How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
A new question is answered every 9 seconds

Ask a Tax Professional

Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: General
Satisfied Customers: 572
Experience:  10 years experience
16356563
Type Your Tax Question Here...
characters left:
Tax Professionals are Online Now

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Exempt Income

When an individual has income there are sometimes exemptions which they claim on their W-4, these exemptions lower the federal taxes that are deducted from the employee’s net income. There are some types of income that are considered exempt income and therefore no taxes will be taken from the monies received. Many people may question what is exempt income? Who, if anyone, is able to obtain exempt income status? These and other questions have been asked of and answered by the Experts.

What is exempt income?

There are some types of income that in most tax systems are excluded from the base of income that is taxable, and these are often known as exemptions or exclusions. Since most tax systems are highly varied so are the exemptions that they include. Though they may vary, here are a few examples of exempt income: inherited property value, income for compensation for a loss, and income that was earned outside of the taxing jurisdiction. It may be noted that in some tax systems there are exclusions that are specifically excluded and encouraged, these certain exclusions can either very general or very specific.

Is Native American’s income tax exempt?

Since there is no statutory provision that states that Native American’s income is considered to be exempt income, and in most cases their income is subjected to the same income taxes as other citizens and is computed in the same way. This is because treaties regarding Native Americans are usually taken to favor Native Americans, but only when the treaties have language that can be reasonably interpreted as income exclusions. Therefore the income of Native Americans will only be tax exempt if the treaties are able to give support for the status on exempt of taxes. It should also be noted that each treaties only stand to the tribes for which they were written, in other words a member from another tribe is unable to use the exemptions from a treaty made with another tribe.

Is an employer able to change the tax exemption status on an employee’s W-4?

Since the IRS made it where employers are to audit the exempt statuses of employees on their W-4s, employers must monitor the employees’ exempt tax income. The employers can receive penalties for allowing employees to claim more exemptions than they are allowed or for claiming an exempt status that is not justified. So if an employee has claimed exempt status after having already being non-exempt, an employer may change the status back to what it was before the claiming of exempt, to cover them from the IRS penalties. The situations in which an individual may claim income tax exempt are if they received a federal tax refund the previous year and are expecting to receive a federal tax refund this upcoming year. If those criteria are met then an employer cannot change the exemption status on the employee’s W-4 without the permission of the employee.

If an individual is working outside of the United States and had tax-exempt income that was taxed by the foreign country, can Foreign Tax Credit be applied?

The purpose of the Foreign Tax Credit is meant to be used as a tool to relieve taxes being applied by both the United States and the foreign country. Therefore if the interest was not taxed by the United States then there would have been no double taxation by the two countries, thus making the individual unable to apply the Foreign Tax Credits. It should also be noted that an individual cannot take credit for foreign taxes that were either paid or accrued on certain types of income that is to be excluded for the United States gross income.

Exempt Income is income that is exempt of taxes. Exemptions are commonly seen when an individual is filling out their W-4s when starting a job. The exemptions that an individual takes affect the amount of taxes that are withheld from their earnings. There are some things that are considered exempt income, for example inherited property value. For a person to be able to claim exempt status on their W-4 they must meet the criteria of having received a federal tax refund the year previous and expect to receive a federal tax refund the year coming. If an individual has questions that in regards to exempt income they should direct their questions to the Experts.

Ask a Tax Professional

Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: General
Satisfied Customers: 572
Experience:  10 years experience
16356563
Type Your Tax Question Here...
characters left:
Tax Professionals are Online Now

How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Tax Professionals are online & ready to help you now

Wallstreet Esq.
Tax Attorney
Satisfied Customers: 570
10 years experience
Wendy Reed
Enrolled Agent
Satisfied Customers: 3052
15+ years tax preparation and tax advice.
Mark D
Enrolled Agent
Satisfied Customers: 985
MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Recent Exempt Income Questions

  • UK citizen with UK social security and UK company & private

    UK citizen with UK social security and UK company & private pensions not drawing from yet. Now perm resident in US Illinois. Looking to plan tax efficient approach to drawing on UK SS and pensions. UK/USA tax agreements means UK social security not taxed by Fed, Is this correct? UK company & private pensions Fed will tax as ordinary income? Is this right? Illinois don't tax any SS or pension income at all? Is this right?
    Thanks
  • Our CPA did not file an addendum with the California Franchise

    Our CPA did not file an addendum with the California Franchise Tax Board after we got audited. we owe back tax plus 4,000 in penalties and fees. I want to go to small claims to recover. we filed as a married couple. My husband has no interest in going to court. I do. can I go by myself even though the taxes are in both our names?
  • Have a client that will receive a $1,000.00 a month from her

    Have a client that will receive a $1,000.00 a month from her local church to host an foreign exchange student. I assume she will receive a 1099 Misc at year end. I read were a maximum deduction for hosting a student is $50.00 per month with no compensation as a charitable deduction. But in this case can we deduct all qualified expenses against this compensation and even if ends up in a loss? This would be reported on a schedule C and any net income subject to FICA?
< Last | Next >
View More Tax Questions