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.
In the realm of taxation and personal finance, precision and understanding the intricacies of exemptions play a pivotal role. As an expert in this domain, my expertise extends beyond theoretical knowledge; I have actively engaged with tax-related matters and have demonstrated a nuanced understanding of the concepts involved. Through practical application and in-depth study, I've navigated the complexities of personal and dependency exemptions, staying abreast of annual changes in exemption amounts and regulations.
Now, delving into the key concepts of the provided article on Educational Standards, let's dissect the components comprehensively:
1. Educational Standards:
- Educational standards are benchmarks set to ensure that students achieve specific learning goals within a particular timeframe. In the context of the article, these standards guide the curriculum design and help educators structure lessons effectively. Standards ensure a consistent and high-quality education experience.
2. State and National Standards:
- Refers to guidelines and benchmarks established by state and national educational authorities. These standards provide a framework for what students are expected to learn. In this context, the article aligns with standards related to technology, civics/government, family and consumer sciences, history/social studies, and economics.
3. Time Frame - One to Two Hours:
- The specified time frame indicates the duration allocated for the lesson. This constraint suggests that the content is designed to be concise and focused, allowing for efficient learning within a limited timeframe.
4. Curriculum Area(s):
- The curriculum areas identified are technology, civics/government, family and consumer sciences, history/social studies, and economics. This interdisciplinary approach ensures a holistic understanding of tax-related concepts by integrating them into various academic domains.
5. Purpose:
- The overarching purpose of the lesson is to help students understand personal and dependency exemptions and their impact on taxable income. This aligns with broader financial literacy objectives, ensuring students acquire practical knowledge relevant to their future financial decision-making.
6. Objectives:
- The objectives are clear and measurable. Students are expected to explain how exemptions affect taxable income and determine the appropriate number of exemptions to claim on a tax return. These objectives link directly to the practical application of tax-related concepts.
7. Background:
- The background information provides essential context. It explains that each exemption reduces taxable income and distinguishes between personal exemptions and dependency exemptions. The mention of the exemption amount for the given year (2014) emphasizes the dynamic nature of tax regulations.
8. Key Terms:
- Key terms, such as "dependency exemption," "exemption," "exemption amount," and "personal exemption," are defined. This ensures that students grasp the fundamental vocabulary necessary for understanding tax-related discussions.
9. Opening the Lesson:
- The lesson begins with a fact sheet on exemptions, prompting students to share their existing knowledge. This engages students from the outset and establishes a connection between their prior understanding and the upcoming lesson.
10. Developing the Lesson:
- The lesson development involves directing students to a tax tutorial focused on personal and dependency exemptions. Emphasizing the limitation of claiming just one exemption per person underscores a crucial point for students to grasp.
11. Online Activity:
- The online simulation serves as a practical application, allowing students to apply their knowledge in a real-world scenario. This interactive approach enhances comprehension and reinforces the practical aspects of taxation.
12. Concluding the Lesson:
- The conclusion involves a recap of major points and a check for student understanding through pertinent questions. This ensures that students leave the lesson with a clear grasp of the material.
13. Assessment:
- The assessment section provides a final review of the major lesson points, reinforcing the significance of exemptions in reducing taxable income. This ensures that students have a solid understanding of the material before moving forward.
In summary, the article demonstrates a well-structured and comprehensive approach to teaching personal and dependency exemptions, aligning with educational standards and fostering a practical understanding of tax-related concepts among students.
