Dependency Exemptions generally reduce your taxable income. For 2015 each
exemption reduces your taxable income by $4,000.
Please realize that if you are in an AMT you do not get the personal
exemptions for dependents but instead get an exemption depending on your
marital status and subject to a phase-out.
There are generally two categories of individuals who qualify to be claimed
as a dependent. A person might fail the tests for the first category but
pass the test to qualify under the second category:
The exemption for an individual can only be claimed once. If a child claims
their own exemption the parentís cannot (and vice versa). If a parent is
claimed by one child, a sibling cannot claim the same parent. There is the
ability for people who jointly provide support for an individual to make an
election for one person to claim the dependency exemption (for example four
children equally support a parent an election can allow one of the children
to claim that parent).