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What is income tax Exemptions?

What is income tax Exemptions?

Exemptions are a set dollar amount determined by the government. That is not taxed and is based on the number of people in your family including dependents And if you've been following the news at all with President Trump that his tax plan will start next year gets rid of exemptions. But for this year we still have exemptions so it's important to understand what they are.

When you file your taxes. So a reminder a dependent on someone you support financially. Are you a dependent. Yes. All of you still are dependents unless you have moved out of your house and are financially responsible for yourself.

So let's talk about exemptions. Each person your house is worth. One exemption. So if you have your mom dad brother and you. That's four people in your house you that your parents whenever they file together they would have four exemptions. So for 2017 each exemption is worth four thousand dollars or four thousand fifty dollars.

So let's say there's a single dad with two kids.
The dad is one exemption. The kid number one is an exemption can number two is an exemption. So total exemptions the total amount he can reduce his taxable income down to is twelve thousand one hundred and fifty.

I've said this before but again we want to bring down our taxable income as much as possible and we do that by having deductions and exemptions. 

So each person can only be claimed as an exemption once. So if you have divorced parents they have to decide who has primary custody. Whoever has the primary custody gets to use the child as the exemption and as students in high school your parents claim you as an exemption. Even if you pay taxes you're still under their financial support so they're still claiming you as the exemption.