You can take an exemption deduction for yourself, your spouse and each dependent you claim. On 2007 returns, this exemption amount is $3,400 per person.
Some taxpayers, however, will see their personal exemption amount reduced if they make over a certain limit, which is adjusted annually for inflation. To determine just how much exemption value is lost, taxpayers will have to complete a work sheet, which can be found in the tax return filing instructions.
You will need the work sheet if your adjusted gross income exceeds the following limits for your filing status:
The maximum income limit is not a total elimination of your exemption amount. Rather, if your income is more than the top phaseout range, you will lose two-thirds of each allowable exemption amount. That means that you will be able to claim only $1,133 instead of $3,400 for each exemption.