A allowable amount which taxpayers can claim for themselves and dependents is called a(n)
A) allowance.
B) deduction.
C) exemption.
D) exclusion.

Question

Quizplus · Accepted Answer

An exemption is the allowable amount that taxpayers can claim for themselves and their dependents on their tax return. This is subtracted from their gross income, which reduces their taxable income and ultimately their tax liability. Option A, allowance, is a broader term that can refer to any type of deduction or credit that reduces taxable income. Option B, deduction, is a similar term but refers more specifically to expenses or costs that can be subtracted from income, such as business expenses or charitable donations. Option D, exclusion, refers to income that is not included in taxable income, such as certain types of Social Security benefits or life insurance proceeds.

A Allowable Amount Which Taxpayers Can Claim for Themselves and Dependents