Have a Tax Question? Ask a Tax Expert
What qualifies exempt income? Being exempt means you will receive a higher paycheck, because less tax will be taken out. Are you eligible to have exempt income? Or, need to know how long you can claim it? If you find yourself facing any questions such as these, consult with an Expert online. Below are some exempt income questions Experts have answered.
Since there is no statutory provision that states this then in most cases, their income is subjected to the same taxes as other citizens and computed the same way. The income of Native Americans will only be tax exempt if the treaties are able to give support for the reason why. If this is the case, only members of that tribe are eligible to use the exemption.
This is determined by an individual’s Adjusted Gross Income, not their age.
An individual may claim this exemption 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. However, since the IRS made it where employers are to audit the exempt statuses of employees on their W-4s, employers must monitor this. They can receive penalties for allowing employees to claim more exemptions than they are allowed or for claiming an exempt status that is not justified.
For unrelated rental of real property by a tax exempt entity, such as the church, the net income received is not taxable (known as unrelated business taxable income or UBTI). Unless the property is encumbered by debt, in which case the net income would be taxable to the extent of the debt-financed income.
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.
If you have questions that were not answered in this article, rest assured there are legal Experts waiting to help you. Experts are available online, day or night, at your convenience to provide customized answers.