The daily Gate City and constitution-Democrat. (Keokuk, Iowa) 1916-1922, 1917-01-08
oriainaI Law Has Been Repealed and
New Act Makes Many
Changes in Its
Provisions.
REPORT ALL DIVIDENDS
Thousands Who Have Never Before
Made Returns, Will be Re-
quired to do So
Now.
(By Louis Murphy, Collector OF Inter
nal Ravenue for Iowa -

by Louis Murphy, Collector OF Inter
nal Revenue for Iowa.
It is estimated that fully three
thousand Iowans who heretofore nave
not made income tax returns to the
federal government are this year
subject to the requirements of the
law. A great many people do not
know that the original income tax
law. enacted on October 8, 1913, has
been repealed and Is succeeded by
the new income tax law. enacted Sep
TENDER 8, 1916; and not knowing this,
they do not know of the changes
made.
Until this year, if persons net
income was less than 100000 ana
over $4,000, he was not required to
include corporation dividends IN MS
return. This year, however, he must
include them. Heretofore If per
sons net income was under S2e,e"
but was all from dividends, he was
not obliged to make return. But
this year If ones net income Is $4,000
or more. no matter if it is all from
dividends, or il only part Is from
dividends, that person must make
return, even If he shall not have any
tax to pay.
Net Income Defined.
It Is hard to remove popular ana
mistaken impression from the PUBIC
mind Many person says to himseH.
"My income last year was less tnan
my exemption Of $4,000. Tor not more
than my exemption 80 don't nave
to make a return This is mistake,
~ ,Io% a. ovomnfinn Is II
he had a net income of $4,000 during
the preceding calendar year. no mat
ter from what source received, ne
must make return before March lst
of the current year or subject himself
to heavy penalty.
Net income is a term not clearly
understood. It Is ones gross in
come-income OF every kind, less
these deductions; business or profess
sional expenses; taxes, but not those
for special improvements; interest
paid; debts charged off as uncollect-
able and losses sustained in ones
business, or arising from fire, etc..
and not compensated for by fnsur-
ance. Personal, family, or household
expenses are not deductible, these
being covered by the exemption.
Thousands More Must Return.
l have personally met thirty per
sons this year whose salaries are from
81 500 to $1,000 and who get from ST.
500 to $1,000 in dividends annually.
In previous years they did not have
to make return 0: income. This year.
having net income OF $4,000. they
must. Bonuses paid employees In
compensation for services and not as
gratuities are income.
The principal changes affecting the
tax payer are as follows:
The normal tax of I per cent has
been increased to per cent. The in
creased rate applies to the income for
the year 1916, although Withholding
at source was continued at the rate
of / per cent through December 81,
1916, Withholding at 2 per cent going
into effect January I, 1917.
The additional Cor super) tax has
been substantially increased. The.
schedule which has been entirely re-
arranged appears on the form OF re-
turn as before. The additional tax
applies only to income above 100000
per year.
All Dividends Must be Reported.
Heretofore dividends were not re-
Quired to be included IN returns I'M
less the net income exceeded $4,000
per year: under the new law divi-
dends must be included in the re-
turn whenever the income is such as
to require return to be made. but
dividends are not subject to tax un-
less net income exceeds $4,000 per
year.
Under the old law tax payers were
not allowed to deduct losses arising
from the ownership of stocks and
bonds and other intangible PROPERTY
unless they were stock exchange
brokers or dealers in securities; I'M
der the new law such losses may be
deducted to an amount not exceeding
the profits from such transactions.
All returns must hereafter be made
under oath, the affirmation only being
no longer acceptable. Returns COW
ering income must, as usual, be filed
with the collector of.internal revenue
on or before March /, 1917. Payment
Of the tax must be made on or be-
fore June 10. 1917. Formerly pay
ment was not delinquent until July 1.
All persons presumed to be sub
ject to the tax have been supplied
with forms. Others may have them
on request. Failure to receive forms
does not relieve persons subject to
the tax from obligation to make re-.
turn.
Who is "Head Of a Family"
Heretofore the exemption OF $4,000
was allowed only to persons married
The law allows it to one who is the
head of a family. It is held that
when one or more individuals are
dependent, either in whole or in prin-i
cipal part, for their actual support
and maintenance upon another who.
by reason OF some legal or moral
obligation. controls and provides for
such individuals, the one who as