Evening star., 1940-03-24
Summary Of District Saes|ncome Tax Program Before House

and non-residents credits against
the tax for income taxes paid to
States or Territories. In the case
Of residents, the bill provides:
Whenever a resident individual
OF the District becomes liable for in
come tax to any State or Territory
upon his net income, o. any part
thereof, for the taxable year, de-
rived from sources within the Dis
trict and subject to taxation under
this title, the amount of income tax
payable by him under this title
shall be credited on his return with
the income tax so paid by him to
any State or Territory upon his pro-
ducing to the assessor satisfactory
evidence Of the fact of such pay
ment.
Amount Of Credit Limited.
There is q further provision, how
ever, that such credit shall not ex-
coed that proportion of the tax pay
able to the District that the por-
ton of taxable income taxed by
such State or Territory bears to
the total net income of the resi-
dent. This credit also would not
be granted when the laws of the
State or Territory involved pro-
vide for credit to the taxpayer SIM
liar to that granted by the District.
AS an example. suppose Mr.. Jones
is a resident of the District, is en-
ployed In Baltimore at a salary
of $1,000 and, in addition, received
a $4,000 income from a store in
Washington. Suppose that his tax
to the District is 500 on the $4,000
income, and on the $1,000 earned
in Maryland he pays that State SIS.
Now although he paid SIS to Mary
land, he cannot credit the entire
amount against the local tax. He
can claim a credit of only half
that amount because the Maryland
income amounts to half the total in
come.
Nonresident Credits.
The section allowing non-residents
credits against the local tax for in
come tax paid State or Territory
says:
Whenever a nonresident indi-
vidual of the District has become
liable for income tax to the State
or Territory where he resides upon
his net income for the taxable year,
derived from sources within the
District and subject to taxation
under this title, the amount of in
come tax payable by him under this
title shall be credited with such pro-
portion of the tax so payable by
him to the State or Territory where
he resides as his income subject to
taxation under this title bears to
his entire income upon which the
tax so payable to such other State
or Territory was imposed.
This section also provides that
such credit shall be allowed only if
the laws of said State or Territory
Cd grant substantially similar
credit to residents of the District
subject to income tax under such
laws, or (2) impose tax upon the
personal income of its residents de-
rived from sources in the District
and exempt from taxation the per-
sonal income of residents of the
District. No credit would be allowed
against the amount of the tax on
any income taxable under this title
which is exempt from taxation un-
der the laws of such other State or
Territory.
Filing Fee Required.
AS an example of the nonresident
credit, suppose Mr.. Smith Is domi-
ciled in MARYLAND. has store in
the District from which he derives
an income of SIS 1000 and is employed
in Maryland with a salary of $1,000.
Suppose further that the local in
come tax on the $4,000 he receives
from the store is $50 and his Mary
land tax on his total income of So.
600 is $3.50. Mr.. Smith thus would
be entitled to credit of SIS against
the District tax and actually would
not have to pay the local tax, be-