Perth Amboy evening news., 1920-01-06
Income Tax Facts
You Should KnOW
No. q.

NV
Twenty Thousand persons last year
paid a fine of SIS each for failure 10
file an income-tax return FOR 1918. al
though their income for that year was
not taxable.
The evenue act provides an exemp-
ton Of $1,000 for single persons
$4,000 for married persons n heads
of families, and an additional exemp-
ton of 5000 for each person DEEPEN
dent upon Taxpayer, If such person is
under IS years of age, or incapable OF
self-support. The delinquents las'
year were persons whose income ex-
actly eQualed the amount of the ex-
emptions and who considered 1t I'M
necessary, therefore, to file a return,
and others whose income was non
taxible because of dependents. n
who were under a similar mistaken
impression.
For example, a single man with a
net income of 81, 900 was supporting a
sister for whom he was allowed an
exemption OF 5000, placing his income
in the ~nontaxable list. For this rea-
son he did not file a return. When his
delinquency vas discovered through u
return to report payments of $1,000
. or more TO each employee, he was I'm
ed So.
Must File a Return.
To avoid penalty. every person
whose income for the last year equal
ed or exceeded 81, goo, or $4,000 &C
cording to their marital status or
their status as the head Of q family,
must file a return. The law makes no
exceptions, the penalty for failure be-
ing a fine Of not more than $1,000.
Head of IA Family.
Whether or not a person is the
head of a family and entitled to a
$4,000 exemption is a question to be
determined largely by circumstances
surrounding each individual case. n
fixing of his status decides, in many
instances, whether his income is tax
able or ~nontaxable.
A head of a family Is defined by
Treasury regulations as "a person h
actually supports and maintains one
or more individuals who are closely
connected with him by blood relation
ship, relationship by marriage or by
adoption, and who's right to exercise
family control and provide for these
dependents is based upon some moral
or legal Obligation" A single person
is the head of a family if he is the
sole support of relatives living in the
same house with him and II he eXer-
cises control of household affairs. The
words sole support" are used in the
sense that there is no other person TO
whom the dependents may look for
support. Income from other sources
such as interest on bonds, stock divi-
dends, pensions, etc, if meagre enough
still to leave the recipient dependent,
does not preclude a claim for exemp-
ton. Such income, however, must be
included in the return of the head of
the family.
Can Not Divide Exemption.
The $1,000 additional exemption al
lowed the head OF a family can not
be divided between two single mem
bers OF a household. A division of re-
sponsibility excludes the parties from
such claim. A single person who does
not qualify as the head of a family
may still claim an exemption of 5000
for each person dependent upon him
for support. If such person is under
IS years of age or incapable of self
support. A son who has left home
but who sends to his mother more
than half the. sun required for hel
support is entitled to the $500 exemp-
ton, provided the mother can not sup
port herself. Otherwise the amour
must be considered as a gift, and
therefore, is not deductible. A sor
mother may claim the 81 900 Kemp
living at home and supporting his
ton allowed the head of a family, but
not an additional exemption of $500
unless the mother is incapable of self
support.