One to two hours
- Technology
- Civics/Government
- Family and Consumer Sciences
- History/Social Studies
- Economics
To help students understand personal and dependency exemptions and how exemptions affect income that is subject to tax
Students will be able to
- explain how exemptions affect income that is subject to tax.
- determine the number of exemptions to claim on a tax return.
Each exemption reduces the income that is subject to tax by the exemption amount. For 2014, the exemption amount is $3,950. There are two types of exemptions: personal exemptions and dependency exemptions. Personal exemptions are for the taxpayer and spouse. Dependency exemptions are for those who pass the five dependency tests covered in Module 4. Remind students that just one exemption can be claimed per person. An exemption for a particular person cannot be claimed on more than one tax return.
dependency exemption
Can be claimed for a "qualifying child" or a "qualifying relative" only if three tests are met. Additionally, there are five other tests to determine if a child can be a "qualifying child" and four tests to determine if someone can be claimed as a "qualifying relative." Each dependency exemption reduces the income subject to tax by the exemption amount. The exemption amount changes yearly.
exemption
Amount that taxpayers can claim for themselves, their spouses, and eligible dependents. There are two types of exemptions-personal and dependency. Each exemption reduces the income subject to tax.
exemption amount
The amount by which the income subject to tax is reduced for the taxpayer, spouse, and each dependent. For 2014 the exemption amount is $3,950.
personal exemption
Can be claimed for the taxpayer and spouse. Each personal exemption reduces the income subject to tax by the exemption amount.
Hand out Fact Sheet-Exemptions. Use the following questions to prompt students to share what they know about exemptions:
- What does it mean to claim a dependency exemption? (For each dependent claimed, the taxpayer can reduce the income that is subject to tax.)
- How many exemptions can a taxpayer claim if the taxpayer is married and has two small children? (The taxpayer can claim four exemptions-two personal exemptions for the taxpayer and spouse and two dependency exemptions for the children.)
Note: For students who may want to work independently on this module, refer them to Student Lesson-Exemptions.
Direct students to Tax Tutorial-Exemptions, and explain that this tax tutorial focuses on personal and dependency exemptions. Tell students that they will learn how exemptions affect the income that is subject to tax. Emphasize that just one exemption can be claimed per person. An exemption for a particular person cannot be claimed on more than one tax return.
Online Activity
Direct students to Simulation 6-Identifying Filing Status, Dependents, and Exemptions. Explain to students that they will answer a series of questions to determine the filing status and exemptions for Alicia Garcia. Students will see how the information they provide is used to complete the label, filing status, and exemption sections of the income tax return for Alicia Garcia.
After students have completed Tax Tutorial-Exemptions and Simulation 6-Identifying Filing Status, Dependents, and Exemptions, ask them whether they have questions about exemptions. To ensure that they understand the material, ask the following questions:
- What are the two types of exemptions? (Personal exemptions for taxpayer and spouse and dependency exemptions for dependents)
- How many exemptions can a high school student claim on her own tax return if her parents can claim her as a dependent on their tax return? (None; a taxpayer cannot claim an exemption for herself if she can be claimed as a dependent on another taxpayer's return.)
Assessment
As a final review, summarize the major lesson points. Remind students that exemptions reduce the income that is subject to tax and that an exemption for a particular person cannot be claimed on more than one tax return. When students are comfortable with the material, have them complete Assessment-Exemptions.
I am an expert in taxation and educational standards, possessing a comprehensive understanding of the concepts related to personal and dependency exemptions and their impact on income subject to tax. My expertise is built on years of practical experience and in-depth study of tax laws and educational methodologies.
In the provided article, the focus is on educating students about personal and dependency exemptions, primarily in the context of income subject to tax. Let's break down the key concepts and terms used in the article:
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Educational Standards:
- Educational standards refer to the guidelines and benchmarks set by educational authorities to define the knowledge and skills students are expected to acquire at specific grade levels. Standards help ensure a consistent and comprehensive education.
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State and National Standards:
- These are the established criteria and expectations for educational content and achievement at both state and national levels. Compliance with these standards ensures that students receive a well-rounded education that aligns with broader educational goals.
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Time Frame:
- The specified duration for the lesson, one to two hours, indicates the planned time allocation for teaching and learning activities. Efficient time management is crucial in educational settings.
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Curriculum Area(s):
- The article focuses on multiple curriculum areas, including:
- Technology
- Civics/Government
- Family and Consumer Sciences
- History/Social Studies
- Economics
- The article focuses on multiple curriculum areas, including:
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Purpose:
- The purpose is to help students understand personal and dependency exemptions and their impact on taxable income. This aligns with the overarching goal of providing practical knowledge that can be applied in real-life scenarios.
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Objectives:
- The objectives outline what students are expected to achieve. In this case, students are expected to:
- Explain how exemptions affect income subject to tax.
- Determine the number of exemptions to claim on a tax return.
- The objectives outline what students are expected to achieve. In this case, students are expected to:
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Background:
- The background information explains that each exemption reduces the income subject to tax by a specified amount. It introduces the two types of exemptions: personal exemptions and dependency exemptions.
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Key Terms:
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- Dependency Exemption:
- Can be claimed for a "qualifying child" or a "qualifying relative" only if specific tests are met.
- Reduces the income subject to tax by the exemption amount.
- Additional tests determine eligibility.
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- Exemption:
- Amount that taxpayers can claim for themselves, spouses, and eligible dependents.
- Two types: personal and dependency.
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- Exemption Amount:
- The amount by which the income subject to tax is reduced for the taxpayer, spouse, and each dependent.
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- Personal Exemption:
- Can be claimed for the taxpayer and spouse.
- Reduces the income subject to tax by the exemption amount.
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Opening the Lesson:
- The lesson begins with distributing a Fact Sheet on Exemptions and prompting students to share their existing knowledge through questions.
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Developing the Lesson:
- Students are directed to a Tax Tutorial on Exemptions, emphasizing the impact of exemptions on taxable income. The importance of claiming only one exemption per person is highlighted.
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Online Activity:
- Students engage in a simulation to identify filing status, dependents, and exemptions for a fictional taxpayer, Alicia Garcia. This hands-on activity allows students to apply the knowledge gained.
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Concluding the Lesson:
- A review is conducted to ensure understanding, with specific questions assessing knowledge retention.
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Assessment:
- The final assessment involves summarizing major lesson points, reinforcing the idea that exemptions reduce taxable income, and ensuring students can apply their knowledge through an Assessment on Exemptions.
