Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1922-02-14
The Income Tax
Whit Taxes May and May Not Be Deducted

income. As an illustration. say you WIS.,
tied the theater during the year 1921
20 times and the average cost Of the
ticket or tickets you purchased was 81,
or see IN all, then you have paid in war
taxes Sc. Aside from this, say the war
taxes paid by you on railroad fares
amounted to SO. You may claim this,
plus the theater tax, or q total war tax
deduction of SIG.
In the event you claim the S16 as q
deduction for war tax paid, do not de-
duet the amount so claimed from the net
amount of income tax due the Govern
ment, but deduct it from your gross
income. Space is provided on Page
of the form for this purpose. On Form
1040-A s1ch reduction is TO be shown
under the heading Deductions" line IL.
An examples of the proper way and the
wrong way follows:
PROPER WAY.
Gross income .....;;.......-.'.'r S1'o99 ~ ~
Less war taxes paid. 1900
Net income ..................s1 81, 1890
Less personal exemption
(s1ngle) .-.....,...--........- 1OOO-OO
Balance taxable ............... S4S4.00
At per cent, or a tax Of 800. 1890
WRONG WAY.
Gross income .................N.. 81, 10000
Less personal exemption
(slnSleJ .....---...---. ...'.''.. A'VVo-Oo
Balance taxable ........... 10000
At per cent, or a tax of....... 1000
Less war taxes paid ............ 1900
S Ststt tai income a@s take: are s4 Ss
deduction from gross income.
TAX PAID
AT SOURCE.
We're the tax Of ? per cent on the
in rest on bonds. mortgages, deeds Of
rust or other similar obligations Of a
corporation containing a tax-free cove
nant is withheld by the corporation or
paid at the source for the recipient, the
holder or recipient may deduct such tax
withheld from the amount of income tax
due.
Note-Under the new law the recipient
or holder Of such bonds IS not required
to include as additional income such
amount of tax withheld. Under the pre-
vious revenue act the department took
the position that the amount Of tax paid
at source aside from the interest paid
was additional income to the holder and
must be reported as such The following
is taken from Section 221-D Of the new
law:
Income upon which any tax is re-
quired to be withheld at the source under
Section 221 shall be included in the re-
turn of the recipient Of such income, but
any amount Of tax so withheld shall be
credited against the amount of income
tax as computed in such return"
ILLUSTRATION.
OIL am a married man, no children.
have an income of S4.21O as follows:
from salary --.-.-----...-.-.....-. 81 900
Interest on bank balances. ...... 90
Interest on $3.50 at 8 per cent on
bonds containing clause where
per cent was paid at source. $50
4otdA ..-.-.-...- .-..-...-.-.. VI lU
How am I to handle IN my return the
. per cent tax paid at the source on
$3.50. or $37
Persons having income from such
sources should check up to ascertain If
this section benefits them.
Iotal net income. .-..-. .......... 4.210o0
Less personal exemption. ...... 10000
Balance taxable .............S1,71 no 90
At per cent, or. ,-.............. 6S.40
Less tax paid at source. 500
Net tax due. OBSERVATION-DISCLOSURES 65.40
Be sure the tax withheld or paid a.
the source is deducted from the tax duo
and not from gross income. For a per-
son whose income Is under $1,000 such
reduction is 10 be made on line % OF
form known as 1040-A