Ellsworth American., 1925-02-11
INCOME TAX IN A NUTSHELL.

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more, and married couples who
had net income of $2,5 or more
or gross income of $4,000 or more
must file returns.
WHEN? The fling period is from
January l to March Is, 1925.
WHERE? Collector of internal
revenue for the district in which
the person lives or has his princi-
pal place of business.
HOW? Instructions on Form 104OA
and Form 1910; also the law and
regulations.
WHAT? Two per cent. normal tax
on the first $4,000 of net income
in excess of the personal eXemp-
tions and credits. -Four per cent.
normal tax on the next $4,000.
Six per cent. normal tax on the
balance of net income. Surtax on
net income in excess Of $4,000.
Your income tax for the year 1924
is less, in proportion to your income,
than was the tax for 1928. A rate
reduction, however, is not the only
benefit afforded by the revenue act
of 1924. Increase in the exemption
for married persons, a 25 per cent.
reduction on earned income and
other changes in revenue legislation
are of immediate interest to every
taxpayer
The revenue act of 1924 requires
that returns be filed by every single
person whose net income for 1924
was $1,000 or more, or whose gross
income was $4,000 or more, and by
every married couple. whose aggre-
gate net income was $4,000 or more,
or whose aggregate gross income
was $4,000 or more. Last year re-
turns were required of married cou-
pies whose aggregate net income was
$4,000 or more. Husband and wife,
living together may include the in
come of each in single joint return,
or each may file separate return
showing the income of each. Net in
come is gross income less certain
specified reductions for business ex-
penses, losses, bad debts, contribu-
tions, etc.
The period for filing returns is
from January l to March Is, 1925.
The return, accompanied by at least
one-fourth of the amount of tax due,
must be filed with the collector of in
ternal revenue for the district in
which the taxpayer has his legal
residence or has his principal
place of business.
The exemptions under the reve-
nue. act of 1924 are 81 900 for single
persons and $4,000 for married per-
sons living together, and heads of
families. In addition a $500 credit
is allowed for each person dependent
upon and receiving his chief support
from the taxpayer, if such person is
under eighteen years of age or in
capable of self-support because men,
tally or physically defective.
The normal tax rate under the
revenue act of 1924 is per cent on
the first $4,000 of net income in ex
cess of the personal exemptions,
credit for dependents, etc., 4 per
cent on the next $4,000, and per
cent on the balance Under the
preceding act the normal tax rate
was 4 per cent. on the first $4,000
of net income above the exemptions
and credits, and s per cent on the
remaining net income.
The revenue act of 1924 contains
a special provision for reduced taxes
which did not appear in previous
laws. All net income up to $1,000
is considered earned income" On
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to credit of 25 per cent. of the
amount of the tax
For example, a taxpayer, single
and without dependents, may have
received in 1924 a salary of $4,000
and from a real estate transaction a
profit of $4,000. His total net in
come was $4,000. Without the bene-
fit of the 25 per cent. reduction his
tax would be $50 His actual tax is
$50. From his net income of $4,000
he is allowed a personal exemption
of $1,000; the tax of per cent, on
the first $4,000 is $50, one-fourth of
which, or $40, may be deducted.
For the purpose of computing this
credit, in no case is the earned net
income considered to be in excess of
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