货币英语 15 Can Your Mother-In-Law be a Tax Exemption?

By Laura Adams.

Today’s show is about what makes someone a dependent, or an exemption¹, for income tax purposes.
Tax Exemptions² Save Money
It’s important to understand who you can claim as a dependent on your taxes, because you get a tax exemption for each one. Tax exemptions are a good thing because they save you money by lowering the income on which your income tax is calculated.
Types of Tax Exemptions
There are two types of exemptions: 1) personal exemptions and 2) dependent exemptions. For 2008 the amount you can deduct³ for each of these exemptions is $3,500. But this amount is reduced by a phase out of exemptions once your adjusted gross income (AGI) gets into the six figures.
I received an email from Amanda in Fairfax, VA. She writes:
I recently got married to a wonderful guy. Now, during the post wedding clean up I was filling out new tax forms to change my tax status from single to married. My question is if I take no deductions⁴ and my new husband claims me as a dependent can that hurt or help us financially?
Thanks for the question Amanda and many congratulations! My advice is to always take every tax exemption that you can. You can usually claim one exemption for yourself and one for your spouse⁵. These are the personal exemptions—your spouse is actually not considered your dependent, nor are you considered his dependent. Amanda, if no one else can claim your husband as an exemption, I recommend that you do so.
Requirement for Dependent Exemptions
The other category of tax exemptions are for dependents. You can claim one exemption for each person you can legally claim as a dependent. In order to claim a child as a dependent, they must have a social security number or taxpayer⁶ identification number and pass an exemption test. I’ll give you the test details in a moment.
If you’re divorced or separated from a spouse, the parent who has custody⁷ of the child for more than half of the tax year can claim the child as a dependent. It doesn’t matter which parent provided more financial support for the child during the year.
But what if you care for other family members, like a mother-in-law? Don’t you get to claim and receive a tax exemption for them as well? Absolutely… if they pass the exemption test that I mentioned. So here it is:
They must be a relative OR if not a relative, live in your household all year
They cannot file a joint⁸ tax return with a spouse, except to claim a refund⁹ of tax due
They must be a citizen, resident or national of the U.S. OR be a resident of Canada or Mexico
They must be someone for whom you provide over one half of their total financial support
They must have less than $3,400 of gross annual income unless the dependent is a child under the age of 19 or a child who is a full-time¹⁰ student under the age of 24. Note that the $3,400 income threshold was the amount for 2007, and it may increase for 2008.
What is Gross Income?
It’s important to distinguish that gross income means all taxable income. This includes wages, unemployment benefits, receipts from rental¹¹ property, and some social security benefits, for example. How much social security income is taxable depends on the total amount of benefits received and other income sources.
But if someone’s only income is social security, those benefits are generally not taxable, and that person will usually pass the test to qualify as a dependent. I’ll put a link in the show notes to IRS Publication 915 which gives complete details about what social security benefits are taxable.
Multiple-Support Arrangements
In some families, there may be several people who collectively support a dependent, such as a disabled parent. The law allows for a Multiple-Support Agreement, which is Form 2120. Each financial contributor to a dependent’s support must sign this form and submit it with their tax return. If the following four rules are met in a multiple-support arrangement, you can receive a tax exemption for the dependent:
If you pay more than 10% of the person’s total financial support
If the amount paid by you and others totals more than one half of the person’s total financial support
If each contributor could have claimed the tax exemption on their own tax return, except that each gave less than one half of the total financial support
If each contributor who paid more than 10% of the support agrees that you can take the tax exemption on your tax return
If you need more details about tax exemptions or the phase out amounts, I’ll put a link to IRS publication 501 in the show notes at moneygirl.quickanddirtytips.com.  Next week, I'll cover tax credits -- a different way to reduce your taxes!
Administrative¹²

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Chi-Ching, that's all for now, courtesy of Money Girl, your guide to a richer life.

 

1 exemption   

n.豁免，免税额，免除

参考例句：

• You may be able to apply for exemption from local taxes.你可能符合资格申请免除地方税。
• These goods are subject to exemption from tax.这些货物可以免税。

2 exemptions   

n.（义务等的）免除( exemption的名词复数 )；免（税）；（收入中的）免税额

参考例句：

• The exemptions for interpretive rules, policy statements, and procedural rules have just been discussed. 有关解释性规则、政策说明和程序规则的免责我们刚刚讨论过。 来自英汉非文学 - 行政法
• A: The regulation outlines specific exemptions for some WPM. 答：该规定概述了某些木质包装材料的特定的例外情形。 来自互联网

3 deduct   

vt.扣除，减去

参考例句：

• You can deduct the twenty - five cents out of my allowance.你可在我的零用钱里扣去二角五分钱。
• On condition of your signing this contract,I will deduct a percentage.如果你在这份合同上签字，我就会给你减免一个百分比。

4 deductions   

扣除( deduction的名词复数 )； 结论； 扣除的量； 推演

参考例句：

• Many of the older officers trusted agents sightings more than cryptanalysts'deductions. 许多年纪比较大的军官往往相信特务的发现，而不怎么相信密码分析员的推断。
• You know how you rush at things,jump to conclusions without proper deductions. 你知道你处理问题是多么仓促，毫无合适的演绎就仓促下结论。

5 spouse   

n.配偶(指夫或妻)

参考例句：

• Her spouse will come to see her on Sunday.她的丈夫星期天要来看她。
• What is the best way to keep your spouse happy in the marriage?在婚姻中保持配偶幸福的最好方法是什么？

6 taxpayer   

n.纳税人

参考例句：

• The new scheme will run off with a lot of the taxpayer's money.这项新计划将用去纳税人许多钱。
• The taxpayer are unfavourably disposed towards the recent tax increase.纳税者对最近的增加税收十分反感。

7 custody   

n.监护，照看，羁押，拘留

参考例句：

• He spent a week in custody on remand awaiting sentence.等候判决期间他被还押候审一个星期。
• He was taken into custody immediately after the robbery.抢劫案发生后，他立即被押了起来。

8 joint   

adj.联合的，共同的；n.关节，接合处；v.连接，贴合

参考例句：

• I had a bad fall,which put my shoulder out of joint.我重重地摔了一跤，肩膀脫臼了。
• We wrote a letter in joint names.我们联名写了封信。

9 refund   

v.退还，偿还；n.归还，偿还额，退款

参考例句：

• They demand a refund on unsatisfactory goods.他们对不满意的货品要求退款。
• We'll refund your money if you aren't satisfied.你若不满意，我们愿意退款给你。

10 full-time   

adj.满工作日的或工作周的，全时间的

参考例句：

• A full-time job may be too much for her.全天工作她恐怕吃不消。
• I don't know how she copes with looking after her family and doing a full-time job.既要照顾家庭又要全天工作，我不知道她是如何对付的。

11 rental   

n.租赁，出租，出租业

参考例句：

• The yearly rental of her house is 2400 yuan.她这房子年租金是2400元。
• We can organise car rental from Chicago O'Hare Airport.我们可以安排提供从芝加哥奥黑尔机场出发的租车服务。

12 administrative   

adj.行政的，管理的

参考例句：

• The administrative burden must be lifted from local government.必须解除地方政府的行政负担。
• He regarded all these administrative details as beneath his notice.他认为行政管理上的这些琐事都不值一顾。