Tax Exempt

No longer empt. If you’re tax exempt, that means you’re a special snowflake who doesn’t have to pay the full portion of taxes. Tax exemption means you could be completely exempt from paying taxes, or exempt from paying taxes on certain things.

To qualify for tax exemption, you need a good reason. For instance, if you have dependents (you know, people you depend on you financially), then you can qualify for some tax exemptions, because the government wants to give you a little break for the kids (they’re expensive as all get-out, but somebody’s gotta raise the next generation of America, no?).

Make sure you don’t confuse tax exempt and tax deductions. Exempt means you’re free of paying any taxes on that one thing. A deduction is more of a tax break, like a discount. For instance, there’s tax exempt, nonprofit businesses, but when you make charitable donations to businesses like those as an individual, you can claim a tax deduction on the contribution (not an exemption). As another example, business owners can write off business expenses for tax deduction on some line items.