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Exemptions reduce your income before you figure your tax. There are two types of exemptions.

• Personal exemptions.

• Exemptions for dependents.

While both types of exemptions are worth the same amount, different rules apply to each.

You generally can claim one exemption for yourself. If you are married and file a joint return, you can claim your own exemption and one for your spouse. If you file a separate return, you can claim the exemption for your spouse only if your spouse had no gross income and was not a dependent of another taxpayer. You also can claim one exemption for each person qualifying as your dependent who meets five specific tests.

<Tip> You may be eligible to claim an exemption for a child, even if the child has been kidnapped. See Kidnapped children under Exemptions for Dependents in Publication 501.

For 2002, you generally can deduct $3,000 for each exemption you claim for yourself, your spouse, and each person who qualifies as your dependent.

If another taxpayer can claim an exemption for you or your spouse, you cannot claim that exemption on your tax return. If you can claim an exemption for a dependent, that dependent cannot claim an exemption on his or her own tax return.

To claim an exemption for a dependent on your tax return, you must list either the social security number (SSN), individual taxpayer identification number (ITIN), or adoption taxpayer identification number (ATIN) for that person on your return.

For more information on exemptions, see Publication 501.

<Caution> If you do not list the dependent’s SSN, ITIN, or ATIN, the exemption may be disallowed.

Above Information Extracted from IRS Publication #3, Armed Forces Tax Guide