The Ocala evening star. [volume] (Ocala, Fla.) 1895-1943, 1921-02-05
INCOME TAX FACTS
YOU SHOULD KNOW

Due, in the majority of cases, to
misunderstanding of exemptions. more
than 10000 persons last year were as
sessed a nominal penalty of from S5
to $40 for failure to file an income tax
return for 1919, although their in
come for that year was not taxable.
The reevnue act provides a personal
exemption of $1,000 for single persons,
$4,000 for married persons and heads
of families, and an additional exemp-
ton of 5000 for each person dependent
upon the taxpayer for chief support,
if such person is under 1S years of
age or incapable of self-Support. The
delinquents last year were persons
whose incomes exactly equalled the
amount of the allowable exemptions
ard who considered it unnecessary to
file a return and others whose income
because of dependents, was non-tax-
able, but who nevertheless were re-
quired by law to make returns. The
bureau of internal revenue, therefore
this year is emphasizing the fact that
the requirements to file a return are
based solely on a persons marital
status and the amount of his or hel
income for 1920. Single persons with
net incomes for 1920 of $1,000 or NOR,
and married persons with net income.
of $4,000 or more must file a return
! Regardless of whether their income.
are nsn-taxable.
Returns of Married Persons
The exemption of $4,000 allowed
married persons applies to the com
bined income of husband and wife, t,
which must be added the income o.
dependent minor children. A common
error is for both husband and wife t.
claim the exemption, which is design
ed to cover essential living expenses
This exemption may be claimed b!
either or may be apportioned betweel
them as they may elect.
If the income of either husband o.
wife for the year 1920 was more thar
$4,000, each should file, separate re
turn. This is for the purpose of com
putting correctly the surtax on incom
in excess of $4,000, which applies sep
arately to the net income of HUSBAND
and wife, and not to the combined ne
income.
The surtax rates, which apply onl.
to net income in excess of $4,000, ar
computed without benefit of the per
sonal exemptions. Many taxpayer
make the mistake of computing tax ol
the combined net income of husban'
and wife, to their own disadvantage
As an illustration. in the case of
husl and whose net income was S700
and that of his wife $4,000, the tota
normal and surtax. if the income
were combined, would amount to s4SC
whereas if computed on the income o
each would amount to only $3.50. Il
the first instance, deducting the per
sonal exemption of $4,000 from tn
combined income of $4,000, the tax j
on the remaining $1,000. At the rat
of per cent on the first $4,000 and
per cent on income in excess of tina
amount the normal tax amounts I
$500. The surtax, which is compute
without the benefit of the persona
exemption, amounts to $50, which
II per cent on the amount of incom
between $4,000 and $4,000, 2 per Ger
on the amount of income betwee
$4,000 and $4,000, and per cent on tn
lamount of income between $4,000 an
$4,000.
If computed separately, the husban
may deduct the personal exemption c
$4,000 from his income of $1,000 an
on the remainder pay normal tax {
S24O, being per cent on the firs
$1,000 and per cent on the exces
his surtax amounts to $50, being
rer cent on the amount of his incom
between $4,000 and $4,000. and 2 pe
| lcent on the amount Of his income b