The Pleasantville press. (Pleasantville, N.J.) 1912-1929, 1919-01-25
THE INCOME TAX MAN
is COMING AROUND SOON.
Concluded from page 81

1oo0 Joob NANCd3 IL ouCn bO0L Hdo III
Guided in the deduction made in the
year of purchase.
1.-THE farmer is not required to in
clude in his income tax computation
the value of farm produce consumed
by himself and family. But in cases
where he exchanges produce for mer-
chandise, groceries, etc, the market
value of the articles received in ex-
change must be included.
All other items of income arising
during the year through personal SER
vice, business or trade, through use
of property or money, should be added
into the gains for 1918.
Everybody wants to know what in
come is exempt from tax. Very few
plums that fall to the average man
may be legally ~disregarded in figuring
up his 1918 income. Gifts and be-
quests can be eliminated; also pro-
ceeds of life insurance received by the
beneficiary of an insured person. A
person who cashed in an endowment
policy need report as income only that
portion which exceeds the total of the
premiums he paid in all years IN that
policy. Annuities are not taxable, I'M
less the person received in the year
payments which represent, when ad-
ded to all prior payments on the an
nuity, an amount greater than the or
iginal cost of the annuity. Dividends
on unexpired life insurance policies
are not taxable income; but dividends
on paid-up policies must be considered
income. Alimony is not income to the
recipient, nor is it an allowable de-
duction on the part of the person who
pays.
From the total of all items of in
come, there are certain deductions al
lowable by law. All interests paid on
personal Indebtedness and all taxes
paid during the year are deductible,
except Federal Income and Excess Pro
fits taxes, inheritance taxes and as
sessments for local Improvements,
such as sidewalks, sewers, etc. Losses
incurred in business or trade are al
lowable, also losses arising from fires,
storms, shipwrecks or other casualty,
or from theft, in cases where such
losses are not compensated for by
insurance or otherwise. Losses in
Cured outside of a persons regular
business are allowable to the extent
of gains reported from similar trans
actions within the year. Debts due to
the taxpayer actually ascertained to
be worthless during the year are de-
ductible.
Depreciation on property used in
a profession, in business, or in farm
ing is another item that may be claim
ed as a deduction. The storekeeper
may claim depreciation on his fixtures,
and on his delivery horses and wa
CONS, but not on his stock held for
sale. The professional man may claim
similar deduction on his instruments
and in the case of a physician who
maintained a team or auto for making
his calls on patients, reasonable de-
probation may be claimed. The far
mer may claim depreciation on his
farm buildings, aside from his person
al residence, also on his farm machin-
cry, his work horses and farm wagons.
The theory of depreciation, in connec-
ton with the Income Tax, is that e
and tear caused by use in earning in
come is a real expense in the earning
of that income. The rate is deter
mined by the number of years that
the property ordinarily would be use
full, and the cost of the property is
the basis of the computation. If the
property suffering depreciation was
bought or acquired prior to March /,
1913, the market value as of that date
is used. instead of the cost, in hgur-
ing depreciation.
contributions or gifts actually made
in 1918 to organizations operating eX-
elusively for religious, charitable, sci
entifc or education purposes, and to
societies for the prevention of cruelty
to children or animals, may be de-
Quoted, to an amount not exceeding
Is per cent of the net income COM
puted without the benefit of this de-
duction.
after the total of all income is
found, and the deductions allowable
by law have been computed as an off
set. the amount of income in excess
of such deductions is the net income,
which forms the basis of the assess
ment of tax.
IF every person in this District will
examine his own 1918 income and his
allowable deductions, in line with data
that | have given, he will know beyond
doubt whether he must file his return
when the blanks arrive. And here is
how he will determine his liability TO
file a return. If he is single he must
file if his net income was $1,000 or
more, and this requirement is enfore-
ed whether or not he is the head of a
family. If he is married, he must file
his return if his income; including
that of his wife and minor children,
was $4,000 or more.
4 want to emphasize the co-opera-
ton feature of the collection of the In
come Tax this year. The policy of
the Internal Revenue Bureau is to aid
taxpayers to meet the requirements
of the law. We are going right to the
people, not to swing clubs or to mulet
the w-age-earner of his savings, but
offering every helpful governmental
function that will assist people to do
their duty"