The Waterbury Democrat. [volume] (Waterbury, Conn.) 1917-1946, 1944-01-13
YOUR FEDERAL
INCOME TAX
No. s
INCOME TO BE REPORTED

In preparing a Federal income
and victory tax return, income from
every source, unless specifically ex-
empt by statute, must be reported.
The types of income specifically ex-
empt are listed in the instructions
accompanying the return Form 1040
and in later article of this series.
In addition to salaries, wages,
fees, and commissions which must
be reported, all bonuses, tips, prizes
and awards, and other forms of
compensation must be reported. A
minister of the gospel must report
all fees he receives for funerals, for
Masses, for baptisrns, for marriages,
and for other like services, as well
as cash allowances received to cover
the cost of parsonage.
If a person is paid in whole or In
part for his services in anything
other than money, the fair market
value of whatever was received
must be reported as income. This
applies to meals or living quarters
furnished an employe as part of his
compensation, with the exception
of the rental value of parsonages
furnished to ministers of the gospel,
which is exempt by law. If, how
ever, meals or living quarters are
furnished to employees for the con-
venience of the employer, they are
not part Of the compensation for
services for income tax purposes,
and need not be treated as income.
In determining whether they are
provided for the convenience Of the
employer, it is not sufficient merely
to show that an employer requires
the employe to eat or reside on the
premises provided, but it must ap-
pear that because of the nature OF
the work it is necessary for the en-
ploye to eat or reside there in order
properly to perform his duties.
Income, including wages, must be
reported whether received in hand
or not, If there is constructive re-
ceipt," that is, if it has been cred
tied to the account Of, or set apart
for, a taxpayer without any sub
stantial limitation or restriction,
and if it may be drawn upon by
him at any time. This applies to in
terest credited to a savings account
and subject to withdrawal during
the year, to dividend checks receiv-
ed during the year whether cashed
or not, to interest coupons matur-
ing during the year whether CASH
ed or not (unless the bond is in
default and no funds are available
to pay the interest coupons), and
the like.
Interest accumulated, or accrued,
during the year on War Savings
Bonds may be treated by taxpayer
reporting his income on the cash
basis, as income during the year,
or the accrual may be deferred
until the bonds are cashed or reach
maturity. and reported then as in
come. However, taxpayer on the
cash basis who elects to report such
income as it accrueS must adhere
to that method in all subsequent
returns.
A farmer who trades or ex-
changes the produce of his farm
for goods or services must report as
income the value Of the goods or
services received by such trade OF
exchange.
Alimony and separate mainten-
ance payments periodically received
by wife subsequent to decree OF
divorce or of separate maintenance
must be reported as income.
A member of the military or ma
val forces of the United States, re-
CARELESS Of rank, may exclude from
gross income for 1913, not more
than $500 Of his or her compen-
sation received during that year, fol
active service. If the total of hi;
pay for such services Is less thar
$500, he may exclude the tota
pay, but the remainder Of the ST..
500 exclusion may not be applied
against other income. Also thu
amounts contributed by the Gov
eminent to the service man!
monthly family allowance" are IL
the nature Of gifts by the Govern
ment and need not be included IL
income.