Federal Tax Exemptions

Exemptions are tax breaks that reduce the taxes by certain percentage that has to be paid to the federal government.

For 2005, exemption for 1 person is $3200. When you file tax return, you get exemption for yourself, wife, kids and the parents that you take care of. You may not get exemptions if salary is on the higher side. For example, you don’t get personal exemption if your adjusted gross income is over

  • $145,950 and if your filing status is single.
  • $218,950 and if your filing status is married filing jointly.
  • $182,450 And if you are head of a household.
  • $109,475 and if you are married, filing separately.
Federal Tax Deductions

There are two types of deduction; standard and itemized deduction and you can avail either one of them.

Standard Deductions:

  • Single: $5,000
  • Married Filing separately: $5000
  • Married filing jointly: $10,000
  • Household: $7,300
  • Additional: $1000 who are over 65 years or blind

You can file itemized deduction if your deductions are more than standard deductions. e.g. When you pay amortized loan amount on a mortgage, the interest that you pay may be more than standard deductions. To save federal tax amount, it is better to go with itemized deductions rather than standard deductions.

Please visit http://irs.gov for more information on Federal Tax Exemptions and Deductions.

Federal Income Tax      Single Filing Status