What is a personal exemption?
A personal exemption (not to be confused with the Health Care penalty exemption) is tax-free money you get to deduct from your income for every taxpayer and dependent claimed on your return.
For 2016, the exemption is $4,050 per person, which means a jointly-filing couple with 2 dependents get an exemption of $16,200 (4 people x $4,050). This amount is subject to a phaseout, or reduction, once you go above a certain AGI level (for example, on joint returns the phaseout kicks in at $311,300).
Also, if you're being claimed as a dependent, you don't get an exemption on your own return because the rule is one exemption per person. Same goes for your jointly-filing spouse. If you're filing separately, you can claim an exemption for your spouse if s/he had no income, isn't filing his or her own return, and isn't a dependent on someone else's return.
We'll calculate your exemption based on your filing status and income.
Did you know? Your personal exemption gets deducted in addition to your standard or itemized deduction.