Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1914-02-11
As To The Income Tas
By Charles b. Kaufm ann OF the Davenport Bar
Copyright 1914 by Charles b. Kaufman.

l such property by those engaged IN tAAt
business.
(7) Governmental Salaries Tho con-
pensation Of the president OF the
United States. the judges Of the su-
preme and inferior courts and all OFF,
GERS and employees OF q state or any
political subdivision thereof, except
when such compensation IL paid by the
United States government do not have
their salary subject to the federal in
como tax.
(s) Government Indebtedness. In
terest upon the obligations Of a state or
any political sub division thereof may
be deducted. This means United States
municipal bonds and the Ike.
Specific Exemptions.
The specific exemptions are pf1-
marily an allowance for living ex-
penses. The act provides that $4,000
shall be deducted from the amount o.
net income for every person to cover
personal expenses even tho 1t may be
less or more than the amount actually
used. If the person making the return
is married there Is an additional ex-
enption of $1,000, but this additional
exemption can not be taken advan-
tage Of by both the husband and the
wife. There can only be one exemp-
ton Of $4,000. but the other may have
an exemption for $4,000. Since cor
porations are artificial personalities the
reason is obvious why they can not
take advantage of the specific exemp-
tons. The specific exemptions can
only be taken advantage OF in deter
mining the normal tax.
Collection at Source.
in what.
ever capacity acting, having the con-
troll, disposal or payment Of interest.
rents. salaries. wages or any fixed or
periodical gains, profits and income Of
another exceeding $4,000 for any tax
able year are required to make and
render return in behalf of such other
and to withhold per cent Of such in
come and pay it to the government as
the normal tax upon the income Of the
person who is entitled to receive the
amount upon which the 1 per cent Is
retained. Payment Of the income tax
at the source is for the normal tax
only, not the additional. The additional
tax, II any is due, will be collected from
the individual himself upon his own
personal return. The collection at the
source for the normal tax is to provide
check upon the individual for the
additional tax which may be due.
suppose Mr.. Jones, unmarried, re-
ceives salary Of SO, 500 from the Otis
{ Manufacturing Company. that this is
his only source Of income. and that on
account of certain deductions his net
| income for the year will only be $4,000.
Mr.. Jones can take advantage OF the
deductions II not less than thirty days
prior to the day on which the return of
his income is due he files with the per-
son who is required to withhold and
pay the tax for him, a signed notice in
writing. claiming the benefit of such
exemption. Then no tax shall be with
held upon the amount Of such exemp-
ton.
Dividends.
The amount received as dividends
upon the stock or from the net earn
ings OF any corporation Is to be de-
Quoted from the normal tax. The rea-
son is that the corporation. which is
an artificial personality based upon a
composite unit. paid the normal tax IN
| making the return Of its net income II
this were not allowed there would be
double taxation. In the report to the
commissioner of internal revenue the
dividends or net earnings should be re-
ported for the purpose Of ascertaining
the additional tax. Corporations, how.
ever. are not allowed to deduct divi-
dends or net earnings from other cor
pora tons. The reason for emitting this
is difficult to figure out. unless It was
thought 1t might be a means to evade
! taxes.
Practical example given in the next
article.