The Leon reporter. (Leon, Iowa) 1887-1930, 1913-11-27
THE INCOME TAX.
Questions Answered by Louis Muir.
ply. Collector of Internal
Revenue for Iowa.

Revenue for Iowa.
Q.-Suppose l am engaged in a
business in which the profits are vari-
able One year ! make S., 900. An
other probably my income will be less
than $4,000. or if my business is OF
highly speculative nature probably
the divergence will be greater from
year to year. If declare my income
to be $4,000 one year will l be taxed
according to that statement the next
year. even though my earnings have
decreased?
A.-No; you will make return OF
net earnings each year and pay taxes
on the earnings Of that year. -
Q.-My children have been left
property by their deceased mother
parents. According to the provisions
OF the joint will of their grandpar-
ents. my son, a child OF seven years
receives from the estate approx
mately $4,000 a year. The two girls
about $500 each or Whereabouts. ]
am allowed 700 for the care and
education of each. My income
amounts to $4,000 year. Altogeth-
er receive $5,000'a year, counting
the $4,000 l receive from the chill
drens income. Practically all of the
money received from their property
is spent for their education and the
care necessary to their station. Is
the $4,000 their income or my in
come? l receive it according to the
provisions of their grandparents
will But it is spent for them.
A.-The will answers the question
whether it is your income or theirs.
If yours. you are taxable on the ex-
cess over $4,000 less the exemptions
prescribed in the law and which do
not allow anything for living ex-
penses, education, medical service,
etc. If you are their guardian, their
individual incomes being in each case
less than $4,000, you will not have to
make return or pay tax for them.
Q.-Will corporation, which is
paying the corporation tax on its
earnings, be required to deduct the
income tax from the dividends to be
paid to it's stockholders, notwith-
standing the fact that the corporation
tax has been paid?
A.-No.
Q.-Does every citizen have to APP
ply to the collector for blanks and
make out a statement showing what
his income is and its source, regard
less of whether his income is less
than the amount exempted by law?
Or do only those whose incomes ex-
coed the amount of the exemptions
have to make returns?
A.-All persons of lawful age hav-
ing a net income of $1,000 or over
must make returns.
Q.-Who must take the initiative
in regard to making the reports
shall the citizen wait until he hears
from the collector or must he make
his report without waiting for mott
fications?
A.-The obligation is upon him to
make the return.
Q.-When must reports be filed,
and with whom?
A.-Before March /, with collector
of district in which taxpayer lives.
Q.-How will any source of an
income, such as bank or corporation
know whether any particular individ-
ual to whom it makes payments has
a total income from all sources large
" NolAPCA lL1C A4NiN1 "
pay an income tax?
At isn't supposed to know, ex-
cept as client or employe files with
it written declaration that he, she
or it, is not taxable. For false state
ment in these declarations heavy
penalty attaches.
Q.-Are banks to pay income tax
on semi-annual dividends? If so, is
it one per cent of the amount dis
tributed or does the fact that as a
corporation it pays corporation taxes
exempt this dividend from income
taxes?
A.-The dividends are exempt and
you should make no deduction of tax.
The banking association as such pays
the tax in the tax on it's net earn
ings and to tax the individual stock
holder would be double taxation.
Q.-The bank in which l am inter-
ested own considerable amount of
coupon bonds on which the tax will
be taken of at the source. Will you
kindly let me know whether in max
ing up their returns they can deduct
this amount from their earnings?
AYou are advised that the
debtor 1.-THE bank as the holder of the
coupons is the creditor) is not requir-
ed to withhold or deduct the tax
upon income derived from interest
on such bonds provided coupons Or