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taxmap/pubs/p504-001.htm#TXMP4e6e4487 Exemptions(p6)

Exemption

Generally, you can deduct $3,400 for each exemption you claim in 2007. However, if your adjusted gross income is more than $117,300 see Phaseout of Exemptions, later.

There are two types of exemptions: personal exemptions and exemptions for dependents. If you are entitled to claim an exemption for a dependent (such as your child), that dependent cannot claim his or her personal exemption on his or her own tax return.

taxmap/pubs/p504-001.htm#TXMP38ff9ec9 Personal Exemptions(p7)

Personal Exemption

You can claim your own exemption unless someone else can claim it. If you are married, you may be able to take an exemption for your spouse. These are called personal exemptions.

taxmap/pubs/p504-001.htm#TXMP2d1c0fee Exemption for Your Spouse(p7)

Exemption for Spouse

Your spouse is never considered your dependent. You may be able to take an exemption for your spouse only because you are married.

taxmap/pubs/p504-001.htm#TXMP53227540 Joint return.(p7)

On a joint return, you can claim one exemption for yourself and one for your spouse.

If your spouse had any gross income, you can claim his or her exemption only if you file a joint return.

taxmap/pubs/p504-001.htm#TXMP5d5bd858 Separate return.(p7)

If you file a separate return, you can take an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer. If your spouse is the dependent of another taxpayer, you cannot claim an exemption for your spouse even if the other taxpayer does not actually claim your spouse's exemption.

taxmap/pubs/p504-001.htm#TXMP58ca5dd5 Alimony paid.(p7)

If you paid alimony to your spouse, you cannot take an exemption for your spouse. This is because alimony is gross income to the spouse who received it.

taxmap/pubs/p504-001.htm#TXMP6a4f6d4a Divorced or separated spouse.(p8)

If you obtained a final decree of divorce or separate maintenance by the end of the year, you cannot take your former spouse's exemption. This rule applies even if you provided all of your former spouse's support.

taxmap/pubs/p504-001.htm#TXMP7595ffaf Exemptions for Dependents(p8)

Exemption for Dependent

You are allowed one exemption for each person you can claim as a dependent. You can claim an exemption for a dependent even if your dependent files a return.

The term "dependent" means:

• A qualifying child, or
• A qualifying relative.

Table 3 shows the tests that must be met to be either a qualifying child or qualifying relative, plus the additional requirements for claiming an exemption for a dependent. For detailed information, see Publication 501.

Dependent not allowed a personal exemption. If you can claim an exemption for your dependent, the dependent cannot claim his or her own exemption on his or her own tax return. This is true even if you do not claim the dependent's exemption on your return or if the exemption will be reduced under the phaseout rule described under Phaseout of Exemptions, later.

You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year. For more information, see the instructions in your tax forms package.

taxmap/pubs/p504-001.htm#TXMP2a950797 Children of Divorced or Separated Parents(p8)

Children of Divorced or Separated Parents

A dependent is either a qualifying child or a qualifying relative. In most cases, because of the residency test (see item (3) under Tests To Be a Qualifying Child in Table 3), a child of divorced or separated parents will qualify as a dependent of the custodial parent under the rules for a qualifying child. However, the noncustodial parent may be able to claim the exemption for the child if the special rule (discussed next) applies.

taxmap/pubs/p504-001.htm#TXMP01f8d088 Special rule for divorced or separated parents.(p8)

A child will be treated as the qualifying child or qualifying relative of his or her noncustodial parent if all of the following apply.

1. The parents:
   1. Are divorced or legally separated under a decree of divorce or separate maintenance,
   2. Are separated under a written separation agreement, or
   3. Lived apart at all times during the last 6 months of the year.
2. The child received over half of his or her support for the year from the parents.
3. The child is in the custody of one or both parents for more than half of the year.
4. Either of the following applies.
   1. The custodial parent signs a written declaration, discussed later, that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches this written declaration to his or her return. (If the decree or agreement went into effect after 1984, see Divorce decree or separation agreement made after 1984, later.)
   2. A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2007 states that the noncustodial parent can claim the child as a dependent, the decree or agreement was not changed after 1984 to say the noncustodial parent cannot claim the child as a dependent, and the noncustodial parent provides at least $600 for the child's support during 2007. See Child support under pre-1985 agreement, later.

