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Understanding Tax Exemptions: A Guide for Small Business Owners and Individuals

In her latest YouTube video, Lina, a certified public accountant, provides an insightful overview of tax exemptions—an important but often misunderstood aspect of the U.S. tax system. Her goal is to help small business owners and individuals better understand how tax exemptions work, how they differ from deductions, and how to maximize their tax benefits.

What Is a Tax Exemption?

Lina begins by explaining that a tax exemption is an amount that the IRS allows you to subtract from your income, reflecting the people who rely on your income—also known as dependents. The key point here is that exemptions are designed to reduce your taxable income based on your personal and family circumstances.