The Glasgow courier. [volume] (Glasgow, Mont.) 1913-current, 1921-12-16
new INCOME TAX
Law EXPLAINED
Change in Revenue Legislation May
Cause Confusion Next Year.

To what extent will the average
taxpayer be benefited by changes IN
revenue legislation? What are MS
exemptions and deductions under the
revenue act of 1921 compared with
the revenue act of 1918? Hundreds
of such questions are reaching the
bureau of internal revenue The pur-
nose of this article is to answer those
NOSE frequently presented. Later, by
direction of Commissioner OF Internal
Revenue David H. Blair, there will be
prepared for the press a series Of in
formative articles telling the tan
payer in detail how to make out his
income tax return for 1921.
Probably the most important change
affecting the man of moderate income
is in the exemptions. Under the 1921
act a married man with a net income
of $4,000 and less is entitled to an
exemption Of $4,000. Under the rev.
enue act of 1918 this exemption was
limited to $4,000. The revenue act Of
1921 also provides for each person de-
pendent upon the taxpayer if such
person is under 10 years of age or
incapable of self-support because
mentally or physically defective-an
exemption of $4OO. The exemption
under the revenue act of 1913 was
5000 for each such dependent. Thus,
a married mar with two dependents
whose net income for 1921 was $4,000
will pay this year a tax of $68, COM
pared with $104 on the same income
for 1920.
The exemption of $4,000 applies also
to the head of a family whose net in
come for 1921 was $4,000 or less, ar
increase of $500 compared with the
1918 act. A head of a family, as de-
fined by present treasury regulations,
is "a person who actually supports
and maintains in one household one
or more individuals who are closely
connected with him by blood relation
ship, relationship by marriage, or by
adoption, or whose right to exercise
family control and provide for these
dependents is based upon some moral
or legal obligation"
The normal rate of tax, 4 per cent
on the first $4,000 of net income above
the exemptions, and 8 per cent on the
remaining net income remains un-
changed. This applies to citizens and
residents of the United States. Alien
nonresident are taxed to the full 8
per cent on income received from
sources within the United States.
Nonresident aliens are allowed only
a single personal exemption Of $1,000.
10 overcome the disparity in the
amount of normal tax in the case of
two taxpayers, one of whom is just
within the lower $4,000 exemption, the
other being just within the higher
$1,000 exemption, the act provides
that the reduction of the personal ex-
emption from $4,000 to $4,000 shall
not operate to increase the tax, which
would be payable if the exemption
were $1,000, by more than the net in
come III excess of $4,000. For exam
Pile, a married mar OF head of a family
has a net income for 1921 of 5000.
Assuming that he has no dependents,
his tax, if he were allowed only the
$4,000 exemption, would be $12O.4O.
Under the benefits of the above pro-
however, his tax is $11O, A per
cent on the amount of his taxable in
of $4,000, of $500, plus the a.
mount by which his net income ex-
ceeds $4,000.
Many inquiries We're received rela-
tive to the surtax rates.
Taxpayers in the preparation of
their returns should be careful to note
that the surtax rates for the calendar
year 1921 remain unchanged. The
surtax rates on incomes for 1921
range from l per cent on the amount
OF net income between $4,000 and
$o,OO0 to IS per cent on the amount of
net income in excess of 81, 200, 900. For
the calendar year 1922 and each cal
endar year thereafter, the surtax
ranges from ! per cent on the amount
of net income between s. 5000 and s1O.-
M to so per cent by which the a.
mount OF net income exceeds 5000. O0O. !
Returns are required of every sim
gle person whose net income for 1921
was $1,000 or over, every married per-
o not living with husband or wife
whose net income was $1,000, and
every married person living with hus-
band or wife whose net income was
$1,000 or over. Every person whose
gross income for the year was SIS, 900
or over must made a return regardless
OF the amount of net income. This
requirement was not contained in the
e act of 1918. Every married
couple living together must make a
return, either separate or Joints as
desired, If their aggregate net income
was $4,000 or over, or if their aggre-
gate gross income was $4,000 or more.
Gross income includes practically
every dollar the taxpayer received
during the year 1921. Net income is
gross income less the exemptions and
deductions specifically provided for bv
the act.
The period for filing returns is from
January l to March Is, 1922, when
made on the calendar year basis. IF
the taxpayer makes his return on the
flscal year basis, the return must he
1iied on or before the fifteenth dav of
Tho fh{~I ~--