If the support of the child is determined under a multiple support agreement, this special rule for divorced or separated parents does not apply. See Multiple Support Agreement in Publication 501 for more information.

taxmap/pubs/p504-001.htm#TXMP09ee2e9f Custodial parent and noncustodial parent.(p8)

The custodial parent is the parent with whom the child lived for the greater part of the year. The other parent is the noncustodial parent.

If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater part of the rest of the year.

taxmap/pubs/p504-001.htm#TXMP16f2e1d8
Example.(p8)

Under the terms of your divorce, your child lived with you for 10 months of the year. The child lived with your former spouse for the other 2 months. You are considered the custodial parent.

taxmap/pubs/p504-001.htm#TXMP07ae80d2 Written declaration.(p8)

The custodial parent must use either Form 8332 or a similar statement (containing the same information required by the form) to make the written declaration to release the exemption to the noncustodial parent. The noncustodial parent must attach the form or statement to his or her tax return.

The exemption can be released for 1 year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration. If the exemption is released for more than 1 year, the original release must be attached to the return of the noncustodial parent for the first year, and a copy must be attached for each later year.

taxmap/pubs/p504-001.htm#TXMP66cf0390 Divorce decree or separation agreement made after 1984.(p8)

If the divorce decree or separation agreement went into effect after 1984, the noncustodial parent can attach certain pages from the decree or agreement instead of Form 8332. To be able to do this, the decree or agreement must state all three of the following.

1. The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support.
2. The custodial parent will not claim the child as a dependent for the year.
3. The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent.

The noncustodial parent must attach all of the following pages of the decree or agreement to his or her return.

• The cover page (write the other parent's social security number on this page).
• The pages that include all of the information identified in items (1) through (3) above.
• The signature page with the other parent's signature and the date of the agreement.

The noncustodial parent must attach the required information even if it was filed with a return in an earlier year.

taxmap/pubs/p504-001.htm#TXMP19978191 Remarried parent.(p9)

If you remarry, the support provided by your new spouse is treated as provided by you.

taxmap/pubs/p504-001.htm#TXMP06c36a1e Child support under pre-1985 agreement.(p9)

All child support payments actually received from the noncustodial parent under a pre-1985 agreement are considered used for the support of the child, even if such amounts are not actually spent for child support.

taxmap/pubs/p504-001.htm#TXMP4550e788
Example.(p9)

Under a pre-1985 agreement, the noncustodial parent provides $1,200 for the child's support. This amount is considered support provided by the noncustodial parent even if the $1,200 was actually spent on things other than support.

taxmap/pubs/p504-001.htm#TXMP22f9637d Parents who never married.(p9)

The special rule for divorced or separated parents also applies to parents who never married.

taxmap/pubs/p504-001.htm#TXMP7549ebf2 Special support rules for qualifying relative.(p9)

The tests that must be met for treating a child as a qualifying relative include the support test (see item (4) listed under Tests To Be a Qualifying Relative in Table 3). The following special rules apply for determining whether the support test is met.

taxmap/pubs/p504-001.htm#TXMP20db7574 Alimony.(p9)

Payments to your spouse that are includible in his or her gross income as either alimony, separate maintenance payments, or similar payments from an estate or trust, are not treated as a payment for the support of a dependent.

taxmap/pubs/p504-001.htm#TXMP6e7dfb16 Remarried parent.(p9)

If you remarry, the support provided by your new spouse is treated as provided by you.

taxmap/pubs/p504-001.htm#TXMP05560dc2 Special test for qualifying child of more than one person.(p10)

Sometimes, a child meets the relationship, age, residency, and support tests to be a qualifying child of more than one person. (For a description of these tests, see list items (1) through (4) under Tests To Be a Qualifying Child in Table 3.) Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child. To meet this special test, you must be the person who can treat the child as a qualifying child.

If a child is treated as the qualifying child of the noncustodial parent under the special rule for divorced or separated parents described earlier, see Applying this special test under the special rule for divorced or separated parents, later.

If you and another person have the same qualifying child, you and the other person(s) can decide which of you will treat the child as a qualifying child. That person can take all of the following tax benefits (provided the person is eligible for each benefit) based on the qualifying child.

