What's the difference between an allowance and a dependent exemption? ... In short, an allowance is used by your employer to calculate how much to withhold from your paycheck, and a dependent exemption is used on your tax return to calculate your actual tax liability.

What is the difference between dependents and allowances?

A dependent results in a direct tax deduction on your filed return. An allowance, on the other hand, results in reduced withholdings from your paycheck, but does not directly affect your tax liability when you file your returns.

How many allowances should I claim if I am a dependent?

You should claim 0 allowances on your 2019 IRS W4 tax form if someone else claims you as a dependent on their tax return. (For example – you're a college student and your parents claim you). This ensures the maximum amount of taxes are withheld from each paycheck. You'll most likely get a refund back at tax time.