Would someone please explain the "phaseout of the exemption" in Foolish English, please? See http://www.irs.ustreas.gov/prod/forms_pubs/pubs/p170302.htm
<< Would someone please explain the "phaseout of the exemption" in Foolish English, please? >>It means that if your income is high enough you lose some or all of your personal exemptions. This is one of those situations where the worksheet included in the 1040 instructions is much easier than a verbal explanation.Phil MartiTax Preparer
The deduction(s) for exemption(s) may be reduced or eliminated for higher-income taxpayers. The exemption for a taxpayer whose adjusted gross income exceeds the set threshold amount, based on filing status, is reduced by 2% for each $2500 or fraction thereof by which the AGI exceeds the threshold amount. The threshold amounts for 1999 are $189,950 for joint returns, $158,300 for head of household and $126,600 for single taxpayers.
<<Would someone please explain the "phaseout of the exemption" in Foolish English, please? >>Gee...I thought that I had an article on this in the Taxes fAQ area that explained it. But it's very similar to the phaseout of itemized deductions (at least in theory). And I KNOW that there is an article in the Taxes FAQ area regarding the itemized deduction phase out. So you might want to check it out.But, basically, as has already been pointed out to you, when your income reaches certain levels, you lose the ability to reduce your taxable income by some (or all) of your personal exemptions.TMF TaxesRoy
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