Personal income-tax exemptions explained

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.