Evening star., 1914-01-28


question as to whether this clause ap-
: plies to the income tax. and III i few cases
/ even where the bonds or coupons contain
| these clauses. tn" corporations are not
paying the tax. acting on legal advice.
| So it would be we'll if one hold any
| bonds. to consult his bank or banker as
| to whether the corporations are paying
| the tax on those bonds. Most banks and
! bankers have lists of whore the corpora
| tions are paving the tax.
Withholding at Source.
In class "A" is included any income of
the various subdivisions where the tax
has been withheld at the source.
| Example: a. rents d house for 5000.
| the owner does not file with him a GER
tificate of exemption He is required to
| take of tax of per cent, or he gives
i the owner $3.50, and ho.ds $50 tax for
the government The $3.50 income is
/ entered in the owners return in class \.
| Or take the case of man who owns Il
mortease on which there is due $1,000 i'll
interest. and the owner has not filed with
| the man who pays the interest A Ger
tiiicate of exemption. then when the man
pays the interest he vii deduct so for
tax, and gives the owner $3.50. This in
| come tS4..E0t goes into class A. The sub
| iect of how to claim this exemption with
| the certificate will be taken up later on.
| In class b is included all income not in
which one may be liable for tax, pro-
vided il is more than will not be offset by
! the deduction of the exemptions and de-
ductions allowed. Now taking the per-
sonal return. ON the first page will be
found d summary of the whole return as
| represented by the different items on
pages and >. This summary is
taken up in seven subdivisions. which
viii be taken up III their order.
l. Gross income. For this turn to
~ nd tai "a hc tot al hi iC
I found at the bottom of the page,
marked subdivision UD under the
heading of gross income.
| >. General deduction. Here enter the
i total amount which is found there and
| marked subdivision 90 under the
| heading of general deduction. Now that
the gross income and the general
deduction have been determined sub
tract the general deductions from the
gross income. and it leaves the net in
| como. which is entered opposite sub
division three
3. Net income This is determined as
explained above. and entered opposite.
Tax on Dividends.
4. Dividends and net earnings re-
ceived or accrued of corporations, etc,
subject to like tax. Here enter the
total as found on page two. opposite
subdivision ID under heading of
gross income Dividends are not sub
ject to the normal tax. and are there
fore allowed as an exemption in fiSur-
ing the normal tax. They do go to
| make up the amount on which the
super or additional tax is charged
=. Amount of incomes on which the
| normal tax has been deducted and
withheld at the source. Here enter the
total amount as found on page two.
heading of gross income. and at the
end of columns marked class "A"
Here is good place to explain how
TO take advantage Of where the cor
porations are paying the tax on in
terest items.
If the corporation is paying the tax
one fills out an ownership certificate
Form 1.1D. in the ordinary way until
coming to the place where it is pro-
vided for claiming or waving exemption.
| Here he should cross out the word do
and leaye the words do not" and in
this way notify the corporations that he
| is subject to the tax. They. knowing
| this, pay it for him and he enters it in
class a. as tax having been paid. He
| should be careful about claiming exemp-
| ton in these certificates and keep a rec
| ord of them, that he will not over
| claim. and he liable to a statutory pen
| atty
| &. Specific exemptions 5000 or $1,000
as the case may be. First one may de-
| cioe whether he is entitled to &:.oGO or
5000 or this year S2.:1oO S:,.:;3ss.::,,;; LIB *;
| people, if they divide the exemptions be-
| tween them. only that prorated share
| to which they are entitled where they
are making separate returns. To finish
up this Summary take the total of sub
| divisions 4. > and e. and subtract it from
| the net income subdivision -, and it
| leaves what amount one is liable to pay
| a tax on. One per cent of this is taken
| and entered up at the bottom of the
! page. The personal return is finished
Two Exemption Forms.
| Next comes an explanation of the two
| exemption forms known as 1867 and 1908.
| First take form 1907 and the question is,
when Shall this be used:
| The answer is that where the income
| from any source. such as entered on
! notes. rents. from trustees, guardians
| executors. etc. is in excess of the total
| amount of exemption allowed by law
one can take the exemption out of
| that income by filing with the party
| who pays him the income thirty days
| in advance of the time of making his
| return March -. certificate 1907, and
| then the payer will only hold out a
| tax on the amount in excess of the
amount Of exemption to which the
| one making the return is entitled
| Form zoos is one which has been
giving many persons very much
| trouble on account of the many inter-
pretdt1OnS given II. me proper use
| of this certificate is where the income
| from any one source is in excess of
| the exemption allowed the person. and
! if he filed form 1907 a tax would be
| withheld on the amount of the excess
| Now. this person, after carefully fig
uring up his income from all sources,
| found that the exemption and deduc-
tions allowed him exceed the net in
come. He does not want to have to
go to the trouble of having this tax
on the excess income In this case re-
| funded. SO he files, thirty days prior
| to March l. with the person paying
| him the income. or the internal reve-
nue. officers. Form zoos, which shows
| that he will not have to pay tax
! Persons who have not yet filed with
| the withholding agent, trustees. execu-
I tors. interest payer, rent payer, etc.
these exemption certificate forms. will
| have to do so before the first of Feb
ruary in order to take advantage of
| this provision in the law.
| Withholding agents are only respon-
| sibIe for the tax for November and
| December and should only take the
| tax out for those months.
Tomorrow. The F'iduciary Return"