Personal and Dependent Exemptions

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Personal and Dependent Exemptions

There are two types of exemptions:

• Personal exemptions for taxpayer and spouse
• Dependency exemptions for dependents

Personal and dependent exemptions reduce your taxable income. For 2009, each exemption equals $3,600. You may claim an exemption for yourself, provided you cannot be claimed as a dependent on another taxpayer's return, for your spouse if you file a joint return, or if you do not file a joint return, provided your spouse has no gross income and is not the dependent of another, and for each dependent child whose gross income is less than $3,600, or for your child, notwithstanding his or her gross income, provided the child is either a full-time student under the age of 24 at the end of the year, or not yet 19 years old at the end of the year.

If you have a child who is married, you may consider the option of taking a dependent exemption for such child if he or she so qualifies as just discussed and have the child file as "married filing separately." In some cases, the benefit of claiming a dependent exemption may outweigh the benefit of having the child file a joint return with his or her spouse. We recommend that you take the time to figure out the tax using each method in order to determine which way provides the lower overall tax.

Personal exemptions are phased out for taxpayers with AGI in excess of certain threshold amounts. For 2008, the exemption phase-out starts when AGI exceeds $159,950 for singles, $239,950 for joint filers, $199,950 for heads of household, and $119,975 for married couples filing separately.

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