A Dependency Exemption allows taxpayers to deduct a specified amount for each dependent claimed on their tax return, reducing their overall taxable income. It is designed to assist families by acknowledging the financial responsibility involved in supporting dependents.
A dependent is any person whom a taxpayer can claim a dependency exemption for, defined by the Internal Revenue Code as any individual supported by the taxpayer who is related to the taxpayer in specified ways or who makes their principal abode in the taxpayer's household.
A Head of Household tax filing status applies to unmarried taxpayers who maintain a home as the principal residence for a designated dependent. This status offers a lower tax rate than Single filers and provides significant tax benefits.
For tax purposes, a student is defined as an individual who, during at least five calendar months of the tax year, is a full-time student at a qualified educational institution or is pursuing a full-time course of institutional on-farm training.
The Support Test is one of the five criteria used to determine whether an individual can be claimed as a dependent on a taxpayer's tax return.
