The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1921-12-16
REQUIREMENTS OF THE
NEW INCOME TAX ACT

I enue legislation? What are his eYen1p-
tions and deductions under the revenue
act of 1921, compared with the revenue
act Of 1882 Hundreds of such ques-
tons are reaching the bureau Of inter-
nal revenue. The purpose Of this arti-
Gle is to answer those most frequently
| presented. Later, by direction of Com
missioner Of internal Revenue David
II. Blair, there viii be prepared for the
press a series of Informative articles
telling the taxpayer in detail how to
make out his income tax return for
1921.
! Probably the most important change
affecting the man of moderate income
/ is in the exemptions Under the 1921
act a married man with a net income
of $4,000 and less is entitled to an ex-
emption 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 depen-
dent 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 exemption under the rev.
enue act Of 1918 was 5000 for each such
dependent. Thus, married man with
! two dependents whose net income for
1921 was $4,000 will pay this year a tax
Of s6s, compared with $1o4 on the same
income for 1920.
1921 Exemptions.
The exemption of $500 applies also
to the head of family whose net in
come for 1921 was $4,000 or less, an
increase of $500 compared with the
1913 act. A head of family, as de-
fined by present treasury regulations,
is "a person who actually supports and
maintains in one household one or
more individuals who are closely con-
nected with him by blood relationship,
relationship by marriage or by adop-
ton, or whose right to exercise fam
lily control and provide for these de-
pendents is based upon some moral or
legal obligation"
The normal rate at tax, per cent
on the first $4,000 of net income above
the exemptions, and s per cent on the
remaining net income. remains I'M
changed. This applies to citizens and
residents of the United States. Alien
on-residents are taxednon- residents
are taxed to the full per cent on in
come received from sources within the
United States. Nonresident aliens
are allowed only a single personal ex-
emption of $1,000. To overcome the dis
parity in the amount of normal tax in
the case of two taxpayers, one of whom
is just within the lower $4,000 exemp-
ton, the other being just within the
higher $4,000 exemption the act pro-
vides that the reduction of the perso-
nal exemption from $500 to $4,000
shall not operate to increase the tax,
which would be payable if the exeInp-
ton were $4,000 by more than the net
income in excess of 5000. For example,
a married man or head of family has
a net income for 1921 of 5000 Assum-
ing that he has no dependents, he tax
If he were allowed only the $2,00C ex-
emption, would be S120.40. Under the
benefits of the above provision, how
ever, his tax is $40. 4 per cent on the
amount of his taxable income of 81, 500,
or 500. plus the amount by which his
net income exceeds $4,000.
Surtax Rates.
Many inquiries are received relative
to the surtax rates.
Taxpayers in the preparation OF their
returns should be careful to note that
the surfaces for the calendar year 1921
range from per cent on the amount of
net income between $4,000 and $4,000
to SIS per cent on the amount Of net in
come in excess Of $1,000, 900. For the
calendar year 1922 and each calendar
year thereafter, the surtax ranges
from 1 per cent on the amount of net
income between $4,000 and $4,000 to
90 per cent by which the amount of
net income exceeds 100000.
Returns Required.
Returns are required of every single
person whose net income for 1921 was
$1,000 or over, every married person not
living with husband or wife whose net
income was $1,000, and every married
person living with husband or wife
whose net income was $4,000 or over.
Every person whose gross income for
the year was 5000 or over must make |
a return regardless of the amount of
net income. This requirement was not
contained in the revenue act of 1918. |
Every married couple living together
must make a return, either separate or
Jbluls DIS uSSlISu, IL their aggregate net |
income was $4,000 or over, or if their
aggregate gross income was $1,000 or
more.
Gross income includes practically
every dollar the taxpayer received DUR |
ing the year 1921 Net income is gross |
income less the exemptions and aeduc-
tions specifically provided for by the /
act.
Period for Filing Returns.
The period OF filing returns is from |
January / to March Is, 1922. when /
made on the calendar year basis II |
the taxpayer makes his return on the |
fiscal year basis, the return must be |
filed on or before the 18th day Of /
the third month following the close Of 4
the fiscal year. Nonresident aliens |
must make return on or before the 18th /
day of the sixth month following the
close of the fiscal year, or. If the re-
turn is made on a calendar year basis, /
m or before Tune q