Business, Legal & Accounting Glossary
The personal exemption is a dollar amount excluded from taxable income on one’s income tax return. The personal exemption represents a deduction one takes for oneself. The personal exemption is offered to taxpayers who cannot be claimed as dependents on others’ tax returns. An individual who has dependents can also take a personal exemption for each one of them as well, provided that certain IRS requirements are met. Two spouses who are filing a joint return can claim their own personal exemptions, for a total of two. The effect of the personal exemption is to lower one’s taxable income and therefore one’s tax liability. The personal exemption is found on page two of form 1040. This amount often changes yearly.
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This glossary post was last updated: 6th February, 2020 | 5 Views.