This discussion will be about personal exemptions, Standard deductions, and Earned Income Tax Credit.
Personal exemption: when filing your taxes you receive one personal exemption for each dependent on your return. A personal exemption for the year 2009 is $3,650.
Example; If you and your spouse have two children, then you will receive 4 exemptions. That is 4X$3,650=$14,600.
Standard Deduction: the standard deduction is based on your filing status and for 2009 will be as follows:
Single...........................................$ 5,700
Marrried filing Jointly................$11,400
Married filing Separately...........$ 5,700
Head of Household....................$ 8,400
Earned Income Tax Credit (EITC) this is a credit that is given to those who unfortunately had a low income for the year. This credit is given after your tax liability has been figured making it a refundable credit. The amount that you receive is based on factors such as if you’re single or married and if you have children, and if so how many. The figures for 2009 are as follows:
No Children, the most you can get is $457 as long as your earned income does not exceed $13,460 and if you are married filing jointly your income cannot exceed $18,470.
One Child the most you can get is $3050 as long as your earned income does not exceed $35,535 and if you are married filing jointly your income cannot exceed $40,545.
Two Children the most you can get is $5,036 as long as your earned income does not exceed $40,363 and if you are married filing jointly your income cannot exceed $43,373.
Three children the most you can get is $5,980 as long as your earned income does not exceed $43,352 and if you are married filing jointly your income cannot exceed $48,362.
Next Topic: Make Work Pay Credit (MWPC)
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