Exemptions,  Standard  Deduction,  and Filing Information

taxmap/pubs/p501-000.htm#TXMP323127ee What's New for 2007(p1)

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Who must file.(p1)

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

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Exemption amount.(p1)

The amount you can deduct for each exemption has increased from $3,300 in 2006 to $3,400 in 2007.

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Exemption phaseout.(p1)

You lose part of the benefit of your exemptions if your adjusted gross income is above a certain amount. For 2007, the phaseout begins at $117,300 for married persons filing separately; $156,400 for single individuals; $195,500 for heads of household; and $234,600 for married persons filing jointly or qualifying widow(ers). However, in 2007, you can lose no more than 2/3 of the amount of your exemptions. In other words, each exemption cannot be reduced to less than $1,133.

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Standard deduction.(p1)

The standard deduction for most taxpayers who do not itemize their deductions on Schedule A of Form 1040 is higher in 2007 than it was in 2006. The amount depends on your filing status. The 2007 Standard Deduction Tables shown near the end of this publication as Tables 7, 8, and 9 can help you figure the amount of your deduction.

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Itemized deductions.(p1)

Some of your itemized deductions may be limited if your adjusted gross income is more than $156,400 ($78,200 if you are married filing separately). However, in 2007, the amount by which these deductions are reduced is only 2/3 of the amount of the reduction that otherwise would have applied. See Who Should Itemize, later.

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Exemption for housing person displaced by Hurricane Katrina expires.(p1)

The $500 exemption for housing an individual displaced by Hurricane Katrina, which was allowed for 2005 and 2006, is no longer allowed.

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Qualifying relative.(p1)

You may be able to claim an exemption for a child whose parent is not required to file a tax return. See Not a Qualifying Child Test.

taxmap/pubs/p501-000.htm#TXMP078adca7 Reminders(p2)

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Taxpayer identification number for aliens.(p2)

If you are a nonresident or resident alien and you do not have and are not eligible to get a social security number (SSN), you must apply for an individual taxpayer identification number (ITIN). Your spouse also may need an ITIN if he or she does not have and is not eligible to get an SSN. See Form W-7, Application for IRS Individual Taxpayer Identification Number. Also, see Social Security Numbers for Dependents, later.

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Photographs of missing children.(p2)

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.

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Introduction

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.

Who Must File 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.

Who Should File will help you decide if you should file a return, even if you are not required to do so.

Filing Status 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.

Exemptions, which reduce your taxable income, are discussed in Exemptions.

Exemptions for Dependents 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.

Standard Deduction 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.

How To Get Tax Help 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.

taxmap/pubs/p501-000.htm#TXMP328eb8e2 Nonresident aliens.(p2)

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.

taxmap/pubs/p501-000.htm#TXMP51236875 Comments and suggestions.(p2)

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-6526 
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.

taxmap/pubs/p501-000.htm#TXMP0c15e625 Ordering forms and publications.(p2)

Visit www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.

 
National Distribution Center 
P.O. Box 8903 
Bloomington, IL 61702-8903

taxmap/pubs/p501-000.htm#TXMP75ba833d Tax questions.(p2)

If you have a tax question, check the information available on www.irs.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.

Useful items

You may want to see:

taxmap/pubs/p501-000.htm#TXMP5e478155 Who Must File(p2)

Filing Requirements

If you are a U.S. citizen or resident alien, 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.

You may have to pay a penalty if you are required to file a return but fail to do so. 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.

taxmap/pubs/p501-000.htm#TXMP31365266 Gross income.(p2)

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.

taxmap/pubs/p501-000.htm#TXMP0f8bfc23 Self-employed persons.(p2)

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.

taxmap/pubs/p501-000.htm#TXMP67740d53 Filing status.(p3)

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.

taxmap/pubs/p501-000.htm#TXMP67ee3b27 Age.(p3)

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 2007, you are 65 or older if you were born before January 2, 1943.

taxmap/pubs/p501-000.htm#TXMP6b390611 Filing Requirements  for Most Taxpayers(p3)

Filing Requirements

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.

taxmap/pubs/p501-000.htm#TXMP3dc94ea2 Deceased Persons(p3)

Deceased

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

1. You are the surviving spouse, executor, administrator, or legal representative.
2. 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.

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Table 2.m2007 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.
mIn 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.
mCaution. If your gross income was $3,400 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 $850. Your earned income was more than $5,350. Your gross income was more than the larger of — $850, or Your earned income (up to $5,050) plus $300.
	Yes. You must file a return if any of the following apply. Your unearned income was more than $2,150 ($3,450 if 65 or older and blind). Your earned income was more than $6,650 ($7,950 if 65 or older and blind). Your gross income was more than $1,300 ($2,600 if 65 or older and blind) plus the larger of– $850, or Your earned income (up to $5,050) plus $300.
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 $850. Your earned income was more than $5,350. Your gross income was more than the larger of — $850, or Your earned income (up to $5,050) plus $300.
	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 $1,900 ($2,950 if 65 or older and blind). Your earned income was more than $6,400 ($7,450 if 65 or older and blind). Your gross income was more than $1,050 ($2,100 if 65 or older and blind) plus the larger of– $850, or Your earned income (up to $5,050) plus $300.

taxmap/pubs/p501-000.htm#TXMP6c97b8ff U.S. Citizens or Resident Aliens  Living Abroad(p3)

U.S. Citizens or Resident Aliens Living Abroad

For purposes of determining whether you must file a return, you must include in your gross income all of the income you earned or received 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.

taxmap/pubs/p501-000.htm#TXMP22592759 Residents of Puerto Rico(p3)

Residents of Puerto Rico

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.

taxmap/pubs/p501-000.htm#TXMP6a7c4c6f Individuals With Income From U.S. Possessions(p3)

Individuals With Income From U.S. Possessions

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 possession government. See Publication 570 for more information.

taxmap/pubs/p501-000.htm#TXMP5992208a Dependents(p4)

Dependent

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.

taxmap/pubs/p501-000.htm#TXMP588db70f Responsibility of parent.(p4)

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."

taxmap/pubs/p501-000.htm#TXMP2100ced4 Earned income.(p4)

This 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.

taxmap/pubs/p501-000.htm#TXMP4c3d7784 Child's earnings.(p4)

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.

taxmap/pubs/p501-000.htm#TXMP6834b608 Unearned income.(p4)

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.

taxmap/pubs/p501-000.htm#TXMP13a55b7f Election to report child's unearned income on parent's return.(p4)

You 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 18 at the end of 2007. (A child born on January 1, 1990, is considered to be age 18 at the end of 2007; you cannot make the election for this child.)
• 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 $8,500.
• Your child is required to file a return for 2007 unless you make this election.
• Your child does not file a joint return for 2007.
• No estimated tax payment was made for 2007 and no 2006 overpayment was applied to 2007 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 Form 8814 and Parent's Election To Report Child's Interest and Dividends in Publication 929.

taxmap/pubs/p501-000.htm#TXMP43a89fe2 Other Situations(p4)

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.

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