The amount you can take as a personal exemption for each family member may be reduced when your income is greater than a certain threshold amount of Adjusted Gross Income (AGI). The threshold amounts, like the amount of the personal exemption, are adjusted annually for inflation.
The personal exemption is $3,800 in 2012 and there is no phase-out of personal exemptions for high earners this year.
The extent to which you can benefit from personal exemptions, as well as some tax deductions, is typically based on your AGI. As noted above, the threshold for the phase-out of personal exemptions can change from one tax year to the next to adjust for inflation and/or changes in tax legislation.
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