The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1921-01-26
1921 Income Tax Facts You Should
Know.

knOw.
Due. in the majority of cases. 10
misunderstanding of exemptions. more
than 10000 persons last year were as
S"ssed II nominal penalty of from So
to SO for failure 10 file an income tax
return Tor 1919, although their in
NorAc lof that Year WAS not taxable.
IN" revenue act provides a per-
S'h'I exemption OF $1,000 for single
p'rs"nS. 5000 for married persons
ana heads Vf families. and an addi-
'iohdi exemption of 5000 for each
person dependent upon the taxnoycr
Tor chlcf support, if such person is
under Is Years Of age or incapable
or Self-support. The dcliaucnts LAST
year were persons whose incomes OK
ectly equalcd the amount of the al
lowable exemptions and who consid
cred 1t unnecessary to file a return and
others whose income. because of de-
pcndcntS, was nOntaXable but who
nevertheless were required by law to
make returns. The bureau of in
'ernal revenue, therefore, this year is
emphasizing the fact that the re-
quWoments to file a return are based
solely on persons marital status
ana the amount Of his or her income
Tor 1920. Single persons with net
income for 1920 of $1,000 or more
ana married persons with net income
or $1,000 or. more must file a return
regardless of whether their incomes
are nontaXable.
returns Of Married Persons
Ihe exemption of $4,000 allowed
married persons applies to the COM
Dihed income of husband and wife, TO
which must be added the income of
dependent minor children. A common
error is for both husband and wife TO
claim the exemption, which is de-
signed to cover essential living ex-
penSeS. This exemption NAV be
claimed by either or may be appor-
toned between them as they may
elect.
If the income Of either husband or
wife for the year 1920 was more than
$4,000, each should file a separate re-
turn. This is for the purpose of
computing correctly the surtax on in
come in excess Of $1,000, which ap-
plies sepaaWely 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 $1,000, are
computed without benefit Of the per-
sonaE exemptions. Many taxpayers
make the mistake Of computing tax
on the combined net income of hus-
band and wife. to their own disad-
a "a n II 4 r~nr tn,a in, 14
case Of husband whose net income
was $1,000 and that OF his wife s3..
600, the total normal and surtax, if
the incomes were combined, would
amount to $3.50, whereas if comput-
eel on the income of each would
amount to only $3.50. In the first in
stance, deducting the personal exem-
ption Of $4,000 from the combined
income OF $4,000 the tax is on the re-
manning $1,000. AT the rate Of 4 per
cent on the first 1900 and S per cent
on income in excess Of that amount
the normal tax amounts TO $500. The
surtaX, which is computed without
The benefit of the personal exemp-
non, amounts TO $50, which is per
cent on the amount Of income be-
bNNOi Yo,V'o anu SO,OUN, per cent
on the amount of income between
$4,000 and $4,000, and per cent on
the amount of income between S.
900 and $4,000.
If computed separately, the hus-
band may deduct the personal ex-
emDtion Of $4,000 from his income
OF $1,000 and on the remainder pay
a normal tax of $3.50, being per
cent on the first $4,000 and per
cent on the excess. His surtax
amounts TO $50, being 1 per cent on
the amount of his income between
$4,000 and $4,000, and = per cent on
the amount of his income between
$4,000 and $1,000. The wife re-
ccives no personal exemption. and
her entire income of $4,000 is taxed
at the rate Of 4 per cent, being less
than $4,000. The husbands tax is
$2l0 and the wife's $50.
Exemptions Not For All.
Not every married person is entitled
to the $4,000 exemption. The claim is
dependent upon whether man and
wife are living together within the
meaning OF the revenue act. In the
absence of continuous residence to-
gether, whether q man or woman is