Taking Personal Exemptions

Filed Under: Income Tax Basics, Tax Advice
In addition to taking either a standard deduction or itemizing your deductions, the IRS allows you to take a personal exemption. For 2008, each personal exemption is worth $3,500.

You may claim an exemption for yourself and for each dependent. Generally, you may claim at least one exemption for each person in your household.

Similar to itemized deductions, your personal exemption begins to phase out at higher incomes. This phase-out rule for losing your itemized deductions is also sometimes referred to as the "phase out" rule.

For married persons filing a joint return and persons filing as qualifying widow or widower, personal exemptions for 2008 begin to phase out when adjusted gross income (AGI) reaches $239,950. Personal exemptions phase out at the rate of 1% of each $2,500 of additional income, which means they phase out completely when income reaches $362,450. For 2008-2009, the phaseout is 1% and for 2010 the phase-out is eliminated.

For single taxpayers, personal exemptions begin to phase out when adjusted gross income reaches $159,950 in 2008. Personal exemptions phase out at the rate of 1% of each $2,500 of additional income, which means they phase out completely when AGI reaches $282,450. For 2008-2009, the phaseout is 1% and for 2010 the phase-out is eliminated.

For persons filing as head of household, personal exemptions 2008 begin to phase out when AGI reaches $199,950, phasing out completely when income reaches $322,450.

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For married persons filing a separate return, personal exemptions for 2008 begin to phase out when AGI reaches $119,975, phasing out completely when income reaches $181,225. (For married persons filing separately, personal exemptions phase out at the rate of 1% of each $1,250 of additional income.) For 2008-2009 the phaseout is 1%, and for 2010 the phase-out is eliminated.

To calculate a partial phase-out for a personal exemption, see IRS Pub. 501.

The Economic Growth and Tax Relief Reconciliation Act of 2001 gradually eliminates the phase out rule over five years, beginning in 2006.


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Mary 1 Har 09:03:40 AM Mar 12 2008

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I had an accident and settled out of court so I would like to know if the money I recevied for my settlement is taxable? Because of the accident, I have severe cronic pain and I am handicap. I have a house keeper now so I was wondering if the money I pay her or anyone else I pay for services is taxable? I would also like to know if there is anything else I can claim on my taxes due to my condition?

Kattie2479 04:06:45 PM Mar 08 2008

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HelP does anyone know if the sale of a time share at a loss would still be considered income. I'm doing my taxes and I'm at a loss on this question

Erwinessig 05:48:50 AM Mar 04 2008

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LET THE FEDERAL RESERVE JUST PRINT MORE PHONEY MONEY
THAT SHOULD TAKE CARE ODF THE TAXES
OR DU YU LIKE DONATING TO ILLEGAL IMMIGRANTS WELFARE

Marian814 08:54:44 AM Feb 24 2008

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Can I take my daughter off on my income taxes, when she is on SSDI? She has been living with me for the last year. She gives me $200, a month to help pay for the ulities. Will it get her into trouble with SSDI. She can not work, she is mentaly handicappe, I don't want to see her loose her SSDI.
I am a widow living on my pension and my husband social security.

melj1410@yahoo.com

nanwalkeraz 02:03:03 PM Feb 23 2008

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MY HUSBAND PASSED AWAY ON JUNE 21ST 2007. HOW IS THIS GOING TO AFFECT THE WAY I FILE MY TAXES THIS TIME? CAN I CLAIM HIS FUNERAL EXPENSES ALSO!

JahnGreen 03:01:05 AM Feb 16 2008

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Bend over for socialism!! You will need carbon credits to have the right to breath. After all it not the sun heating up. Its average Americans having to much freedom causing global warming and environMental harm. We need to be more like socialist China.

Giddles 12:34:22 AM Feb 10 2008

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I have paid 63% of my salary for one child as child support. Do I get him as a deduction.?

DarleMtch 09:33:03 AM Feb 09 2008

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RDillard325 My husband files income tax and I'm on SSI and he claims me as a dependent, but he doesn't claim my check, is he suppose to claim my check?

Rhofcalif2 07:57:49 PM Feb 02 2008

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if you didnt work in 2007, and only received long-term disability do you still file a return?

Jody1975 01:44:41 PM Jan 29 2008

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We have a foreign exchange student, what are the deductions or credits if any?

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