PERSONAL EXEMPTION Meaning and
Definition
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A personal exemption refers to a specific allowance that individuals can claim on their tax returns to reduce their taxable income. It is a deduction granted by tax authorities, based on a set amount, which individuals can subtract from their total income before calculating the income tax owed. The personal exemption is mainly intended to acknowledge and account for the basic needs of taxpayers and their dependents.
To qualify for a personal exemption, an individual must meet specific criteria outlined by the tax system, such as being a citizen or resident of the country and not claimed as a dependent by someone else. The value of the personal exemption is usually fixed for a particular tax year and is adjusted periodically to account for changes in the cost of living.
By claiming a personal exemption, individuals can effectively lower their taxable income, which ultimately leads to a reduced tax liability. For example, if the personal exemption amount is $4,000 and an individual's taxable income is $50,000, they can deduct $4,000 from their income, resulting in a taxable amount of $46,000. This reduction in taxable income helps to lower the overall tax bill that the individual owes to the tax authorities.
It is important to note that the availability and value of personal exemptions may vary from one country to another, as tax laws differ across jurisdictions. Additionally, some countries have eliminated or modified personal exemptions recently due to changes in tax policies and reforms.
Common Misspellings for PERSONAL EXEMPTION
Etymology of PERSONAL EXEMPTION
The word "personal" is derived from the Latin word "personalis", which means "of a person". It originated from the combination of the Latin words "persona" (meaning "person" or "character") and "alis" (which denotes "pertaining to" or "related to").
The word "exemption" comes from the Latin word "exemptio", which is a derivative of the verb "eximere". "Eximere" combines "ex" (meaning "out" or "from") and "emere" (which translates to "take" or "buy"). Hence, "exemption" essentially means taking or buying something out or away.
When combined, "personal exemption" refers to a specific tax exemption or deduction pertaining to individuals or persons in the realm of taxation.
