The Oakes times. [volume] (Oakes, N.D.) 1906-current, 1921-01-13
HOW ABOUT YOUR
1920 INCOME TAX
Some of the Things You Should Know
Before Preparing Your Annual
Report
LIST OF TIMELY SUGGESTIONS
Fargo District Revenue Man Here
This Week

Fargo District Revenue Man Here
This Week
The income tax is disagreeable
subject and probably this in a meas
ure accounts for the almost universal
ignorance in regard to the law. But
we face condition, not theory, and
as long as we have to make out our
reports it is just as we'll to have a
general idea of the right way to go
about it.
All single persons who had an in
come of $1,000 or more, net, are re-
quired to make out the report; also
all married couples with net income
of $4,000 or more. March Is, 1921,
is the final date for filing returns and
making first payments. Returns must
be sent to the collector of internal
revenue at 719 Second avenue north,
Fargo. Four per cent is the normal
tax on taxable income up to $4,000 in
excess of exemption. Eight per cent
on balance of taxable income. Surtax,
from l per cent to 65 per cent on net
incomes over $4,000.
Due to misunderstanding of exemp-
tions, more than 10000 persons last
year were assessed nominal penalty
Of from SIS to $40 for failure to file
an income tax return for 1919, al
though their income for that year was
not taxable.
The revenue act provides personal
exemption of $1,000 for single per-
sons, $4,000 for married persons and
heads of families, and an additional
exemption of 5000 for each person de-
pendent upon the tax payer for chief
support, if such person is under 18
years of age or incapable Of self sup
port. The delinquents last year we're
persons whose incomes exactly equal
ed the amount of the allowable exemp-
tions and who considered it unneces-
sary to file returns and others whose
income, because of dependents, was
non-taxable, but who nevertheless
were required by law to make returns.
The bureau of internal revenue this
year is emphasizing the fact that the
requirements to file return are based
solely on a PERSONS marital status and
the amount of income for 1920. Sim
gle persons with net incomes for 1920
of $1,000 or more and married persons
with net incomes of $4,000 or more
must file returns regardless of wheth-
er their incomes are taxable.
The exemption of $4,000 allowed
married persons applies to the combin-
ed income of husband and wife, to
which must be added the income of
dependent minor children. A COM
mon error is for both husband and
wife to claim the exemption, which
is designed to cover essential living
expenses. This exemption may be
claimed by either or may be appor-
toned between them as they may
elect, but not by both.
If the income of either husband or
wife for the year 1920 was more than
$4,000, each should file SEPARATE re-
turn. This is for the purpose of COM
putting correctly the surtax on income
in excess of $4,000, which applies sep
arately to the net income Of husband
and Wife, and not to the combined net
income.
The surtax rates, which apply only
to net income in excess of 1000, are
computed without benefit of the per-
sonal exemptions. Many tax payers
make the mistake of computing tax on
the combined net income of husband
and wife, to their own disadvantage.
AS an illustration, in the case of a
husband whose net income was $1,000
and that of his wife $4,000, the total
normal and surtax, if the incomes
were combined, would amount to $3.50,
whereas if computed on the net in
come of each would amount to only
$3.50. In the first instance, deduct
ing the personal exemption of $4,000
from the combined income of $4,000,
the tax is on the remaining $1,000. At
the rate of per cent on the first
$4,000 and 8 per cent on income in
excess of that amount the normal tax
amounts to $400. The surtax, which
is computed without the benefit of the
personal exemption, amounts to $50,
which is one per cent on the amount
of income between $4,000 and $4,000,
IL per cent on the amount between
$4,000 and $4,000, and per cent on
the amount between $4,000 and &c.
900.
If computed separately, the hus-
band may deduct the personal exemp-
tion of $4,000 from his income Of ST.
900 and on the remainder pay a nor
NAL tax Of $240, being per cent on
the first $4,000 and per cent on the
excess. His surtax amounts to $50,
being per cent on the amount Of his
income between $1,000 and $4,000,
and 2 per cent on the amount Of his
income between $4,000 and $1,000.
| The wife receives no personal ex-
emnti0n and her entire income 0f 70 .