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The Hows of Taxes

Module 6: Exemptions

 

Parents with two children.
There are two types of exemptions: personal exemptions and dependency exemptions. Each exemption reduces the income that is subject to tax by the exemption amount. For 2014, the exemption amount is $3,950. Only one exemption can be claimed per person. An exemption for a particular person cannot be claimed on more than one tax return.

materials:

skill check:
Check your understanding of exemptions and how they affect taxable income. Indicate whether each of the statements below is true or false by clicking on the correct answer. To assess your answers, click the Check My Answers button at the bottom of the page.
  1. There are two types of exemptions.
  • A.
  • B.
  1. A taxpayer can be claimed as a dependent on his parents' return and also claim a personal exemption on his own tax return.
  • A.
  • B.
  1. Personal exemptions are for parents and children, and dependency exemptions are for other blood relatives.
  • A.
  • B.
  1. Each exemption reduces the income that is subject to tax by the exemption amount.
  • A.
  • B.


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