Personal income-tax exemptions explained

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As you fill out your federal income tax return, even before you report your income, the IRS asks you to list your personal exemptions. It's important not to skip this step -- exemptions reduce your taxable income.

For 2009, the personal income tax exemption amount is $3,650. That's per person, not per family. That amount applies so long as your adjusted gross income (AGI) falls under the phaseout amount. Phaseouts begin at $125,100 for taxpayers filing as married filing separately, $166,800 for taxpayers filing as single, $208,500 for taxpayers filing as head of household and $250,200 for taxpayers filing as married, filing jointly.

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