Lila and Ted are married and have AGI of $337,000 in 2015.They had their first children this year,twins.Lila and Ted will be allowed a deduction for personal and dependency exemptions of
A)$8,000.
B)$16,000.
C)$12,480.
D)$6,240.

Question

Quizplus · Accepted Answer

The personal and dependency exemption in 2015 is $4,000 per eligible person. Since Lila and Ted have two children, they can claim 4 exemptions, which gives them a total deduction of $16,000. However, phase-out rules apply for taxpayers with AGI over certain thresholds. In 2015, the phase-out threshold for married taxpayers filing jointly is $309,900, and the exemption is reduced by 2% for every $2,500 of AGI over the threshold. For Lila and Ted, their AGI exceeds the threshold by $27,100, so their exemption is reduced by 2%*11=$220. Their allowable exemption is $16,000-$220*4=$12,480. Therefore, the correct answer is C.

Lila and Ted Are Married and Have AGI of $337,000