Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1921-12-12
ANSWERS TO QUERIES FROM "THE
MAN IN THE STREET" REGARDING
NEW FEDERAL INCOME TAX LAW

(Note-TIlls story was written In
answer to queries from the "man in
the street" as TO the requirements Of
the new income tax act. With due
regard for space limitations. IL tells
of the exemptions and other
changes with which the average
taxpayer wishes to familiarize HIM
self before the beginning of the
taxpaying period. Later there will
be prepared by the bureau of in
ternal revenue series of informa-
tive stories telling the taxpayers in
detail how TO make out his income
tax return for 1920
To what extent will the average
taxpayer be benefited by changes
in revenue legislation? What are
his exemptions and deductions UNI
der the revenue act of 1921 COM
pared with the revenue act of
1918? Hundreds Of such questions
are reaching the bureau of internal
revenue. The purpose of this ar
ticle is to answer those most fire.
quently presented. Later. by direc-
ton OF Commissioner of Internal
Revenue David II. Blair. there will
be prepared for the press a series
of informative articles telling theI
taxpayer in detail how to make OUT
his income tax return for 1921.
Probably the most important
change affecting the man of mod
crate income is in the exemptions. |
Under the 1921 act married man
with net income of $1,000 and
less is entitled to an exemption Of
$4,000. Under the revenue 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 IS years OF age or
incapable of self-support because /
mentally or physically defective
an exemption Of $500. The exemp-
ton under the revenue act of 1913
was 5000 for each such dependent
Thus, married man with two de-
pendents whose net income Tor
1921 was $4,000 will pay this year
a tax of SOS. compared with SlO4
on the same income for 1920.
1921 Exemptions.
The exemption of $4,000 applies
also to the head Of family whose
net income for 1921 was $4,000 or
less, an increase of $500 compared
with the 1918 act. A head Of a
family, as defined by present treas
urv regulations is "a person who
actually supports and maintains IN
one household one or more indis
viduals who are closely connected /
with him by blood relationship, re-
lationship by marriage, or by adop-
ton, or whose right to exercise
family control and provide Tor 4
those dependents is based upon
some moral or legal obligation"
The normal rate of tax, 4 per
cent on the first $4,000 OF net In
come above the exemptions, and
per cent on the remaining net In
come remains unchanged. This APP ,
plies to citizens and residents OIL
the United States. Alien non-resi-
dents are taxed to the full 3 per
cent on income received from
sources within the United States.
Non PRESIDENT aliens are allowed
only a single personal exemption
of $1,000. To overcome the dispar-
ity in the amount Of normal tax IN
the case of two taxpayers, one OF
whom is Just within the lower $2,-
600 exemption the other being just
within the higher $4,000 exemption
the act provides that the reduction
of the personal exemption from
500 to $4,000 shall not operate
n increase the tax, which would
be payable II the exemption were
$500, by more than the net IN (
come in excess of 5000. For eX.
ample, a married man or mead OF
family has net income Tor 1911
of 5000. Assuming that he mas /
no dependents, his tax. II ne were
allowed only the $1,000 exempuon,
would be $1,000 Under the bene-
fits of the above provision. now
ever. his tax is $40, per cent on
the amount of his taxable fncomel
of 52,500, or 500, plus the amount
by which his net income exceeds
$4,000.
Surtax Rates. II
Many Inquiries are received rela- [
tive to the surtax rates. III
Taxpayers in the preparation OIL
their returns should be careful 10
note that the surtax rates for the j
calendar year 1921 remain un- /
changed. The surtax rates on IN ]
comes for 1921 range from per {
cent on the amount of net income
between $4,000 and $4,000 to 65 per
cent on the amount of net tncome
n excess of s1,O00.000. For the
calendar year 1922 and each cal b
endar year thereafter, the surtax ]
ranges from per cent on inc {
AMOUNT of net income between So j
300 and $4,000 to so per cent by |.