Aberdeen herald. [volume] (Aberdeen, Chehalis County, W.T.) 1886-1917, 1913-11-28
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Q.-What is meant by the necessary ex-
penses paid in carrying on business? A.
Clerk hire, rent lighting. heating, sta
tionery. delivery charges. etc.
Q.-Suppose ! have allowed state or
local taxes to accumulate for several
years: can | deduct the payment of &C.
cumulated taxes. or can | only deduct the
taxes which fell due within the year for
which 7 made an income tax return? A.
You can deduct all the tax payments.
whether they were accumulated or not.
Q.-What deductions are allowed to cor
porations" Al The ordinary and neces-
eary expenses incurred in maintaining and
operating the business and properties OF
the company. including rentals. 2. All
losses actually sustained and not compen-
stated by insurance or otherwise, includ-
ing reasonable allowance for deprecia-
ton. 3, Interest paid on bonded and other
Indebtedness to an amount OF such In
debtedness not exceeding one-half the in
terest bearing Indebtedness and its out
standing capital stock. I. All taxes, ma
tional or state or imposed by a foreign
government
Q.-ls corporation entitled to an ex-
emption of 5000 or $4,000 like an individ-
uaI? A.-No. There are no exemptions in
the case of corporations: they are allowed
to deduct the expenses. losses. interest
and taxes as already explained.
Q.-lndividuals may deduct dividends:
can corporation deduct dividends re-
ceived from other corporations? A.-No
while this appears to result in a double
taxation. tax of per cent having been
paid upon the dividends by the corpora
tlon from which they were received, con-
gress intended to tax dividends received
by one corporation from another.
Q.-Does the present income tax law
take the place OF the corporation income
tax law Of 1909? Ayes. but for the
months of January and February 1873
the old corporation income tax law re-
mains in force. The present income tax
law goes into effect from March l. 1918.
Collection at Source.
Q.-what is meant by the collection Of
this tax lat the source?' A.-The law
provides that all persons. firms and corpo-
rations paying interest, rent, salaries, an
nulties or other fixed or determinable an
nual or periodical gains, profits and in
come of any other person exceeding $1,000
per year shall withhold l per cent and
pay 1t to the government as the normal
tax upon that portion Of the income Of
the person who was entitled to receive the
rent. salary. income annuity. etc.
Off the annual rent on my home or
place of business is $500 and 1 know that
the landlord has other income which
would make him taxable, shall | deduct
per cent from my rent? A.-No; you can
only make the deduction provided the rent
you pay exceeds 5000 per year. and this
same principle applies to all payments OF
rent. salary interest, annuities, ETC.. with
the sole exception Of interest on corporate
bonds.
OFF the interest on corporate bonds
amounts to less than 5000. must the
per cent be deducted at the source? A.
Yes: the law provides that where the in
come Is interest on corporate bonds the
tax must be deducted at the source. ire
spective of the amount of the interest
payment
OFF rent or salary payable by me
amounts to $1,000 or less l understand |
withhold no tax. but II 1t amounts to
more than 5000. do ! withhold the tax on
the excess or on the whole amount? A.
You withhold the tax on the whole
amount For example If rent or salary
due from you amounts to 5000 or less you
deduct nothing but If 1t amounts to $500
you must deduct $35-namely. l per cent.
of the entire $780,
Q.-Can the person entitled to rent. sal
airy. interest. annuity. ETC.. claim an ex-
emption? Ayes: by filing a notice with
you he can claim and obtain an exemp-
ton Of $1,000 Tor $4,000 II married and with
wife living with him): in that case you
should only deduct the per cent from
the excess over the exemption. For ex-
ample. II landlord or employee is en-
titled to 5000 year and files with you an
exemption as married man amounting to
$4,000 you would only deduct $10-namely,
per cent on the excess of 81. 900.
Q.-How about the collection Of coupons
on corporate bonds? A.-The interest is
to be deducted by the corporation. The
owner Of the coupon must then file GER
tificate Of ownership with the bank or
other concern which receives the coupon
for collection otherwise that bank would
have to deduct the tax and attach it's own
certificate. giving the name of the owner.
The owner has right to claim exemp-
ton up to $1,000 II single or $4,000 II mar
ried. The forms Of certificates OF owner
ship and of exemptions have been pre-
scribed and may be obtained from the col
lector.
DIN deducting the tax from rent sal
airy and interest. shall deduct from each
payment or wait until 5000 has been paid
A.-Under the regulations you need not
withhold the tax until such time as the
rent. salary or interest shall have reached
an aggregate In excess Of $3,O00. The tax
subsequently Is to be deducted from the
full amount or from $1,000 or $4,000 less II
notice Of exemption has been filed.
Q.-What tax shall be deducted in 1913?
A.-For the year 1918 everything is on
nve-sixths basis. because the law will
have been In effect for ten months. All
calculations Of exemptions. deductions. In
come, ETC.. for 1913 shall be taken at five
sixths Of the whole annual amount in
each case.
Q.-Suppose the landlord or employee
entitled to receive more than 5000 a year
has business expenses. losses. ETC., which
bring his net income below 5000 in all;
can he. by fling statement of such bust
ness expenses. losses. etc.. obtain a full
payment from me without deduction? A.
No. You must still deduct per cent. He
will be entitled to obtain the benefit OF
such deduction by application to the col
leotor.
Q.-What do l do with the amounts
deduct from payments Of salary interest.
rent. annuity. etc.? A.-You hold them
and make separate returns for such de-
duction at the same time you make your
own return. You pay the amount Of the
deductions to the collector between June
and June 30. individuals and corpora
lions will be notified of the amount upon
which they are liable on or before June l.
Publicity of Returns.
Q.-Are the returns made by an individ-
uaf or corporation open to the inspection
Of the public? A.-All returns, whether
by individuals or corporations. are public
records. but they may be inspected only
upon the order Of the president under
rules and regulations to be prescribed by
the secretary Of the treasury and ap-
proved by the president.
Q.-Can income tax returns be inspected
by the tax officers Of any state. city or
county? A.-No. except as they may be
inspected by any citizen. IA explalned In