What are the federal income tax deductions for personal exemptions?
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UPDATED: Jul 16, 2021
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Effective 2018 through 2025, personal and dependent exemptions are suspended entirely. In prior years, each person could lower taxable income by around $4,000.
Pre-2018: In addition, a taxpayer is allowed an additional personal exemption for each dependent. A dependent is a person with certain specified relationships to the taxpayer and with more than half of whose support is provided by the taxpayer. Children cease to be dependents, even if supported by a parent or parents, in the year in which they attain age 19, or in the year in which they attain age 24 if they are full-time students for at least 5 months during the taxable year. The definitions of “support” and “full-time” result in many disputes and persons claiming these exemptions should consult with a tax adviser.
There are rules dealing with a dependent who is supported by several taxpayers. Essentially, any person paying at least 10% of the support can claim the exemption if all other 10% or more payers agree (and none of them paid more than 50% of the support) and have the appropriate relationship to the claimed dependent.
The personal exemptions are, like many other tax benefits, phased out for taxpayers with substantial taxable incomes. Phase-outs for personal exemption amounts (called “PEP”) begin with adjusted gross incomes.