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Is an exemption considered a deduction off your AGI?
I have a question for my individual income taxation class that seems all too easy....
Eugene and Velma are married. For 2008, Eugene earned $25,000 and Velma earned $30,000. They have decided to file separate returns and are each entitled to claim one personal exemption. They have no deductions for adjusted gross income. Eugene's itemized deductions are $9,400 and Velma's are $1,700. Assuming Eugene and Velma do not live in a community property state, what is Velma's taxable income?
3 Answers
- MathewLv 71 decade agoFavorite Answer
Velma's taxable income would be $24,800 with a tax liability of $3,319. She only would be able to use standard deduction if her husband also used standard deduction.
- Anonymous1 decade ago
The personal exemption reduces your taxable income AFTER your Adjusted Gross Income.
For 2008 the personal exemption is $3500.
Therefore, Velma's taxable income is $30,000-$1,700-$3500 = $24,800
- Anonymous1 decade ago
I do not agree with Smart A$$. AGI is not reduced based on your exemptions. Your deduction amount increases with added exemptions. Velma's AGI will be $30,000 and her deductions will be $5450 (standard deduction). She does not need to itemize because her deductions are only $1700. Her taxable income is $24,550
