Exempt-Interest Dividend

Dictionary Says

Definition of 'Exempt-Interest Dividend'

A distribution from a mutual fund that is not subject to income tax. Exempt-interest dividends are often associated with mutual funds that invest in municipal bonds. While exempt-interest dividends are not subject to federal income tax, they may still be subject to state income tax or the Alternative Minimum Tax (AMT). The dividend income must be reported on the income tax return, and it is reported by mutual funds on Form 1099-INT.
Investopedia Says

Investopedia explains 'Exempt-Interest Dividend'

Individuals with high net worths are more likely to use municipal bonds and funds because the tax savings outweigh the lower returns provided by the investments. The tax benefits provided by the investments, including exempt-interest dividends, are lost if the investments are held in an IRA. This is because all dividends and interest within an IRA are considered tax-exempt.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Alternative Minimum Tax - AMT

    A tax ...
  2. Income Tax

    A tax that ...
  3. Form 1099-INT

    The form issued ...
  4. Dividend

    1. A ...
  5. Mutual Fund

    An investment ...
  6. Dividend Tax Credit

    The amount a ...
  7. Liquidator

    In the most ...
  8. Economic Profit (Or Loss)

    The difference ...
  9. Profit

    A financial ...
  10. Operating Income

    The amount of ...

Articles Of Interest

  1. Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  2. The Basics Of Municipal Bonds

    Investing in these bonds may offer a tax-free income stream but they are not without risks.
  3. Avoid Tricky Tax Issues On Municipal Bonds

    Learn the rules every investor should know before buying into this "tax-free" investment.
  4. Why Retirees Can't Count On Muni Bonds

    Interest may not be tax-exempt for seniors with Medicare or Social Security benefits.
  5. Bonds: They're Not Just For Seniors

    Fixed-income investments can be part of your portfolio at any age. Find out how.
  6. The Impact Of Combining The U.S. GAAP And IFRS

    The convergence of accounting standards is changing the attitudes of CPAs and CFOs toward harmonization of international accounting.
  7. Analyze Cash Flow The Easy Way

    Find out how to analyze the way a company spends its money to determine whether there will be any money left for investors.
  8. Digging Into Book Value

    This calculation will serve up your portion of the shareholder pie.
  9. CPA, CFA Or CFP® - Pick Your Abbreviation Carefully

    A couple of letters can mean a big difference. Find out which designation you need and how to get it.
  10. Using Enterprise Value To Compare Companies

    Learn how enterprise value can help investors compare companies with different capital structures.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center