Which of the following is a true statement?
A) Personal exemptions, but not dependency exemptions, are subject to phase-out.
B) A married filing joint taxpayer with AGI of $500,000 would not be able to deduct personal and dependency exemptions.
C) At most, only 80% of exemptions are subject to phase-out.
D) Itemized deductions, but not exemptions, are subject to phase-out.
E) None of the choices are true.

Question

Quizplus · Accepted Answer

The statement that a married filing joint taxpayer with AGI of $500,000 would not be able to deduct personal and dependency exemptions is true for the tax year 2020. The personal and dependency exemptions are subject to phase-out, but only if the taxpayer's AGI exceeds certain thresholds ($261,500 for single taxpayers, $313,800 for married filing joint taxpayers). The phase-out reduces the exemptions by 2% for each $2,500 (or fraction thereof) that AGI exceeds the threshold. However, the phase-out does not apply to dependency exemptions for tax years 2018 through 2025 due to the suspension of the exemption. Therefore, statement A is false, statement C is incorrect (there is no 80% limit for phase-out), and statement D is also false, as itemized deductions and exemptions are both subject to phase-out in certain circumstances.

Which of the Following Is a True Statement