How Do You Calculate Federal Income Tax Exemptions?

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The number of exemptions a taxpayer claims in his federal tax return is the sum of his personal exemptions and dependent exemptions, states the Internal Revenue Service. Single filers claim one personal exemption and married filing jointly claim two personal exemptions.

If someone else can claim a taxpayer as a dependent, then the taxpayer cannot claim a personal exemption. A taxpayer can claim an exemption for each dependent, such as a child or parent, who meets the dependency test. A spouse is never claimed as a dependent, explains the IRS.

Each exemption reduces the taxable income by $3,950 for tax year 2014. For example, a married couple with two children could claim two personal exemptions and two dependent exemptions when filing jointly for a total deduction of $15,800, notes the IRS. However, this deduction is phased out for high-income taxpayers. The phase-out begins at $254,200 for single filers and $305,050 for married filing jointly.

The amount allowed for each exemption usually increases by $50 a year. The phase-out levels also tend to change every year. The IRS advises taxpayers to check current information before filing their tax returns. Exemptions are different from standard or itemized deductions and from child care and dependent care tax credits.