What Does Tax Exempt Mean?

What is the name of your state? KENTUCKY

I WAS WONDERING WHAT TAX EXEMPT MEANS?

KATHYISFUNNY200 said:

What is the name of your state? KENTUCKY

I WAS WONDERING WHAT TAX EXEMPT MEANS?

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Not obligated to pay taxes.

Example, non-profit organizations, churches.....

Also see:

http://www.thefreedictionary.com/tax-exempt

Also, an individual can be tax exempt for a specific tax year. A year when the individual knows for certain that no taxes will be due.

Example: You have a business and you have significant losses that carry forward to a future tax year. You then close it down and get a job instead.
The losses being carried forward are greater than the salary that you will earn that year. You can be tax extempt for that year.

Happy Trails is correct. Tax-exempt also refers to sources of income (eg. municipal bonds) that are not taxed by the fed govt.

Sorry to disagree LdiJ, but 'tax exempt' is not conceptually the same as 'someone who happens to have zero tax liability', even though in practice, neither entity pays taxes.

LdiJ was referring to when someone may check the "exempt" box on a W-4 form, i.e., when last year's tax liability was $0 & this year's liability is expected to be $0. Hence the reason the example specified someone with an NOL last year, who expected this year's earnings to be less than the NOL carryforward.

abezon said:

LdiJ was referring to when someone may check the "exempt" box on a W-4 form, i.e., when last year's tax liability was $0 & this year's liability is expected to be $0. Hence the reason the example specified someone with an NOL last year, who expected this year's earnings to be less than the NOL carryforward.

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That box refers to "exempt from withholding" not that they are truly tax exempt.

Shortbus has got it right.

justalayman said:

That box refers to "exempt from withholding" not that they are truly tax exempt.

Shortbus has got it right.

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However, that is what I was referring to.