Broker Check

Personal Income Tax Exemptions

February 17, 2017

For the 2016 tax year, the Personal Exemption income tax deduction increased from $4,000 to $4,050.  Separate from the standard deduction or itemized deductions, every taxpayer is allowed to take one personal exemption deduction.  Married couples who file jointly are allowed to take two personal exemption deductions on a joint tax return (one each). In addition, if a taxpayer has a qualified dependent, subject to the qualifying relative or qualifying child test, they can list the dependent on their return and take an additional exemption for each dependent.

Keep in mind that if you list an individual as a dependent and take their personal exemption deduction, they will not be able to claim their own exemption if they file a return. It is important to run the dependency tests to determine if a dependent qualifies and which filing status will yield the best outcome.

The personal exemption de-duction is also subject to income phase-out tests if your adjusted gross income exceeds certain amounts. The deduction phases out completely at $381,900 for single filers and $433,800 for married couples filing jointly for 2016.