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taxfree1994
New Member

While processing my federal taxes I noticed that I did not get any credit for my exemptions. Why is this?

 
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ThomasM
New Member

While processing my federal taxes I noticed that I did not get any credit for my exemptions. Why is this?

It's important to understand that the $4050 personal/dependent exemption is a deduction and not a refundable credit that'll go into your pocket.  It's certainly a good thing to get, because it lowers your taxable income by $4050 per exemption, which means you pay less tax.  But it's just one factor (of many) that goes into calculating the bottom line on your tax return.

As long as you've entered all your information, TurboTax will take all these different factors -- income, deductions, credits, taxes withheld, etc. -- and put them together to arrive at your bottom line amount.  The deduction for yourself and your spouse and dependents, even though it's a nice deduction, can only reduce your taxes owed to zero.  So once you don't owe any more tax, any extra deduction remaining just disappears -- the IRS doesn't give it to you.

That's the difference between a deduction and a refundable credit, where the IRS will give you the portion of the credit that hasn't been used. 

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1 Reply
ThomasM
New Member

While processing my federal taxes I noticed that I did not get any credit for my exemptions. Why is this?

It's important to understand that the $4050 personal/dependent exemption is a deduction and not a refundable credit that'll go into your pocket.  It's certainly a good thing to get, because it lowers your taxable income by $4050 per exemption, which means you pay less tax.  But it's just one factor (of many) that goes into calculating the bottom line on your tax return.

As long as you've entered all your information, TurboTax will take all these different factors -- income, deductions, credits, taxes withheld, etc. -- and put them together to arrive at your bottom line amount.  The deduction for yourself and your spouse and dependents, even though it's a nice deduction, can only reduce your taxes owed to zero.  So once you don't owe any more tax, any extra deduction remaining just disappears -- the IRS doesn't give it to you.

That's the difference between a deduction and a refundable credit, where the IRS will give you the portion of the credit that hasn't been used. 

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