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What are Circumstance Exemptions?

Exemptions are a tax allowance of a fixed amount, specific to your personal circumstances and dependent on how you file your tax submission.

Tax exemptions dependant on your circumstance include:

  • Single
  • Married - Filing Jointly
  • Married - Filing Separately
  • Head of Household
  • Qualified Widower

What are Circumstance Exemptions for?

Circumstance Exemptions provide a basic pot of earning which are not subject to tax (tax free earnings). Circumstance Exemptions are designed to support lower earners, the idea being that you don't pay tax on those earnings until you pass a certain earning threshold, in this case the Circumstance Exemption threshold.

Tax rates are often based on earning thresholds (in most countries, not just the US). Typically tax rates increase as you earn more meaning the more you earn, the more tax you pay. It's a somewhat unfair means of calculating tax as you penalize people who study and work hard to get higher paying jobs. A flat rate tax scheme would provide a fairer means of paying tax. The theory of having a tiered tax system is to provide financial support to those in lower earning brackets though this in turn can have a negative effect on personal motivation and the will to succeed. Like it or not, the tiered tax system is likely to stay and Circumstance Exemptions will continue to be used as a tax free earning buffer.

How much are my Tax Circumstance Exemptions?

Circumstance Exemptions, along with other tax exemptions and tax rates, change each year. The tax calculators on iCalculator contain the latest personal allowance, circumstance exceptions and FICA rates.

You can calculate how Circumstance Exemptions affect your tax payments here, simply select the advanced tax calculator and enter your Circumstance Exemptions details

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