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1c - Personal & Dependency Exemptions

1c - Personal & Dependency Exemptions -...

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Personal & Dependency Exemptions Federal Individual Income Tax  Online Lecture Series Presented by Akore Berliner, CPA
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Taxable Income Formula Income  $x,xxx Less: Exclusions          (x,xxx) Gross Income $x,xxx Less: Deductions  for  AGI          (x,xxx) Adjusted Gross Income (AGI) $x,xxx Less: The greater of- Total itemized deductions or the standard deduction            (x,xxx) Personal & dependency exemptions (x,xxx) Taxable Income $x,xxx FIGURE 3–1
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Filing Requirements General Rule:  Tax return must be filed  if  gross income is    the sum of the  standard deduction and  exemption   amount
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Exemption Amounts An Exemption is an  Exclusion from Income  Every taxpayer is allowed one “Exemption Amount” for  themselves (a Personal Exemption) and one for each  qualifying dependent (a Dependency Exemption) Amounts go up every year: 2007: $3,400 per exemption 2008: $3,500 per exemption Check www.irs.gov for current year exemption  amounts Some taxpayers are not entitled to a personal  Exemption i.e., Individual claimed as dependent by another taxpayer
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Qualifying Dependents A dependency exemption is available for  Qualified Dependents only: 1.
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