Evening star. [volume] (Washington, D.C.) 1854-1972, 1914-02-03
Forms 1907 and 1908.

No. 20. Question-When shall | use
exemption form 1907 and when 1905?
Answer-You use form No. 1907 for ex-
emption when you know that at the end
of the year the net income is going to
be in excess of the exemption and de-
auctions allowed you. Or that you will
have some tax to pay. This form gives
you the advantage of preventing the
Withholding agents from Withholding too
much tax. Example: Suppose y has
an income made up of say $500 from a
trustee and $500 from the rents of d
house If he did not file any exemption
certificates with either the trustee or the
tenant of the house they both would eN-
tract l per cent of the money which they
paid to "a" or $50
When "A came to make up his per-
sonaI return he would find that his eH-
emptions, and deductions, or that on
which he had paid a tax. and his ex
emption of $1,000 were $1,000 more than
his net income. or that he had paid a
tax on 5000 more than he was liable
for. Or he had paid $50 more taxes than
he should have paid. He would have to
go to the trouble of having it refunded.
Therefore, if he filed with either the
trustee or the tenant an exemption GER
tificate claiming the $1,000, they would
not take out any tax until the amount
exceeded 5000. or he would pay $50 less
taxes at the source. When he then
makes up his personal return at the end
of the year he would not have to have
any taxes refunded. Form 1ebS is for
the use of persons who know that they
will not be subject to a tax when the
time comes for making personal return.
The fling of this certificate prevents the
Withholding agent from taking out any
tax at all.
He sees from the summary statement
that his deduction and exemptions are
going to exceed his net income. En-
ample: "a has an income of $500 from
a house. and $1,000 from some other
property. He has spent $l,j0o on them
for necessary repairs and other expenses
He had a fire, and the loss exceeded the
insurance by 500 Now, when he came
to make up his return he would have ex-
emptionS. and deductions to the extent of
$780, 5000. $1,000 fthe law allows). or
s., 700 His gross income was only 81. 500.
so he would pay no tax. Now. if he flied
form 1907, the withholding agent would
withhold tax on the 500, or the differ
ence between the 5000 and the rent
So, 500 If he filed 1908. nothing would be
withheld, and nothing would have to be
refunded.
Where Corporations Pay.
No. 2l. Question-How do ! take
advantage of where the corporations
are paying the tax?
Answer-You file with your coupons
an ownership certificate. but in it you
do not" claim the exemption This
notifies this corporation that you are
subject to the tax, therefore it will pay
it for you.
No % Question-When does a trus-
tee have to make return of the es-
tate?
Answer-He makes a return of the
estate whenever any beneficiary from
the estate receives an income from tie
estate for the year in excess of $4,000
Cs2.5o0 this Year,. Attached to this re-
which he shows how much tax he has
deducted from each beneficiary This
part of the return this year does not
have to be made out unless the in
come. for November and December of
any beneficiary is In excess of $4,000.
No. %. Question-Must l make u re-
turn If my income is under $4,000
Answer-No. The law does not require
a return to be made unless the income is
s.. 900 or over. There is no penalty for
not making a return in this case.
No. "a Question-To what liability am
] ject for not Withholding the tax and
for not making a return to the revenue
officer?
Answer-When you do not withhold the
tax and you should have, you yourself
are liable for the tax. But if you did
not take the tax out, but did not remit it
to the revenue officer when due. you are
Interest Only on Gifts.
No. % Question-If l have $1,000 given
to me gift am l to include that as
income?
Answer-No. You include only the i'll
terest that the money may have earned
for the period of the return or the gain
on the investment of the $1,000.
No. 26. QUESTIONABLE stock dividends
included as income?
Answer-Yes. they are income and are
included in the personal return at par
value.