List of Tax Exemptions

Exemptions reduce your taxable income for the year and are divided into two categories: personal exemptions and exemptions for dependents. Each exemption is worth $3,500 for the 2008 tax year but different rules apply to each type of deduction.

Usually, you can claim one exemption for yourself, one for your spouse if you are married, and one for each dependent if you have children. However, if another taxpayer claims you as a dependent, or is entitled to claim you as a dependent, you are not eligible for a personal tax exemption.

The following table shows the tax exemption effect on your gross income:

Tax Exemptions Table

Personal Exemptions

You may generally claim one exemption for yourself if you are a single taxpayer.

If you are married and file a joint return, you may claim one exemption for yourself and one for your spouse. If you file a separate return, you are only able to claim your spouse for an exemption if your spouse is not filing a return, has no gross income, and was not the dependent of another taxpayer. If your spouse dies during the tax year, you are generally allowed to claim their tax exemption for the year.

You must be married on the last day of the tax year to claim a tax exemption for your spouse on your tax return, and if you obtain a final divorce or separation decree by December 31st, the last day of the tax year, you may not claim your spouse’s tax exemption.

You may be able to take additional personal exemptions, up to $500 each for a maximum of $2000, for providing housing to persons displaced by tornadoes, storms, or flooding in a Midwestern disaster area.

Exemptions for Dependents

A person may qualify as a dependent, and be eligible for a tax exemption, if they are a Qualifying Child or Qualifying Relative. There are five important tests that an individual must pass in order to be considered a Qualifying Child for a tax exemption:

1. The child must be your daughter, son, foster child, brother, sister, half brother, sister, half sister, step sister, step brother, or any descendent of the above listed.
2. The child must be either any age and permanently or totally disabled, under the age of 24 at the end of the year and a full-time student, or under the age of 19 at the end of the year.
3. The child must have not provided more than half of her or his own support for the year.
4. The child must have lived with you for more than half of the year.
5. You must be the person who is entitled to claim the child if the child is a qualifying child for more than one person.

If your child was born on or before December 31st, and all five of the tax exemption tests are met then you may claim the child for a dependency tax exemption on your tax return.

You may also add exemptions for dependents that are Qualifying Relatives. An eligible Qualifying resident must meet the following four requirements:

1. The person cannot be the qualifying child of another taxpayer or your own qualifying child.
2. The person must be related to you in one of the following ways: they may be your child, stepchild, adopted child, grand child, great-grand child, son or daughter in law, father or mother in law, brother or sister in law, parent, brother, sister, grand parent, step-parent, stepbrother or sister, half brother or sister, and, if related by blood, uncle, aunt, niece, or nephew.
3. The person’s gross income for the year must be less than $3,500.
4. You must supply more than half of the person’s total support for the year.

There are many additional rules and qualifications that apply to tax exemptions. For more information, please refer to Exemptions, Standard Deduction, and Filing Information.

Reductions of Exemptions

The tax deduction for personal exemptions begins to phase out after your adjusted gross income (AGI) reaches a certain limit. If your AGI exceeds the limit, determined by filing status, you must reduce the dollar amount of your exemptions by 2% for each $2,500 that your AGI exceeds the limit set out below. You can only lose up to 50% of your exemptions through phase-out AGI reductions. The AGI income ceilings are listed below and divided by filing status:

For more information on phase out of exemptions, or tax exemptions in general, please refer to Exemptions, Standard Deduction, and Filing Information