Can my son and his wife file jointly and take one personal exemption?

[football1-]

I am claiming an exemption on my taxes for my son since he lived at home for more than 6 months.  His new wife's exemption is not being taken by her parents.

[AnthonyC · Accepted solution]

One of the requirements of being able to claim a dependent is that the dependent is not filing a joint return.  So, if your son is filing a joint return, then you would not be able to claim him.  

However, there is one exception to the above rule. You can claim an exemption for a person who files a joint return if that person and his or her spouse file the joint return only to claim a refund of income tax withheld or estimated tax paid.  See, examples 1-3 of IRS Publication 501 (starts at page 12) for examples of the scenarios applicable.  

Basically, if they are filing a joint tax return only to get their tax withholding back from their W2s, then this exception would apply and you would still be able to claim him.  But, if it's for any other reason, such as to get a tax credit and their withholding, then the exception does not apply and you cannot claim him.

Otherwise, if they file married filing separately, then you can claim him as a dependent and she would still be entitled to her own exemption.  But, filing separately will preclude them from certain tax credits and higher overall tax rates.