tax-deferred income


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Related to tax-deferred income: Tax deferral

Tax-deferred income

Dividends, interest, and unrealized capital gains on investments in an account such as a qualified retirement plan, where income is not subject to taxation until a withdrawal is made.

Tax-Deferred Income

Any income that one earns but does not receive until a later date, resulting in a situation in which taxes on the income are not paid until later. Common examples of tax-deferred income fall into two broad categories. The first is income in certain retirement accounts; the account holder is not liable for taxes until funds are disbursed. The second is the capital gain on some bonds such as U.S. Treasury securities; taxes on these gains are deferred until maturity. It is important to note that tax-deferred income is not the same as tax-free income, which has no tax liability at all.

tax-deferred income

The income that is earned but that is neither received nor taxed until a later date. For example, interest earned on U.S. Treasury bills is received and taxed at maturity. Likewise, U.S. savings bonds provide appreciation of value on which holders may defer paying taxes until the security is cashed in. Compare tax-free income, tax-sheltered income.
References in periodicals archive ?
taxpayers could accumulate tax-deferred income from offshore investments and, upon sale of the investment, recognize gain at the long-term capital gains tax rate.
Let's look at the tax-deferred income growth from an annual return point of view.
In some cases, an entire real estate portfolio can be constructed for the purpose of creating tax-deferred income streams.
Regardless of what income-tax bracket, tax-deferred income is almost always considered better than taxable.
Strategy 4: "Some investors may want to shift from investments generating high dividends or interest to those generating tax-exempt or tax-deferred income, such as municipal bonds," Kahler says, "or investors should defer more income through employer-sponsored retirement plans or annuities.
Life insurance is a preferred vehicle for funding these trusts because it provides guarantees, tax-deferred income and a death benefit that can be free of federal income and estate taxes.
The primary benefit of the insurance vehicle is its ability to convert tax-deferred income into tax-free income.
Universal life (UL) insurance policies take advantage of this by maximizing the over-funding and earning tax-deferred income.
Given the key attraction of investing in an investment bond is the tax-free, or tax-deferred income, it is ironic just how much more tax is payable compared to the phased alternative,' he said.
The IC-DISC is required to: (1) calculate the tax-deferred portion of its "taxable income" each year; (2) accumulate the tax-deferred income for the current tax year and prior tax years in a separate account; and (3) report the total accumulated amount of tax-deferred income to its shareholders each year.
Individual retirement accounts (IRAs) are, by design, supposed to be simple, uncomplicated vehicles by which to make tax-deferred contributions (and obtain tax-deferred income growth) into a retirement nest egg.