The New York herald., 1921-12-12
INCOME TAX RULES
OUTLINED TO PUBLIC
1921 Act Provides $500 Ex-
emptiOn for Married Men
and Families.
sURTAX RATE UNCHANGED
Returns Must Be Filed Before
March Is on Calendar
Year Basis.

The Bureau Of Internal Revenue issued
changes in the revenue legislation, par
ticularly the exemptions and reductions
which the average taxpayer will receive
under the revenue laws Of 1921 as COM
pared with the revenue act Of 1918.
BY direction of the Commissioner Of
Internal Revenue, David Fl. Blair, the
bureau is prepa airing for later publication
a series of articles telling the taxpayer
In detail how to make out his income
tax return for this year. Last nights $
statement says:
Probably the most important change
Affecting the man of moderate income is
in the exemptions. Under the 1921 act a
married man with net income of $1,000
and less is entitled to an exemption of
$500. Under the revenue act of 1918 this
exemption was limited to $1,000 The
revenue act of 1921 also provides for
each person dependent on the taxpayer
If such person is under eighteen years of
age or incapable of self-support because
mentally or physically defective an ex-
emption of 800. The exemption under
the revenue act of 1913 was 500 for each
such dependent Thus. married man
with two dependents whose net income
for 1901 was 5000 will pay this year
same income for 1920.
The exemption Of $3.50 applies also
to the head of a family whose net in
come for 1921 was $500 or less, an in
crease of $500 compared with the 1918
act. A head of a family as defined by
present Treasury regulations, is a per-
son who actually supports and maintains
in one household one or more indivi-
duals who are closely connected with
him by blood relationship. relationship
by marriage, or by adoption. or whose
right to exercise family control and pro-
vide for these dependents is based upon
some moral or legal obligation
THE normal rate OF tax, per cent on
the first $4,000 of net income above the
exemptions and per cent. on the re-
naming net income, remains unchanged
This applies to citizens and residents
of 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 single personal exemption
OF $1,000.
ITO overcome the disparity in the
amount Of normal tax in the case of two
taxpayers. one of whom is just within
the lower $4,000 exemption, the other
being just within the higher $4,000
exemption, the act provides that the re-
duction of the personal exemption from
s2,500 to $4,000 shall not operate to in
crease the tax which would be payable
IL the exemption were $2,500, by more
than the net income in excess of $4,000.
For example. married man or head
OF a family mas net income for 1921
of 5000. Assuming that he has no
dependents, his tax, il he were allowed
only the $4,000 exemption. would be
$120.40. Under the benefits of the above
provision. however, his tax is $110. per
cent. on the amount OF his taxable in
come of $4,000, or 800 plus the amount
by which his net income exceeds $4,000.
Many inquiries are received relative
to the surtax rates.
Taxpayers in the preparation or their
returns should be careful to note that
the surtax rates for the calendar year
1921 remain unchanged. The surtax
rates on incomes 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 income in
excess of s1.000.000. For the calendar
year 1922 and each calendar year there
after the surtax ranges from / per cent.
on the amount of net income between
$4,000 and $4,000 to so per cent. by
which the amount of net income exceeds
100000.
Returns are required OF every single
person whose net income for 1921 was