Deductions for Number of Persons Supported by Taxpayer's Income

A

The correct answer to this question is A. Exemption.

An exemption is a deduction from a taxpayer's Adjusted Gross Income (AGI) based on the number of persons supported by the taxpayer's income. The purpose of an exemption is to reduce the amount of income that is subject to taxation, and therefore decrease the taxpayer's overall tax liability.

In the past, taxpayers could claim a personal exemption for themselves, their spouse, and any dependents they claimed on their tax return. The amount of the exemption varied from year to year and was subject to certain income limitations. However, with the Tax Cuts and Jobs Act of 2017, personal exemptions were eliminated and replaced with an increased standard deduction.

The term "dependence" mentioned in the answer choices refers to a person who meets certain criteria and is claimed as a dependent on another taxpayer's tax return. While claiming a dependent can result in certain tax benefits, it is not the same as claiming an exemption.

Tax payment is the amount of money that a taxpayer owes to the government based on their taxable income and other factors. Adjustments refer to certain expenses and deductions that can be subtracted from a taxpayer's gross income to arrive at their AGI. Examples of adjustments include contributions to retirement accounts and student loan interest. However, neither of these terms directly relates to the deduction of AGI based on the number of persons supported by the taxpayer's income.