The Waterbury Democrat., 1943-01-20
your FEDERAL INCOME TAX
No. 10
INCOME TO BE REPORTED
TTEMs EXEMPT FROM TAX

ITEMS EAEME cNOMA
In the instructions accompanyin ing
return Form 1O40 are listed certain
items which are specifically exempt
from the income tax and need not
be reported as income in the tax
PAYERS return. Among these Is lie
insurance paid on the death OF the
insured. Amounts so received are
nontaxable to the beneficiary. HOW"
ever( life insurance paid to q policy
holder on the maturity Of an en-"
dowment contract (I1ot q death pay
ment) represents income, which
must be reported, to the extent that
the amount received Is greater than
the premiums or consideration paio
for the policy. Amounts received up
to the amount Of the premiums or
consideration paid for the policy are
nontaxable.
In the case Of annunities received
either under annuity or endow-
ment insurance, or under retirement
funds or plans toward which the
taxpayer has contributed or made
payments, a portion Of the annunity
Is considered as representing o re-
turn of the funds originally paid
in, and Is nontaxable, and the ball
ance Is taxable as income. The
amount considered as income Is an
amount each year equal TO 3 per
cent OF the total premiums, consid-
Grafton, or payments made for the
annuity. Amounts received in ex-
cess Of 8 per cent Of the total pre-
muims, consideration, or payments
made, are considered as return OF
principal and are nontaxable; how
ever the total tax free amounts
received equal the total premiums,
consideration or payment made for
the annuity, then the.entire amount
Of each annuity payment is con-
sidered as income subsequently re-
ceived and must be SO reported.
There are also exempt from tax
amounts received by gifts, bequest,
and devise, but the income derived
from any amounts or property so
received IS subject to the tax.
Interest on obligations Of a State,
Territory, or any political subdivis-
ion thereof, or the District, Of Co
lumbia, or possessions Of. the United
States, is exempt from tax and, also,
the interest on obligations Of the
United States issued prior to March
/, 1941, to the extent provided In
the Acts authorizing their issue. For
the manner Of reporting such In
terest the instructions accompany
ing the return should be consulted.
The same applies to interest on OBJ
legations issued prior to March /,
l941, Of a corporation organized I'M
der an Act, Of Congress If such corr
poration is an fundamentally Of the
United States.
Amounts received through ac-
cident or health insurance or under
wofkmen's compensation acts for
personal injury or Sickness. and
damages received on account Of
such injuries or sickness, are tax
exempt and need not be reported
as income. s.3
Pensions and compensation re-
ceived by veterans from the United
States for services n time Of war
are exempt. and pensions received
from the United States by the FAM
hy OF q veteran for services render
cd by the veteran IN time af war
are also exempt.
Amounts received as Q pension.
en- nllity, or similar allowance for
personal injuries or sickness result
Ing from active service 81 the
armed forces Of any country ere
also exempt.
Also exempt and not required 70
be reported q the rental value Of
g dwelling house and fiEnlshinea
provided q minister q the gospel
as part Of bis compensation.
Persons n the military o. naval
service ~ the close % the taxable
year, below commissioned Grade, arc
exempt from iax a. their cQHpensa-
ton received Tor such service. ~
q $3.50 IN The case 81 . single per-
son and go q iIle case q : mar
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