• The exemption for the child.
• The child tax credits.
• Head of household filing status.
• The credit for child and dependent care expenses.
• The exclusion from income for dependent care benefits.
• The earned income credit.

The other person cannot take any of these benefits based on this qualifying child. In other words, you and the other person cannot agree to divide these tax benefits between you.

If you and the other person(s) cannot agree on who will claim the child and more than one person files a return claiming the same child, the IRS will disallow all but one of the claims using the tie-breaker rule in Table 4. taxmap/pubs/p504-001.htm#w15006i04

Table 4.mWhen More Than One Person Files a Return Claiming the Same Qualifying Child (Tie-Breaker Rule) IF more than one person files a return claiming the same qualifying child and ... THEN the child will be treated as the qualifying child of the ... only one of the persons is the child's parent, parent. two of the persons are the child's parents and they do not file a joint return together, parent with whom the child lived for the longer period of time during the year. two of the persons are the child's parents, they do not file a joint return together, and the child lived with each parent the same amount of time during the year, parent with the higher adjusted gross income (AGI). none of the persons are the child's parent, person with the highest AGI.

taxmap/pubs/p504-001.htm#TXMP543ca79e
Example 1—separated parents.(p10)

You, your husband, and your 10-year-old son lived together until August 1, 2007, when your husband moved out of the household. In August and September, your son lived with you. For the rest of the year, your son lived with your husband. Your son is a qualifying child of both you and your husband because your son lived with each of you for more than half the year and because he met the relationship, age, and support tests for both of you. At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement and you and he did not live apart for the last 6 months of the year, so the special rule for divorced or separated parents does not apply.

You and your husband will file separate returns. Your husband agrees to let you treat your son as a qualifying child. This means, if your husband does not claim your son as a qualifying child, you can claim your son as a dependent and treat him as a qualifying child for the child tax credit and exclusion for dependent care benefits, if you qualify for each of those tax benefits. However, you cannot claim head of household filing status because you and your husband did not live apart the last 6 months of the year. As a result, your filing status is married filing separately, so you cannot claim the earned income credit or the credit for child and dependent care expenses.

taxmap/pubs/p504-001.htm#TXMP575e8e08
Example 2—separated parents claim same child.(p10)

The facts are the same as in Example 1 except that you and your husband both claim your son as a qualifying child. In this case, only your husband will be allowed to treat your son as a qualifying child. This is because, during 2007, the boy lived with him longer than with you. If you claimed an exemption, the child tax credit, head of household filing status, credit for child and dependent care expenses, exclusion for dependent care benefits, or the earned income credit for your son, the IRS will disallow your claim to all these tax benefits. In addition, because you and your husband did not live apart for the last 6 months of the year, your husband cannot claim head of household filing status. As a result, his filing status is married filing separately, so he cannot claim the earned income credit or the credit for child and dependent care expenses.

taxmap/pubs/p504-001.htm#TXMP20e3aa63 Applying this special test under the special rule for divorced or separated parents.(p10)

If a child is treated as the qualifying child of the noncustodial parent under the special rule for divorced or separated parents described earlier, only the noncustodial parent can claim an exemption and the child tax credit for the child. However, the noncustodial parent cannot claim the child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit. Only the custodial parent (or other eligible taxpayer) can claim the child as a qualifying child for these four tax benefits.

taxmap/pubs/p504-001.htm#TXMP688af85b Phaseout of Exemptions(p11)

Phaseout of Exemptions

The amount you can claim as a deduction for exemptions is reduced once your adjusted gross income (AGI) goes above a certain level for your filing status. These levels are as follows:

	AGI Level
	That Reduces
Filing Statusn	Exemption Amount
Married filing separately		$117,300n
Single		n156,400n
Head of household		n195,500n
Married filing jointly		n234,600n
Qualifying widow(er)		n234,600n

You must reduce the dollar amount of your exemptions by 2% for each $2,500, or part of $2,500 ($1,250 if you are married filing separately), that your AGI exceeds the amount shown above for your filing status. However, you can lose no more than 2/3 of the dollar amount of your exemptions. In other words, each exemption cannot be reduced to less than $1,133.

If your AGI exceeds the level for your filing status, use the Deduction for Exemptions Worksheet, found in the instructions for Form 1040, 1040A, or Form 1040NR to figure the amount of your deduction for exemptions.

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