mechanical school. However, an on-the-job training course, correspondence school, or Internet school does not count as a school.

Vocational high school students.

Students who work on co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students.

Permanently and totally disabled.

Your child is permanently and totally disabled if both of the following apply.

He or she cannot engage in any substantial gainful activity because of a physical or mental condition.

A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death.

Residency Test Residency test

To meet this test, your child must have lived with you for more than half of the year. There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents.

Temporary absences. Temporary absences Absence, temporary

Your child is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances such as:

Illness,

Education,

Business,

Vacation, or

Military service.

Death or birth of child. Death: Of child Birth: Of child

A child who was born or died during the year is treated as having lived with you all year if your home was the child's home the entire time he or she was alive during the year. The same is true if the child lived with you all year except for any required hospital stay following birth.

Child born alive. Child born alive

You may be able to claim an exemption for a child who was born alive during the year, even if the child lived only for a moment. State or local law must treat the child as having been born alive. There must be proof of a live birth shown by an official document, such as a birth certificate. The child must be your qualifying child or qualifying relative, and all the other tests to claim an exemption for a dependent must be met.

Stillborn child. Stillborn child Children: Stillborn

You cannot claim an exemption for a stillborn child.

Kidnapped child. Kidnapped children: Qualifying child Children: Kidnapped

You can treat your child as meeting the residency test even if the child has been kidnapped, but both of the following statements must be true.

The child is presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family.

In the year the kidnapping occurred, the child lived with you for more than half of the part of the year before the date of the kidnapping.

This treatment applies for all years until the child is returned. However, the last year this treatment can apply is the earlier of:

The year there is a determination that the child is dead, or

The year the child would have reached age 18.

Children of divorced or separated parents. Parents, divorced or separated Divorced parents Separated parents

A child will be treated as the qualifying child of his or her noncustodial parent if all of the following apply.

The parents:

Are divorced or legally separated under a decree of divorce or separate maintenance,

Are separated under a written separation agreement, or

Lived apart at all times during the last 6 months of the year.

The child received over half of his or her support for the year from the parents.

The child is in the custody of one or both parents for more than half of the year.

A decree of divorce or separate maintenance or written separation agreement that applies to 2005 provides that the noncustodial parent can claim the child as a dependent (and, in the case of a pre-1985 agreement, the noncustodial parent provides at least $600 for the support of the child during the year) or the custodial parent signs a written declaration that he or she will not claim the child as a dependent for the year.

Written declaration. Form 8332: Release of exemption to noncustodial parent

The custodial parent may use either Form 8332 or a similar statement (containing the information required by the form) to make the written declaration to release the exemption to the noncustodial parent.

The exemption can be released for 1 year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration.

Custodial parent and noncustodial parent. Child custody Children: Custody of Custody of child Divorced taxpayers: Child custody

The custodial parent is the parent with whom the child lived for the greater part of the year. The other parent is the noncustodial parent.

If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater part of the rest of the year.

Example.

Your child lived with you for 10 months of the year. The child lived with your former spouse for the other 2 months. You are considered the custodial parent.

Parents who never married.

This special rule for divorced or separated parents also applies to parents who never married.

Support Test (To Be a Qualifying Child) Support test: Qualifying child

To meet this test, the child cannot have provided more than half of his or her own support for the year.

This test is different from the support test to be a qualifying relative, which is described later. However, to see what is or is not support, see Support Test (To Be a Qualifying Relative), later. If you are not sure whether a child provided more than half of his or her own support, you may find Worksheet 1 helpful.

Scholarships. Scholarships

A scholarship received by a child who is a full-time student is not taken into account in determining whether the child provided more than half of his or her own support.

Special Test for Qualifying Child of More Than One Person

If your qualifying child is not a qualifying child for anyone else, this test does not apply to you and you do not need to read about it. This is also true if your qualifying child is not a qualifying child for anyone else except your spouse with whom you file a joint return.

If a child is treated as the qualifying child of the noncustodial parent under the rules for children of divorced or separated parents described earlier, see Applying this special test to divorced or separated parents, later.

Sometimes, a child meets the relationship, age, residency, and support tests to be a qualifying child of more than one person. Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child. To meet this special test, you must be the person who can treat the child as a qualifying child.

If you and another person have the same qualifying child, you and the other person(s) can decide which of you will treat the child as a qualifying child. That person can take all of the following tax benefits (provided the person is eligible for each benefit) based on the qualifying child.

The exemption for the child.

The child tax credit.

Head of household filing status.

The credit for child and dependent care expenses.

The earned income credit.

The other person cannot take any of these benefits based on this qualifying child. In other words, you and the other person cannot agree to divide these tax benefits between you.

If you and the ot