Tax exempt


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Tax Exempt

Describing income or organization that is not subject to taxation. Examples of tax exempt organizations include religious groups and charities. Additionally, certain income an individual or corporation derives may be tax exempt. For example, coupons from a municipal bond are tax exempt at the federal level. See also: Tax credit, tax deduction.

Tax exempt.

Some investments are tax exempt, which means you don't have to pay income tax on the earnings they produce.

For example, the interest you receive on a municipal bond is generally exempt from federal income tax, and also exempt from state and local income tax if you live in the state where the bond was issued.

However, if you sell the bond before maturity, any capital gain is taxable.

Similarly, dividends on bond mutual funds that invest in municipal bonds are exempt from federal income tax. And for residents of the issuing state for single-state funds, the dividends are also exempt from state and local taxes.

Capital gains on these funds are never tax exempt.

Earnings in a Roth IRA are tax exempt when you withdraw them, provided your account has been open for five years or more and you're at least 59 1/2 years old. And earnings in 529 college savings plans and Coverdell education savings accounts (ESAs) are also tax exempt if the money is used to pay qualified education expenses.

When an organization such as a religious, educational, or charitable institution, or other not-for-profit group, is tax exempt, it does not owe tax of any kind to federal, state, and local governments. In addition, you can take an income tax deduction for gifts you make to such organizations.

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UBTI from operations is thus isolated in OpCo, which is generally a corporation, and gain from the sale (generally not subject to UBIT) flows through PropCo to the tax exempt investors.
Other benefits of ownership and equity participation for embassies, consulates and other related tax exempt organizations (and not-for-profit groups) include the ability to stabilize occupancy costs and take control of their office and residential environment.
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Employers that have, at all times, been tax exempt are generally exempt from this excise tax (Sec.
Many observers charge the organization does not deserve to be tax exempt because it engages in too much partisan politics.
If the parent organization is tax exempt it is best to avoid Sec.
"Nothing from a tax exempt can go into supporting a candidate - zero," Gibbs said.

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