Evening star., 1933-02-17
BUREAU EXPLAINS
TAX DEDUCTIONS
Figures Given for Married
Man With One Child Max
ing $4,000 Net.

The typical American man, selected
by the Bureau Of Internal Revenue, hav.
ing a wife and one child, with net
income Of $4,000 a year, will have to
pay Uncle Sam under this years reve-
nue. act about S44.
How is this calculated? What kind
of deductions and personal exemptions
and credit enter into the calculation?
What are the things which the average
American can subtract from his income
legally" to bring his income tax during
these depression days down to the
minimum?
To answer some of these questions,
the Bureau of Internal Revsnue was
requested to prepare statement con-
corning the average Americans income
and how he can prepare his income tax
return to get the full benefit Of all de-
ductions and exemptions.
Bureau Simp,ifies Problem.
Here is how the bureau has figured
it cut for the typical American specified:
The tax is upon net income (gross
income less allowable deductionS), after
the allowance of certain credits against
the net income.
Suppose your income was from a
salary and amounted to $4,420. This
amount would be reported in your in
come tax return as gross income.
'If you paid $190 interest on a mort
gage on your home or on other indebt-
edness Except indebtedness incurred
or continued to purchase or carry tax
exempt securities or Indebtedness in
Cured or continued in connection with
the purchasing or carrying of an an
nuity), you woul be entitled to deduct
that amount from your gross income
as interest paid.
IF you expended $3.50 for taxes on
your home, such amount would likewise
be deductible from your gross income.
Deductible Taxes.
"If you paid $100 on your electric bills
for electricity furnished after June 81.
1882, the tax thereon would be So. II
you had 40 telephone conversations on
which the charge was so cents each, the
tax on account thereof would be 81. II
you paid $40 for telegraph dispatches
and messages, the tax thereon would be
81. If you paid $50 for the rental of a
safety deposit box after June 81, 1882,
the tax on that account would be So.
If you expended S100 for two hundred
50-cent admissions to moving pictures
OF SHOWS iIlO LAX Is lIupOScQ III CdSc tlic
amount paid for admission is less than
Al cents) after June 81, 1882, the tax
on such admissions would be $40. II
you wrote 100 checks between June 81,
1882, and December 81, 1882, the tax on
such checks would be 50. All of these
taxes would be deductible from your
gross income.
IF, then, the total Of your allowable
deductions amounted to $420, your net
income would be $4,420 less $420, or
1000.
$500 Credit for Child.
"If you are the $4,000 man described
above, your credits for personal exemp-
ton and dependent would be $2,900
which includes the $400 credit for your
son or daughter. These credits would
be allowed against your net income of
| $4,000, reducing 1t to 81 100, upon which
amount the income tax would be $44, as
compared with $3.50 which would have
been the amount of the tax under the
revenue act OF 1928.
THE tax under the revenue act OF
1882 on your net income Of $4,000 would
be computed as follows:
W PERSONAL i exemption $4,000 '''''
Credit for dependent. -. 400
Balance taxable at ~ 100
| Amount Of tax (4% Of S1,1o0) -. ~