The Washington herald., 1920-02-27
Income Tax Facts
You Should Know

The man who pays an income tax
this year has several reasons for
which to be thankful. First. that
his income for 1919 was sufficient
to place it within the taxable list;
second, that the normal rates are
lower than for 1918: and. third, that
the current revenue act is more lib
eral in its provisions than preced-
ing acts.
Prior'to 1916 a distinction was
made between only two classes Of
taxpayers. A man was either mar
ried or single, and was taxed ac-
cordingly. The act of September s,
1916, extended the exemption privi-
leges in one respect. Recognition
was taken of the fact that many
unmarried persons, in the MAIN
tenance of a household, assume the
same responsibilities as a married
man. Under the 1916 act the ex-
emptions allowed a married person
were extended to include the head
of a family" A single man, If his
net income for 1919 was $1,000 or
more must file a return. but If he
is the sole support of relatives by
blood, marriage, or adoption, living
in the same house with him, and IL
he exercises control of household
affairs, he is granted an exemption
of $4,000.
Still another distinction was drawn
by the revenue act of 1917. An addi-
tional allowance OF 500 was made for
each child dependent upon its parent.
provided such child was under IS or
mentally or physically defective. The
exemption applied only to the father
or mother who Nas supporting de-
pendent child in his or her household.
The revenue act of 1918 extended
further the exemption privileges. The
additional 500 allowance now applies
to each "person (other than husband
or wife) dependent upon the taxS
payer. IL such person Is under IS
years of age, or incapable of self
support" Thus. for example, il a
man supports his mother, uncle, or
aunt I'm a sanitarium, he is entitled
to tho 500 additional exemption. but
If he supports his children at home
and his wife in a sanitarium he re-
ceives no additional. exemption for
his wife.
Under the 1918 act deductions for
losses sustained outside OF the tax
payers regular business were not al
lowed. The merchant or professional
the stock market was granted no al
lowance for such loss in the making
Of his income-tax return. The act Of
1916 allowed such losses to the extent
Of gains In similar transactions. For
example, the taxpayer who. such not
being his regular business, made 800
in one stock transaction and in an
othay lost 1900 was required to re-
port The 500 gain and could deduct
only that amount as Joss. The 1918
ect provides for the deduction of all
losses "if incurred in any transaction
entered into for profit. though not
connected with trade or business"
Prior to 1917 deductions for con-
tributions to corporations organ
lied for religious, charitable, scien-
tific, or educational purposes were
mot allowed. Under the current
act such deductions are allowed to
an amount not in excess of is per
cent of taxpayers net income.
The normal rate of tax for 1919
is 4 percent on the first $4,000, or
net income, and per cent on net
income above that amount. As in
1918, the tax may be paid in full
or in four instalments, the first
of which must accompany the filing
of the return on or before March
Is. the second on or before June
Is. the third on or before Septem-
ber Is. Forms for making returns
may now be obtained at the Offices
of collectors of internal revenue.
postofices and banks. If the tax
payers net income for 1919 was
$1,000. or less, he should ask for
Form 1040-A. III Il was more than
$5.000., he should ask for Form
1910. The assistance OF trained
revenue agents. who ? will visit
every county in the United States.
Is offered taxpayers in making out
thtir rpf,,ru.