You can take an exemption deduction for yourself, your spouse and each dependent you claim. On 2009 returns, this exemption amount is $3,650 per person.
Some taxpayers, however, will see their personal exemption amount reduced if they make over a certain limit that is adjusted annually for inflation.
To determine just how much exemption value is lost, taxpayers will have to complete a work sheet 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:
You must reduce the dollar amount of your exemptions by 2 percent for each $2,500 or part of $2,500 ($1,250 if you are married filing separately) that your AGI exceeds the amounts shown above for your filing state.
However, 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 one-third of each allowable exemption amount. That means that you will be able to claim only $2,433 instead of $3,650 for each exemption.
|Filing status||Phaseout of exemptions when AGI is over||Maximum phaseout applies if your AGI exceeds|
|Married filing jointly or qualifying widow(er)||$250,200||$372,700|
|Head of household||$208,500||$331,000|
|Married filing separately||$125,100||$186,350|