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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 2008, the exemption amount is $3,500. Only one exemption can be claimed per person. An exemption for a particular person cannot be claimed on more than one tax return.

materials:

Tax Tutorial
Tax Tutorial: ExemptionsDiscover the two types of exemptions and how exemptions affect income that is subject to tax.
Fact Sheet
Fact Sheet: ExemptionsPrint this fact sheet on exemptions.
Simulation
Simulation 6: Identifying Filing Status, Dependents, and ExemptionsAnswer a series of questions about Alicia Garcia. Then, see how your responses are reported in the label, filing status, and exemption sections of the tax return for Alicia Garcia.
Assessment
Assessment: ExemptionsReview your understanding of exemptions.
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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