Milford chronicle., 1924-01-18
NO PLACE TO REPORT
TAX PAID AT SOURCE
SimpIified Form lO4OA For In
comes Up To $4,000 Fail To
Meet This Demand.
DEDUCTIONS ARE EXPLAINED
Bureau Makes Clear Problems OF
Business Expenses--InfOrma-
ton For Farmers.

The new forms for Federal income
tax returns, 1040A, to be used by in
dividuals whose net income from sal
aries, wages or commissions does moi
exceed $4,000, have no space for re-
porting per cent tax paid at the
source on taX-free covenant bonds. il
was pointed out this week. Although
no income is payable on interest from
these bonds, the law requires that it
be reported.
Taxpayers who have any substantial
interest to report from tax-free cove
nan bonds paid at the source should
use Form 1040A- the form for net in
comes of more than $4,000 and all in
comes derived chiefly from business,
it was said at the Office of Frank X.
Bowers, collector for the lower Man
haitian district. Smaller amounts of in
terest may be reported on the simpli-
fed Form 1040A.
It was explained that reference to
the taX-free covenant bonds was
omitted from 1O4OA because of the
wish to simplify the form for the
small salaried men.
Problems concerning deductions for
business expenses in Federal income
tax returns are clarified by the Bu-
reau of Internal Revenue in a state
ment issued as one of a series on the
income tax. The bureau says:
deductions for business expenses
form the largest claim in the returns
of many taxpayers. All the ordinary
and necessary expenses incurred in
carrying on any business, trade, pro-
fession or vocation are allowable de-
auctions.
Typical expenses of a mercantile
establishment are amounts paid for
hire of employees, rent, light, heat and
water, telephone, advertising, insur-
ance, delivery expenses, the cost of
operating delivery wagons and motor
trucks, and incidental repairs to such
vehicles. The expenses of a manufac-
turing business include labor, raw ma
terial, light, heat and power, selling
cost, administration, and similar
charges.
"a professional man may claim as
deductions the cost of supplies used
by him in his practice, expenses paid
in the operation and repair of an au-
tomObile used in making professional
calls, dues to a professional society,
to professional journals,
office rent, the expenses of fuel, light,
water and telephone used in his Of
flee, and the hire of assistants.
"The farmer may deduct all amounts 6
paid in the production and harvesting 7
of his crops, including labor, cost of q
seed and fertilizer used, cost of minor
repairs to farm buildings (but not the
iwellings), fences, machinery and !
small tools used up in the course Of a
rear or two.
Travelling expenses, when the trip
S solely on business, including the =
entire cost of meals and lodgings
While away from home, are deductible.
Deductions for business expenses
must have certain qualities to be al
owed They must relate to business,
rade, profession or vocation in which
he taxpayer has invested time or
money for the purpose of livelihood Il
r profit. A business may be carried y
n by a taxpayer, even if all its activ- =
lies are conducted by employees. A 8
axpayer may conduct more than one u
rade or business and claim deduc- q
on for the business expenses of each, "
rovided he devotes sufficient time end y
ttention to EACH" y