For 2010, you will no longer lose part of your deduction for personal exemptions, regardless of the amount of your adjusted gross income.

This chapter discusses exemptions. The following topics will be explained.

• Personal exemptions — You generally can take one for yourself and, if you are married, one for your spouse.
• Exemptions for dependents — You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. If you are entitled to claim an exemption for a dependent, that dependent cannot claim a personal exemption on his or her own tax return.
• Social security number (SSN) requirement for dependents — You must list the social security number of any dependent for whom you claim an exemption.

Exemptions reduce your taxable income. You can deduct $3,650 for each exemption you claim in 2010.

How you claim an exemption on your tax return depends on which form you file.

If you file Form 1040EZ, the exemption amount is combined with the standard deduction amount and entered on line 5.

If you file Form 1040A or Form 1040, follow the instructions for the form. The total number of exemptions you can claim is the total in the box on line 6d. Also complete line 26 (Form 1040A) or line 42 (Form 1040).

There are two types of exemptions you may be able to take:

• Personal exemptions for yourself and your spouse, and
• Exemptions for dependents (dependency exemptions).

While each is worth the same amount ($3,650 for 2010), different rules apply to each type.

You are generally allowed one exemption for yourself. If you are married, you may be allowed one exemption for your spouse. These are called personal exemptions.

You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer does not actually claim you as a dependent.

Your spouse is never considered your dependent.

On a joint return you can claim one exemption for yourself and one for your spouse.

If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer. This is true even if the other taxpayer does not actually claim your spouse as a dependent. This is also true if your spouse is a nonresident alien.

If your spouse died during the year and you file a joint return for yourself and your deceased spouse, you generally can claim your spouse's exemption under the rules just explained under Joint return. If you file a separate return for the year, you may be able to claim your spouse's exemption under the rules just described in Separate return.

If you remarried during the year, you cannot take an exemption for your deceased spouse.

If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed as an exemption on both the final separate return of your deceased spouse and the separate return of your new spouse for that year. If you file a joint return with your new spouse, you can be claimed as an exemption only on that return.

If you obtained a final decree of divorce or separate maintenance by the end of the year, you cannot take your former spouse's exemption. This rule applies even if you provided all of your former spouse's support.