When preparing your personal income tax return, it is essential that you understand the significance of filing 0 as opposed to 1 as well as their tax implications. Filing 0 or 1 on taxes answers for the Internal Revenue Service the question of whether you are eligible to claim yourself or whether someone else is eligible to claim you. To answer this important question, you must take several considerations into account.
For tax year 2010, your taxable income is reduced by $3,650 for each exemption you claim on your return. You are eligible to claim personal exemptions for yourself and your spouse and dependent exemptions for any dependent who you are eligible to claim. If you decide to claim only yourself on your income tax return, then you will claim 1. If you decide not to claim your own exemption, then you must claim 0.
Generally, the number of exemptions you claim on your tax return should correspond to the number of personal allowances you claim on the W-4 you submit to your employer. However, even if someone else can claim you as a dependent, you are still not allowed to exempt yourself from federal withholding on your W-4. As will be discussed in Section 3, you can file a tax return and be refunded the withholding. The more allowances you claim, the less tax you'll have taken from your pay. And the fewer allowances you claim, the more tax you'll have withheld from your pay. If you aren't sure how much tax you should have withheld on your W-4, use the withholding calculator on the IRS website as your guide (see Resources).
A dependent is any person who is eligible to be claimed by another taxpayer. If you are dependent and plan to file taxes, you must file 0 on your return if someone else will claim you on his return. For example, if you are a college student with a part-time job and you have federal tax withheld from your pay, the IRS will refund your federal withholding if your earnings are below the income limit for your filing status. However, you must claim 0 instead of 1 so that your parents can still benefit from claiming you on their return.
If someone else can claim you as a dependent – meaning you are claiming 0 on your return – do not check box 6a. If however you are claiming yourself – meaning you are claiming 1 on your return -then check box 6a and write "1" in the box to the right.