Evening capital and Maryland gazette. (Annapolis, Md.) 1910-1922, 1922-01-30
INCOME TAX FACTS YOU
SHOULD KNOW

OssOOIG tfi WIZ
Thousands OF letters have reached
the Bureau of Internal Revenue rela-
tive 70 changes in revenue legislation.
Taxpayers desire 10 hnow the BENEFITS
10 which they are entitled under the
revenue act of 1927 ty way OF in
creased exemptions, lowered surtaxes,
aud allowances for deductions for
business expenses. losses. contribu-
lions, and bad dehls.
The purpose Of the Bureau of In
ternal Revenue is 10 answer the Ques-
tions presented in 4 series Of news
paper statements. of which this is the
first Taxpayers are advised To pre-
serve the articles as they appear, in
order that when they begin prepara-
ton Of their income-tax returns for
the year 1921 they may have before
them a comprehensive summary of the
requirement. $ Of the new revenue act
To the person OF moderate income.
prof ably the most important change
is in the exemptions, or credits.
Under the revenue act Of 1921 mar
RED person or head OF family whose
net income for 1927 was $4,000 Or less
! is allowed = personal exemption OF
$2.500. If the net income is more
than $1,000. the personal exemntion is
81 900 The exemption allowed 4 mar
ried person or head 90 a family under
I Tile revenue act Of 1918 was $4,000. re
gardless of the amount of net income.
Exemptions for dependents. also, are
increased from $500 TO $500 Thus, q
married man with three children,
whose net income for 1927 was $4,000,
viii pay this year an income tax Of
/ fl2 On the same income for 1920 he
paid tax of $50.
Husia and and wife living together
receive but one personal exemption
! (S2,500 or $4,000 as the case may tel.
II they make separate returns. the
exemption may lie taken either or d.
yided between them.
NCrm.,i Tax
| To overcome the disparity in the
normal tax in the case Of two tax
payers, one Of whom is just within the
! lower exemption OF $4,000 applying TO
income OF more than $4,000 and the
other just within the higher exemption
! of $2,500 applying 10 income of $4,000
or lessl. the law proaues that the
reduction of the personal exemption
| for married persons and heads OF
families from $500 10 $4,000 in such
cases shall not operate to increase the
TAX which would lie payable IL The ex-
emption were $500 by more than the
amount OF net income in excess Of
| $1,000. For example. a married man
| had a net income for 1921 OF S5.006
Without the henefit of the above pro-
vision, his tax, assuming he had no
dependents, would be $12024 $4,000
less $4,000 equaling $3.006 at 4 per
| cent?. His actual tax is $106.24
| ($5,0O6 less $500 equaIing $2,5C6 al
per cent, or $l00.24, plus St, the
amount by which his net income ex-
ceeds $4,000
There is no change in the exemption
of $1,000 granted a single person or a
married person not living with hus-
land or wife. Nonresident aliens are
allowed 4 specific exemption OF $1,000
regardless Of their marital status, ana
are allowed no exemption for depend
ents
The normal tax Of 4 per cent on the
first $4,000 of net income al owe the
exemptions and per cent on the re-
naming net income remains un-
changed. This applies TO citizens and
residents Of the United States. Alien
nonresdents receiving income from
sources within the United States are
taxed to the full per cent on income
from such sources.
SurtaN Rates
Taxpayers are reminded that the
surtax rates. which apply only to net
income in excess of $4,000. also are
unchanged for the year 1921. Letters
received by the bureau indicate the
impression in the minds of the writer's
that the lowered surtax rates are ap-
plicahle to net income for the calendar
year 1921. Under the revenue act Of
1921. the surtax rates for that year
range from l per cent on the amount
of net income between $4,000 and
$4,000 to Go Ter cent on the an1o"nt g
net income in excess of S1,000,000
For the calendar year 1922. the sutt.A
rates range from per cent on the
amount of net income between $4,000