How Do I Calculate Exemptions and Deductions When Figuring My Taxes?Atlanta CPA on Filing Personal Income Tax Returns

Filing Status

When you get ready to file your personal tax return, perhaps one of the biggest issues you will want to initially determine is your filing status.  This one issue will affect not only the way you compile and file your return but the actual amount of your tax obligation as well.  Tax law mandates that your filing status is determined by your marital status on the last day of the tax year, December 31st.
— Atlanta CPA, John Dillard CPA

Frequently, taxpayers will file their returns incorrectly, believing their filing status is determined by their marital status for the predominant portion of the year.  However, this would be incorrect as it is solely one’s marital status on the last day of the year that is the determining factor.

Filing Status/Dependent/Exemptions

Determining your filing status, exemptions and dependents will be three critical aspects of determining your lowest legal possible tax.  If you are a single taxpayer and have a child who is also your dependent who lives with you full time, you may file as Head of Household, which will allow your income to be taxed at a lower rate.  In a situation with a child having two parents who do not live together, typically a parent with primary legal custody will be the one allowed to claim Head of Household.

Taxpayers who are married may also file returns, Married Filing Separately.  These tax rates/brackets are the highest of the four brackets and are generally the least advantageous.  However, if a taxpayer is married and either of them have a tax obligation that either occurred while they were single or married filing separately, then it would be prudent to consider filing Married Filing Separately to avoid having either the IRS or state merging their files, collection efforts and obligations.


All taxpayers (who are not claimed as dependents by others) are allowed dependents, which reduces taxable income.  If married and filing a joint return, you are allowed to claim your spouse as a dependent.  Taxpayers generally can claim as dependents family members and children, provided they provide over half of their support and they live with the taxpayer full time.  Generally children can be claimed until they become of legal age (18) and then be claimed for several years beyond that provided they are a full time student for more than five months a year.  If a child files their own return and claims themselves, then a parent, who otherwise would have qualified to claim the child, are precluded from also claiming the child.  Each dependent qualifies the taxpayer to take an exemption which is a statutory amount indexed annually for inflation. This total reduces a taxpayer’s gross income in determining the taxable amount.


The number of dependents a taxpayer has is one of the key factors used in calculating the total number of exemptions.  To this total taxpayers who are disabled, blind, or elderly are allowed to take an additional exemption when determining their taxable income.  One’s total dependents and additional exemptions are then multiplied by that year’s amount to determine the total reduction in taxable income.  Exemptions, like itemized deductions, are by law phased out/reduced based upon the taxpayer’s filing status and adjusted gross income.

Tax law and its correct application and the correct determination of your lowest legal possible tax bill are as important to us as they are to you.  Contact us today and let’s get started on planning for your short and long-term future.