What are tax exemptions?


Quick Answer

A tax exemption is a certain amount of money that can be subtracted from a taxpayer's total adjusted gross income for the entire year. The two types of exemptions allowed are personal exemptions and exemptions for dependents. These exemptions reduce the amount of income that is taxable.

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Full Answer

Personal exemptions may be claimed for the person paying taxes and, if applicable, the taxpayer's spouse. For each qualifying child, the Internal Revenue Service allows for a certain amount to be deducted. A qualifying child is not limited to only natural-born children; stepchildren, foster children or siblings may also qualify.

A person must have a Social Security Number to qualify as a dependent.

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