Personal Exemptions Explained

Determining your personal tax exemptions depends on your dependents
Determining your personal tax exemptions depends on your dependents

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 2010, the personal income tax exemption amount is $3,650, the same as in 2009. That's per person, not per family. That amount applies so long as your adjusted gross income (AGI) falls under the phaseout amount; the amount of personal exemptions you can claim is normally phased out as your income rises. As a result of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, there is a temporary repeal of the PEP (personal exemption phase-out) limitations. With the repeal, high-income taxpayers hold on to their exemptions a little longer.

Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.
Who Can Garnish an Income Tax Refund?
Depending on the laws of your state, private creditors may have access to those funds. However, it's best to get all the facts before you start to panic.
Read MoreBrought to you byTurboTax.com
The Dirty Dozen: 12 Tricky Tax Dependent Dilemmas
Knowing when someone qualifies as a tax dependent can be trickier than it seems. These 12 examples help clear up the confusion about who you can and can't claim as a dependent on your tax return.
Read MoreBrought to you byTurboTax.com
Can I Redo My Taxes and Should I?
Congress sets the laws that change the current and future rules around taxes. But some of these changes can also retroactively affect taxes from previous filings. You might be wondering how to file an amended return to take advantage of these changes and whether you should.
Read MoreBrought to you byTurboTax.com
The W-4 Form Changed in Major Ways — Here's What's Different
In 2020, the W-4 form changed to help individuals withhold federal income tax more accurately from their paychecks. Learn everything you need to know so you can update your W-4 with confidence.
Read MoreBrought to you byTurboTax.com