Final answer:
A deduction from adjusted gross income for an individual, their spouse, and qualified dependents is known as an exemption. This amount, combined with other deductions, reduces the taxable income on which income taxes are calculated.
Step-by-step explanation:
A deduction from adjusted gross income for yourself, your spouse, and qualified dependents is: d) an exemption.
The basic formula for calculating taxable income following deductions and exemptions is: taxable income = adjusted gross income - (deductions + exemptions).
Understanding these concepts is crucial when preparing to file taxes, as they directly affect the amount of income tax you owe. The standard deduction and the exemption are two key factors that reduce your taxable income. Not to be confused with tax credits, which are amounts that can be subtracted directly from your final tax bill, deductions and exemptions lower your taxable income.