Exempt-Interest Dividend

外汇网2021-06-19 13:39:56 45

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

Inpiduals 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 pidends, are lost if the investments are held in an IRA. This is because all pidends and interest within an IRA are considered tax-exempt.

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