Jul 26, 2014

Each Tax Exemption Equals a $3,800 Deduction

If you qualify for an exemption, that amount can be deducted from your gross income to calculate your taxable income.

Each Tax Exemption Equals a $3,800 Deduction

According to a DailyFinance report, exemptions are some of the most uncomplicated parts of filing taxes.

Exemptions work in a similar way as  deductions by reducing the amount of income on which you are taxed. When filing your 2012 tax returns, for each exemption you take, you can deduct $3,800 from your gross income to determine at your taxable income. Taxpayers are allowed to take exemptions for themselves, their spouses and their dependents. 

Read more about exemptions and find out if you are eligible to take them. 

Check out an article on imaginative tax breaks that have been approved by the Internal Revenue Service, including deductions on the cost of oils for a professional bodybuilder, breast implants considered a stage prop and a clown costume. 

You might also be interested in reading: 

  • Taxpayers are Already Asking 'Where's My Refund?'
  • Timely Tax Advice: Signs Your Tax Preparer is the Wrong Person for the Job
  • Protect Yourself from Scammers Who Want Your Tax Return
  • 2013 Federal Tax Rates and Standard Deductions Announced
  • Should You Take the Home Office Deduction on Your Taxes?

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