Tax Tips: What is an exemption?

An exemption is a deduction allowed for the taxpayer, a spouse, and dependents. Essentially, people who are supported by the income of the spouse and the taxpayer can become an exemption, if all the rules are followed.

Exemptions are most commonly taken for the taxpayer, the spouse, and any small children living in the home. But there are others who might also be an exemption, including children of divorce who don't live with you, an elderly sibling or parent supported by you, foster children, adopted children, and other relatives for whom you provide over half of the support.

The key to exemptions is that each person may only be claimed on one tax return. So, for example, if you've got small children living with your ex-wife, only one of you may claim the exemptions for those children.

Details on exemptions can be found in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Video: Deducting Mortgage Interest and Property Tax

If you itemize your deductions on Schedule A of your 1040, you can deduct the mortgage interest and property taxes you've paid.

Read More

Brought to you by TurboTax.com

Video: Why Do I Owe on My Tax Return?

If you finish your tax return and are confused as to why you need to send the IRS a check, there is only one possible explanation for this: you paid less tax during the year than you owed for your income level. Watch this video to find out more about why you may owe money of your tax return.

Read More

Brought to you by TurboTax.com

Video: Tax Deductions for Job Hunters

Searching for a new job can run up costs. Can you deduct them on your tax return? Yes, but with a few limitations.

Read More

Brought to you by TurboTax.com

Earthquake Retrofitting Tax Breaks for Californians

When a moderate earthquake hit Napa, California, in 2014, it cost individual homeowners as much as $300,000 to repair their homes. Most were older structures that weren’t equipped to stand up even to this less-than-devastating quake. For the most part, the cost of earthquake repairs comes out of homeowners’ pockets. Most insurance companies don’t cover earthquake damage and, if they do, it can be expensive and have high deductibles before payments begin. In some cases, you can report damages as deductible casualty loss on your tax return.

Read More

Brought to you by TurboTax.com
Read Full Story