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Day 2: Examine exemptions
Day 2: Examine exemptions © iStock

Day 2: Examine exemptions

Today we start slashing your tax bill by claiming exemptions, dependents and a wide variety of adjustments to income. And this is all done on the first page of your Form 1040 or Form 1040A tax return.

First, your exemptions: On your 2014 return, you get to take $3,950 off the top for each person you claim as an exemption. That's generally a pretty easy determination: you, your spouse and any dependents, which generally means your kids. But did you care for a parent, even one who didn't live in your home? You may be able to claim an exemption for that person, too.

The key thing to remember when it comes to folks who qualify as your dependents is that you need their Social Security numbers. Without those nine digits, the IRS will disallow the claim.

Next, there are some expenses eligible taxpayers can claim directly on the 1040 or, to a lesser degree, the 1040A. These are known as adjustments to income or above-the-line deductions and include, to name just a few, certain IRA contributions, student loan interest, alimony payments or moving costs.

Take a few minutes to check out the complete income adjustments list, and note which ones apply to you. That's it. You're done for today.

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