Norwich bulletin., 1921-12-15
HOW REVENUE LEGISLATION AFFECTS THE TAXPAYER

payer be benefited by changes in reve- nue legislation? What are his exemp- tions and deductions under the revenue act of 1921 compared with the revenue act of 1913? Hundreds of such ques- l tions are reaching the bureau of inter- ] nal revenue. The purpose of this arti- cle is to answer those most frequently presented. Later, by direction of Com missioner of Internal Revenue David H. Blair, there will be prepared fer the press a series of informative articles telling the taxpayer in detail how to l 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 8 married man with net income of l s5,oa0 and less is entitled to an exenp- tion of $2,500. Under the revenue act of 1913 this exemption was limited to $2,o00. The revenue act of 1921 also provides for each person dependent up-
 on the taxayer if such person Is under l eighteen years of age or incapable of
 self support because mentally or physi- cally defective-an exemption of s400 The exemption under the revenue act of 1918 was S200 for each such dependent. Thus, a married man with two depend -ents whose net income for 1921 was S5,- 900 will pay this year tax of s68, com- pared with S1G4 on the same income for 1920.
 1 1891 Exemptions
 The exemption of s2,5O0 applies also
 to the head of-a family whose net in-
 come for 1921 was $5,000 Or less, an in- crease of $500 compared with the 1918 act. A head of family, as defined by
 present treasury regulations, is "a per- son who actually supports and main tains in one household one or-more in- dividuals who are closely connected with him by blood relationship, rela-
 tionship by marriage, or by adoption or l whose right to exercise family control
 and provide for these dependents is
 based upon some moral or legal obliga. tion.''
 i The normal rate of tax, per cent. on
 the first $4,0o0 of net income above the exemptions and. per cent. on the re-
 mainlng net income, remains unchanged . This applies to. citizens and residents oi
 the United States. Alien non-residents
 are taxed to the full per cent on in-
 come received from sources within the
 United States. Nonresident aliens are
 allowed only a single personal exemp- ton of $1,000. To overcome the dispar-
 ity in the amount of normal tax in the
 case fo two taxpayers, one of whom is 5 just within the lower $2,O00 exemption the other being just within the higher 5 S2,5000 exemption the act provides that 1 the reduction of the personal exemption from $2,500 to s2,0Oo shall not operate
 to increase the tax, which would be pay able if the exemption were s250Q bJ more than the net income in excess O. el s5,000. For example. married man o 2 head of a family has 8 net income fo
 1921 of $5,010. Assuming that he ha. , no dependents, his tax, if he were al , lowed only the s2o00 exemption, woult
 be $120.40. Under the benefits of tn, above provision, however, his tax fl ! $110 4 per cent. on the amount of hi taxable income of S2.5O0. or s100, plu the amount by which his net income ex ceeds $5.0Oo.
 T Many inquiries are received relative s to the surtax rates.
 . Taxpayers in the preparation of thei ] returns should be careful to note tha
 the surtax rates for the calendar yea
 1921 remain unchanged. The surta,
 rates on incomes for 1921 range from n per cent. on the amount of net incom between s5,000 and $e, e,0o0 to 65 per cen
 on the amount of net income in exces ' of S1.000,0 900. For the calepdar yea . 1922 and each calendar year thereafter a the surtax ranges from 1 per cent. O s the amount of net income between 500 - 1 and s10.000 to 50 per cent. by which th + amount of net income exceeds s200, ,00t t Returns Required.
 e Returns are required of every singl e person whose net income for 1921 wa d f$1, 900 Or over every married person nc l. living with husband or wife whose nc f income was S1,000, and every. marie
 person living with husband or wifi
 whose net income was S2,o0o Or ove Y Every person whose gross income for tr g year was s5,ooo Or over must make It return regardless of the amount of nt Il income. This requirement was not COT
 tained in the revenue act of 1918. Ever 70 married couple living together mus Is make a return, either separate or joir ,a as desired, if their aggregate net 1T | come was s2,0Q0 or over, or if their as
 gregate gross income was s5,o00 ( ID more.
 "a Gross income includes practically e Id cry dollar the taxpayer received dul a- ing the year 1921. Net income Is gro r. income less the exemptions and dedu IS tions specifically provided for by tf is act.
 ,e Period For Filing Returns. sy The period for filing returns is fro ,a January 1 to March 15, 1922, wht iI1et16 Ol lNS Cdi0dudr year DdSlSs II L. = taxpayer makes his return on the fisc A year basis, the return must be filed > or before the fifteenth day of the thi ,a month following the close of the fisc
 year. Nonresident aliens must make I # turn on Or before the fifteenth day he the sixth month following the close op the fiscal year, or, if the return Is ma lie on calendar year basis on or befo " June 15.s
 y The commissioner of internal reven
 may grant a reasonable extension
 time for filing returns. Except in t
 case of taxpayers who are abroad, is such extension shall be for a period it's more than six months. The return mt
 be filed with the collector oN intern
 revenue for the district in which the ta payer lives or has his principal pla no of business If the taxpayer has no gal residence, the return must be fl ng with the collector of internal revenue
 Baltimore.
 May Pay in TnstaIlments. 'n- This year as last, the tax may US paid in full at the time of fling the lg, turn, or in four quarterly instaffmen k due on or before March 15,I June
 September 15 and December 15. If a
 installment is not paid when due, t 7iIl whole amount becomes due and payal es- upon notice and demand from the c ,.- lector. The penalty for failure to <. return Or pay-the tax within the ii prescribed is a fine of not more tn
 S1, 900. For 'wfllful refusal" to ma
 return or pay the tax on time the p, aps alty is fine of not more than $1o,0 CT. or one years Imprisonment, or both,