Exemption is a tax deduction allowed by IRS to reduce your taxable income. There are two types of exemptions: Personal exemptions for yourself and your spouse, and exemptions for dependents.
1. Personal exemptions for yourself and your spouse
Generally, you can take one personal exemption for yourself and one for your spouse if you are married. However, if you are another taxpayer’s dependent, you can’t take personal exemption on your return even the other taxpayer does not actually claim you as a dependent on his/her return.
2. Exemptions for dependents
You must meet 3 tests to be able to claim exemptions for your dependents. You can go through the 3 tests on Table 7. Tests To Claim Exemptions for Dependents to determine if you can take exemptions for your dependents.
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