Tax Exemption
A Tax Exemption is a monetary transaction or an income that are tax-free.
- AKA: Tax Exempt.
- Example(s)
- See: Tax Deduction, Tax Credit, Tax Abatement, Taxpayer.
References
2016
- (Wikipedia, 2016) ⇒ http://en.wikipedia.org/wiki/Tax_exemption
- Tax exemption refers to a monetary exemption which reduces taxable income. Tax exempt status can provide complete relief from taxes, reduced rates, or tax on only a portion of items. Examples include exemption of charitable organizations from property taxes and income taxes, veterans, and certain cross-border or multi-jurisdictional scenarios.
Tax exemption generally refers to a statutory exception to a general rule rather than the mere absence of taxation in particular circumstances, otherwise known as an exclusion. Tax exemption also refers to removal from taxation of a particular item rather than a deduction.
International duty free shopping may be termed "tax-free shopping". In tax-free shopping, the goods are permanently taken outside the jurisdiction, thus paying taxes is not necessary. Tax-free shopping is also found in ships, airplanes and other vessels traveling between countries (or tax areas). Tax-free shopping is usually available in dedicated duty-free shops. However, any transaction may be duty-free, given that the goods are presented to the customs when exiting the country. In such a scenario, a sum equivalent to the tax is paid, but reimbursed on exit. More common in Europe, tax-free is less frequent in the United States, with the exception of Louisiana. However, current European Union rules prohibit most intra-EU tax-free trade, with the exception of certain special territories outside the tax area.
- Tax exemption refers to a monetary exemption which reduces taxable income. Tax exempt status can provide complete relief from taxes, reduced rates, or tax on only a portion of items. Examples include exemption of charitable organizations from property taxes and income taxes, veterans, and certain cross-border or multi-jurisdictional scenarios.
- (Investopedia, 2016) ⇒ http://www.investopedia.com/terms/t/tax_exempt.asp
- Tax exempt refers to income earnings or transactions that are free from tax at the federal, state or local level. When a taxpayer earns wages or sells an asset for a gain, that individual is creating a tax liability. While a tax deduction refers to an amount that reduces a tax liability, a tax-exempt item is excluded from any tax calculations.