Nontaxable Income

Nontaxable Income

All income that is exempt from taxation at the federal level. Coupons from municipal bonds are a common example of nontaxable income, thought they still may be taxed at the state level.

nontaxable income

Income items specifically exempted from taxation. On federal returns, the interest from most municipal bonds, life insurance proceeds, gifts, and inheritances is generally nontaxable income.

Nontaxable Income

Income that is by law exempt from tax.
References in periodicals archive ?
Total nontaxable income includes interest earned on investments in State or local government bonds.
However, he has ruled out introducing a minimum nontaxable income, as trade unions had demanded.
417 percent) of the payout to shareholders was nontaxable income.
The other involved claims that nontaxable income placed in certain investment funds should be eligible for tax credits - money back for tax it had not paid in the first place.
THE pounds 4,250 limit was chosen because that is the figure which the Government allows as nontaxable income for homeowners who take in tenants.
Assume the taxpayer had one child and earned income of $8000, including $1000 of nontaxable income.
Says Steele, "You can reduce your taxes by converting taxable income into nontaxable income by investing in tax-free vehicles such as municipal bonds" (see "Tax-free Investing," Moneywise, this issue).
Thus, out-of-state corporations (such as Petitioner Hunt-Wesson) are compelled to reduce their interest deduction by the amount of their nontaxable income, without regard to whether the interest expense is related to the nontaxable income.
Asked if the special income tax cut offered this year by the government would be made a permanent measure, Kato denied such a possibility saying, ''It would institutionalize a (large) amount of nontaxable income and thus increase unfairness.
The corporate sponsorship provisions, in contrast, open the door for new planning opportunities to broaden the scope of nontaxable income.
Some nontaxable income also qualifies to be included in earned income under EIC: voluntary salary deferrals (401k contributions), military combat pay and basic quarters and subsistence allowances, clergy housing allowances, excludable dependent care benefits, voluntary salary reductions under a cafeteria plan and the value of meals and lodging provided by an employer (for the convenience of the employer).
In 1992, IRS publication 525, Taxable and Nontaxable Income, took a middle-of-the-road approach, saying that the refund should be multiplied by a fraction: state tax paid (after the 3% reduction) is the numerator and the total state tax paid is the denominator.