It’s my annual Taxes from A to Z series! If you’re wondering how to figure basis for cryptocurrency or whether you can claim home office expenses during COVID, you won’t want to miss a single letter.
P is for Personal Exemption.
A personal exemption used to be an easy way to reduce your taxable income.
If you were not claimed as someone else’s dependent, you could claim a personal exemption. Married persons who file jointly could claim two personal exemptions. Additionally, you could claim a personal exemption for each of your dependents.
The math worked out like this: you would figure your eligible family members and multiply that amount by the personal exemption amount. So, if you were married and had one child, you would multiply three times the personal exemption amount (for the 2017 tax year, the personal exemption was $4,050 per person).
As part of the Tax Cuts and Jobs Acts (TCJA), personal exemptions were eliminated for the tax years 2018 through 2025. Since there are no currently personal exemption amounts, it makes sense to revisit your dependents and make sure that you’re claiming the right number: there’s typically no advantage to claiming a dependent solely for the exemption.
- A is for ATIN
- B is for BEAT Regs
- C is for Cryptocurrency Reporting
- D is for De Minimis
- E is for Extended Due Dates
- F is for FTE
- G is for GILTI
- H is for Head of Household
- I is for Inflation
- J is for Jeopardy Assessment
- K is for Kiddie Tax
- L is for Legal Entity
- M is for Mark-to-Market Taxation
- N is for Nexus
- O is for Ordinary and Necessary
You can find the rest of the series here: