Arizona republican., 1922-03-06
GIVES ADVICE ON
INTRICAC|ESOF THE
INCOME TAX LAWS

The following advice on the max
ing out OF income tax returns has
been prepared by Frank r. Stewart
collector of internal revenue for the
district of Arizona, with special refer
ence to those intricacies of the law
which puzzle the man of average IN
come:
Compensation for personal services
in the form of salaries. wages. COM
missions. fees. tips, bonuses and pen
sions form the principal item In the
returns of millions of taxpayers. AS
a general rule, all such income Is sub
iect to tax. However. there are ex-
ceptions with which the taxpayer in
the interests of self as well as the
government should familiarize him
self.
Salaries paid to its officers and en-
ployes by a state or political sub
division thereof Getty, town. county
or hamlet) are exempt from taxation.
The reason for this is that the federal
government does not tax such actiyi-
ties of a state. Fees received by a
notary public commissioned by a
state are not taxable, neither are
fees paid jurors by a state or political
subdivision thereof. Witnesses in law
suits, however, even though sub
poened by states attorney are not
considered employees of the state ana
fees received by them are subject to
taxation.
The commissions OF receiver ap--
pointed by state, county or municipal
court are not taxable. The commis-
sions of an administrator. or executor
are taxable because they are not paid
by a state or political subdivision,
but out of the estate Of the deceased.
Salaries Of federal officers and en-
ployes, including those OF the terri
tories and the District OF Columbia
are subject to tax. Salaries and fees
paid by the United States to its am
bassadors, ministers or consuls ac-
credited to foreign countries or by a
foreign government to United States
citizens are taxable, and the amount
spent by them for entertaining is not
deductible. Fees paid a Juror by the
federal government are taxable in
come, likewise the fees received by a
referee, trustee or receiver, under the
national bankruptcy act The fees
received by a notary public commits
stoned by the District OF Columbia
are taxable.
Annuities paid by the government
to retired employees are subject TO tax
to the extent that the aggregate
amount of the payments exceeds the
amounts withheld from the compen-
sation of the employees. Amounts de-
Quoted and withheld from the basic
salary. pay or compensation paid 10
employees in the civil service OF the
United states, in accordance with the
provisions of the act providing for
pensions to government employees
should be reported for income tax
purposes. The total compensation or
the employees should be reported In
gross income No corresponding de-
ductions can be taken from the
amounts withheld. inasmuch as such
amounts are payments towards the
purchase of annuities provided for In
the ac,.
Inquiries received indicate the inn
preston in the minds OF many per-
sons that all school teachers are
exempt from payment OF the income
tax. Teachers are not exempt be-
cause engaged IN educational WORK.
AS rule the salaries paid pubic
school teachers are exempt but only
for the reason that they are employees
OF a state or political SUBDIVISION
Thereon. .snn
The special exemption OF $500
allowed under the revenue act OF 1918
persons in active service in military
and naval forces is repealed by the
revenue act of 1891. Soldiers and
sailors are allowed only the exemp-
tions granted other individuals, $1,000
OF single. or married and not living
with wife or husband: $2,500 II mar
ried and living with wife or husband
and the net income for 1921 was
SIS 900 or less. and $4,000 IL married
and living with wife or husband ana
the net income was more than 5000