In most states and countries, the law mandates personal exemptions on tax return. In the US, the new tax law provides several tax credits and extensions to previous tax laws, temporarily relieving the taxpayers of increased tax rates and more exemptions on their tax returns, depending on their filing status and other considerations. A personal income tax aims to make taxpayers who have higher earnings subsidize a part of those who have tax liabilities and exempting the poor from personal income tax. Claiming exemptions on 2011 tax return is dependent on the manner of filing the personal income tax return. The IRS Form 1040EZ is used by most taxpayers and enters tax exemptions on line 5.
Some of the significant changes under the Tax Relief Act of 2010 signed into law by Pres. Obama in December include personal exemptions on tax return, tax credits and the Personal Tax rates for 2011 and 2012. Temporary these may be, the new tax law will surely benefit and provide relief to the taxpayers. Under the Tax Relief Act of 2010, tax credits Enhance Child Tax Credit, Adoption Tax Credit, American Opportunity Credit, Dependent and Child Tax Credit and the Enhanced Earned Income Credit. Although there would be exemptions on 2011 tax return, tax rates, on the other hand, keep the current six-rate structure which ranges from 10% to 35%.
Eligibility of Personal Exemptions
Make sure you are filing the right tax return status to be given exemptions on 2011 tax return. For married couples, only one exemption is allowed, and is applicable only if no one has claimed any of you as dependent on another person’s tax return.
For spouses filing individual returns, either one can claim the other for exemption provided the spouse did not have income for the applicable tax year. But if you have lost your spouse in the preceding tax year due to death, you are eligible for exemptions on tax return 2011. This also goes to the taxpayer whose tax return status is the head of household. Additional exemptions include the qualifying dependent not claimed by another person but should meet specific requirements.