, 1921-12-15
SOME CHANGES IN TAX LAWS.
Some Information For the Benefit of
the Average Taxpayer of the
United States.

as to the requirements of the new in
come tax act.
With due regard for space limita-
tions. it tells of the exemptions and
other changes with which the average
taxpayer wishes to familiarize himself
before the beginning of the taxpaying
period. Later there will be prepared
by the Bureau of Internal Revenue "A
series of informative stories telling the
taxpayer in detail how to make out
his income tax return for 1921.
To what extent will the average tax
payer be benefited by changes in rev
enue legislation? What are his exemp-
lions and deductions under the rev
enue act of 1921 compared with the
revenue act of 1918? Hundreds of
such questions are reaching the Bureau
of Internal Revenue. The purpose of
this article is to answer those most fire.
quently presented
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 $1,000 and less is entitled to an ex-
emption of $500. Under the revenue
act of 1913 this exemption was limited
to $1,000. The revenue act of 1921 al
so provides for each person dependent
upon the taxpayer. if such person is un-
der eighteen years of age or incapable
of self support because mentally or
physically defective-an exemption of
S4O0. The exemption under the reve-
nue. act of 1918 was 5000 for each such
dependent. Thus, IA married man with
two dependents whose net income for
1921 vas $1,000 will pay this year IA
tax of SOS, compared with $104 on the
same income. for 1920.
The exemption of $500 applies also
to the head of Il family whose. net in
come for 1921 was $1,000 or less. an
increase of $500 compared with the
1918 act.
The normal rate of tax. 1 per cent
ON the first $1,000 of net income above
the exemptions, and S per cent on the
remaining net income. remains IN
changed. This applies to citizens and
residents of the United States. Alien
non-residents are taxed to the fun s
per cent on income received from
sources within the United States. Non
residents aliens are allowed only a sin
gle personal exemption of $1,000.
Many inquiries are received relative
to the surtax rates.
Taxpayers in h preparation of heir
returns should he careful to note that
1921 remain unchanged. The surtax
rates on incomes for 1921 range from
per cent on h amount Of net Income
between 5000 and $4,000 to e. per
cent on the amount of net incomes in
excess of 81 10000 For the calendar
year 1922 and each calendar year
thereafter. the surtax ranges from /
per cent on the amount of net income
between $4,000 and $4,000 to 30 per
cent on the amount Of net income ex-
ceeding 100000.
Returns are required of every single
person whose net income for 1921 was
81 900 OF over. every married person
not living with husband or wife whose
net income was 81 900. and every mar
ried person living with husband or
wife whose net income was $1,000 or
over, Every person whose gross in
come for the year was 5000 or over
must make II return. regardless of the
nou of net income. This require
ment was not contained in the revenue
act of 1918. Every married couple liv-
ing together must make IL return. either
separate or joint as desired. if their
aggregate net income was $1,000 or
over. or if their aggregate gross Income
was $1,000 on more
Gross income includes practically
every dollar the taxpayer received dur
ing the year 1921. Net income is gross
income less the exemptions and dcduc-
tions specifically provided for by the
act.
The period for filing returns is from
January / 10 March II. 1922. when
made on the calendar year basis. If
the taxpayer makes his return on the
fiscal year basis, the return must be
filed IN or before the fifteenth day of
the third month following the close of
the fiscal year.
The commissioner Of Internal reve-
II may grant n reasonable extension
of time for filing etnrns. Except In
the case of taxpayers who are abroad.
no such extension shall be for IA period
OF more than six months. The return
must be filed with the collector Of in
ternal revenue for the district in which
the taxpayer lives or has his principal
place of husineSs