There are various regimes which have been set at both the federal and state level to formulate the basis and rates of individual taxation. One important element included in laws and regulation pertaining taxation is the basis for exemption on tax returns of an individual. In this context, an important question always arises about who can or cannot be claimed as dependent as well as the filing status. A dependent is any person who relies on the taxpayer for financial support thus rendering taxpayer tax exemption (IRS. gov, n.
d. ).This definition excludes the taxpayer themselves from being a dependent on which the taxpayer can claim dependency exemption from taxation. A dependent can also be a mentally or physically impaired person, an adopted child or a common law spouse (eHow, 2010).
In simple terms, a taxpayer would claim dependency on a relative or someone who is staying among their households for the whole taxation period.A child who is capable of paying more than half of their support cannot be claimed as a dependent by the taxpayer (WorldWideWeb Tax, 2010). Federal laws start with an Internal Regulation Code (IRC) with sections that contain laws regarding exemptions to taxation. For instance, a person qualifying to be dependent must be national of US, or else a resident of Canada, Mexico or US (WorldWideWeb Tax, 2010).
Filing status of a taxpayer determines the amount of tax that they will pay.There are various categories of filing status and different people would fall in different categories depending on their family situation as well as their marital status. Filing status is important because a dependent person is still entitled to file tax returns. This is determined by the amount of income earned, income unearned and the gross income.
For instance, in case a dependent child who can file tax return would not file it for any reason, any other legally responsible person must file it for the child.
