Norwich bulletin. [volume] (Norwich, Conn.) 1895-2011, 1922-02-01
INCOME TAX FACTS
YOU SHOULD KNOW
Income Take Returns

Thousands of letters have reached the
bureau OF internal revenrns relative to
changes in revenue legislation. Tau9ay-
ers desire to know the benefits to which
they are entitled under the rerenue act
of 1921 by way of increased exemptions,
lowered sitrta.xes and e.'owsfaces for
deductions for business expenses. losses.
contributions, and bad debts.
The purpose of the bureau of internal
revenue is to answer the questions pre-
scented in series OF newspaper state
ments, of which this is the first Tax
7ayers are advised to preserve the arti-
cles as they appear, in order that when
they begin their preparation of their in
come-tax returns for the year 1921 thew
may have before them a comprehensive
summary of the requirements of the new
revenue act.
To the person of moderate income.
probably the most important change is
n the exemptions, or credits. Under the
revenue act of 1921 married person or
| head of a family whose net income for
1921 was $4,000 or less Is allowed a per
sonal exemption of s2.5o0. If the net in
come is more than IS, 600, the persona
| exemption is $4,000 The exemption al
| lowed a married person or head of a
| family under the revenue act of 1918 was
| So 1000, regardless of the amount of net
| income. Exemptions for dsyendendents
also are increa sed from 5000 to $500
Thus a, married man with three children
| whose net income for 1921 was $4,000
| will pay this year an income tax of S12
On the same income for 1920 he paid q
tax of s56.
Husband and wife living together re-
cefTe but one personal exemption (s2.5oC
or $4,000 as the case may be) If they
| make separate returns, the exemption
may be taken by either or divided be-
tween them.
Normal Tax
To overcome the disparity in the norma
| tax in the case of two taxpayers, one o.
whom is Just within the lower exemption
of $4,000 (applyfng to income of NOR,
than $4,000 and the other just within thu
higher exemption of $4,000 (applying tt
income of $1,000 OF less), the law provide,
that the reduction of the personal ex
enption for married persons and heads Of
families from $4,000 to $4,000 in sucl
cases shall not operate to increase tn,
tax rate which would be payable if tn,
exemption were $4,000 by more than tn,
amount of net income In excess Of S., 900
| For example, a married man had a ne
income for 1921 of $1,000 Without tn,
benefit of the above provision, his tax. as
Stunning he had no dependents would b
s120.24 (s5,000*g less $4,000 equall
s3,0e6 at per cent? HIS actual tax L
s106.24 (s5,o0s less s2,5eo equalling 50,
sos at 4 per cent. or s100.24 plus Sc tn
amount by which his net income exceed
SIS .ooo.)
There is no change in the exemption 0
$1,000 granted a single person or a mar
FED person not living with husband o
wife Nonresident aliens are allowed
specific exemption of $1,000 regardless o
their n arital status, and are allowed n
exemption for dependents
IRE normal tax of per cent on IN
first $4,000 Of net income above the ex
erpticns and per cent on the ren1aiain
: net income remains uchaee1 This ar
piles TO citizens and res;denta Of til
U1ited States. Alien nonresdents -cce.y
: Ing ineeme from sources within the Uni
ed Sra.cs are taxed to .hc full per cen
on income fro msuch sources.
surtax Rates
Taxpayers are reminded that the surta
: rates, which apply only TO net income i
excess ct $4,000, also, are unchanged fc
the year 1921. Letters ~eeaivtd by I'll
b1raan indicate the impression in I'll
minis of the writers that lhe lower ell Sd
! tax rates are applicable 70 net inccme ft
tn eca'entFar year 1921. Under the rev,
me act 0. 1921 the surtax rates for III;
: ear range from per cert on the amour
OF net income between 5000 and SS.eG
i to ct I er cent. on the atfo..nt IF net IL
I s9ine IL exet IS. eft s1,09o,09a. F5r II
e ea.eea: year 1922, the sul.az rates Iars