Income Tax exemption reduces the taxable income. There are two types of tax exemptions - Personal Exemption and Exemption for dependents like your spouse or children. For the year 2009 if your taxable income was below $3650, you pay no taxes. Personal Exemption depends on the Adjusted Gross Income (AGI) and deductions lower your taxable income.
You can claim further exemption if you have dependents. There are certain criteria which define a dependent which have to be met before you can avail a dependent personal exemption. Any child under the age of 19 years is a dependent provided that you bear 10% cost of support and the dependent did not pay more than 50% of the support.
Tuesday, February 24, 2009
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Many thanks for sharing the information about personal exemptions. These are, similar to various other tax benefits, phased out for taxpayers with significant taxable incomes.
ReplyDeleteMany thanks for sharing your views on Personal Exemption. Most taxpayers can claim a personal exemption for themselves, and if they are married they may be able to claim a second exemption for their partner. The effect of the personal exemption is to lower one’s taxable income and therefore one’s tax liability
ReplyDeleteCheers !!!!