Q & A on Tax Exemptions, Dependents, and Charitable Giving

by Ron Haynes

Since we work on our taxes (usually) only once per year and even then many of us turn them over to professionals whether in the form of a tax accountant or a software program like TurboTax, our understanding and recollection of many of the terms and definitions used during tax time can become a little fuzzy.

I’ve been receiving a lot of questions on taxes via my contact page. Here is some information that I put together to help answer some of the most common questions about exemptions, dependents, and giving to charities.

What are tax exemptions?

Exemptions are legal ways to reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for qualified dependents. Each exemption allows you to deduct $3,700 on your 2011 tax return and $3,800 on your 2012 tax return.

What is a dependent?

A dependent is your qualifying child or qualifying relative for whom you provide more than 50% of their financial support. You must list the Social Security Number of any dependent for whom you claim an exemption. You generally can take an exemption for each of your dependents.

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Can my spouse be my dependent?

No. Your spouse is never considered your dependent. If you file a joint return, you can claim one exemption for yourself and one for your spouse. But, if you’re filing a separate return from your spouse, you can claim an exemption for your spouse only if he or she had no gross income, is not filing a joint return themselves, and he or she wasn’t the dependent of another taxpayer.

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Do I have to file a tax return if I’m a dependent?

Maybe. If another person can legally claim you as a dependent, you may still have to file a tax return depending on your income, your marital status, any special taxes you owe, and any advance Earned Income Tax Credit payments you received. See IRS Publication 929, Tax Rules for Children and Dependents for more information on dependents and their requirements to file a tax return.

If someone else claims me as a dependent, do I still get a personal exemption?

No, you don’t. If someone else claims you as a dependent, you may not claim your personal exemption on your own tax return.

Who cannot be claimed as my dependent?

Generally speaking, you cannot claim a married person as a dependent if that person files a joint return with his or her spouse. You cannot claim non-U.S. citizens, any U.S. resident alien, a U.S. national who resided in Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children.

What if I have more questions about dependents?

See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.

Can I claim a charitable deductions for any charity I choose?

No. If you plan to claim a charitable deduction, make certain the charity is a tax-qualified organization under IRS rules. Use GuideStar to research a non-profit organization of charity’s tax-exempt status.

Can I deduct a donation if I received something in return?

No. These are called “charitable purchases” and are only deductible for the amount exceeding the worth of the item purchased. For example, if you attend a fancy $500 a plate dinner for children’s hospital, the deductible amount is equal to $500 minus the fair market value of the dinner.

Can I deduct what I spend at a charitable auction?

The same rules apply. If you bid $700 for  a week’s stay at a one bedroom beach condo in Florida. You probably didn’t exceed the fair market value of that stay and your bid wouldn’t be considered a legitimate tax deduction. However, if you bid $3,000 and the going rate for that condo is $700, you would be eligible to deduct $2,300.

Do I have to have a receipt for my charitable contributions?

Yes. Whatever you do, make sure you get your receipt for any and all of your charitable cash contributions – if you want to deduct them!

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What records do I need to provide as record of my charitable contribution?

  1. A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Bank records may include:
    • A canceled check,
    • A bank or credit union statement, or
    • A credit card statement.
  2. A receipt (or a letter or some other formal written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution.

Where can I get more information on charitable giving?

Refer to IRS Publication 526, Charitable Contributions, for additional information (and a lot of it) on giving to charity.

About the author

Ron Haynes has written 988 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.

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