Exempt Income

Exempt Income

Any income that is not subject to taxation. Examples of exempt income in the United States include income from municipal bonds, some retirement contributions, interest paid on mortgages, and the personal exemption, among other things. See also: Earned Income Tax Credit.
References in periodicals archive ?
It says 15 per cent tax litigation relates to determination of expenditure related to exempt income and so there is a need to clarify and simplify some provisions of this rule.
Currently the Trust receives both taxable income and exempt income and is "partially exempt" for VAT purposes.
25, 2010 (CENS)--Taiwan recently signed an agreement with Paraguay to mutually exempt income taxes on individuals of the two nations and/or that related to investments in both nations, aiming to avoid double taxation.
A B Total 70% Owner 30% Owner Year 3: Opening Basis 89,200 62,440 26,760 Taxable Income 37,000 32,105 4,895 Tax Exempt Income 500,000 433,850 66,150 Ending Basis 626,200 528,395 97,805
The new law applies to calendar year 2009, allowing refunds of any taxes withheld this year on the now exempt income.
Several potentially contentious options remain on the table, including capping or repealing tax breaks for employer-provided health insurance, both as a deduction for the employer and as exempt income for the employee.
There are several aspects of investing in municipal bonds that experienced investors, as well as novices, can use to maximize their tax exempt income, and moderate credit and market risk.
Section 861(a)(1)(A) interest, however, should not be considered exempt income since it is foreign-source income that is exempt from tax under subchapter N of the Code.
If a taxpayer has both income that is subject to the tax and exempt income, the taxpayer's expenses must be allocated between the two types of income in calculating the tax.
Working together, the FSC and AMT provisions effectively whipsaw taxpayers by : (1) re-classifying and taxing 50 percent of this otherwise exempt income as non-exempt FTI in the FSC under section 923(a)(5), and then (2) taxing the same income as exempt FTI to the shareholder under the alternative minimum tax rules provided in Prop.
The new law applies to all of calendar year 2009, allowing refunds of any taxes withheld this year on the now exempt income.
The court held that by offsetting or disallowing legitimate deductions where there is no relationship between the disallowed expense and exempt income, California, in effect, indirectly taxed income it could not tax directly.