Evening star., 1945-02-25
BY JAMES MARROW,

Associated PreSs Stan writer.
Watch your exemptions for de-
pendents-and you may save money
in filing your 1914 income tax
return. There's been a change in the
law on dependents.
Last year you could not claim as
a dependent any one over 18, no
matter how closely related, who
was capable of sef-support.
Now you can claim as dependent
any close relative of any age
whether capable of self-support or
not-who received more than half
his support from you and whose
income was less than $500.
You chop a surtax exemption of
$500 OF your income for each de-
pendent. The meaning and working
OF the surtax exemption will be ex-
planned here later.
You cannot claim as dependent
any person-even though receiving
more than half his support from
you-who had income of $500 or
over. Such a person would have to
file his own return.
II you had a dependent who
earned less than $500 you can claim
him as dependent and get an ex-
emption for him. He does not have
to file return and you do not have
to report his income in your return.
Counted as Full Years.
II a child was born to you any
time in 1944-or a person dependent
upon you died any time in 1914
you can claim him as a dependent
tor the full year.
To be a dependent a person must
be related to you this way:
Your child or his descendants
(your grandchildren brother,
sister, step-brother, step-sister, your
parent, grandparent or other an
cester, your step-father, STEP
mother, uncle, aunt, nephew, niece
and your in-laws; father, mother,
sister, brother, son or daughter-in-
| law.
You get the same kind of surtax
exemption for a wife If she has
no income-or If she has income
and files a joint return with you
as you do for a dependent, al
though she's never classed as a de-
| pendent.
If you file return on Form W.,
the withholding receipt, or the 1040
short-form, you list your exemp-
tions for yourself, wife and de-
pendents but don't do any figuring
Exemptions are allowed for already
in the tax table used with both
| forms.
| It's when you use the 1040 long
form that you have to do arithmetic
with exemptions. Explaining how
will explain the basic method of
making out the l040 long-form.
| There are two kinds of taxes on
income: A normal tax and a sur
tax. There are two kinds of ex-
emptions: A normal tax exemp-
ton and surtax exemption
Everyone filing a return is en-
titled to $500 surtax exemption
for himself, another $500 for his
wife if she had no income or is
filing a joint return, and $500 for
each dependent.
Surtax Exemption Differs.
But everyone is entitled to only
$500 normal tax exemption for
| himself-in the case of wife with
out income-and no exemption for
any dependent.
| The normal tax is a fiat per
rent on taYa hle incop,o h,,t tho cur-
tax Is fiat 20 per cent on taxable
income up to $1,000 and then rises
to 81 per cent on the highest income
! Here's an example of what all this
means and how it works.
Mr.. Smith, married, has two chill
dren, dependent brother and two
dependent parents. He claims seven
surtax exemptions. His income was
$4,000. His deductions for charitable
contributions and medical expenses
were $500.
He subtracts the $500 deduction
from the $1,000 income to get his
net income, $500 From that he
subtracts his seven surtax exemp-
tions-each at $500 makes $500
and gets what is called his surtax
net income, $4,000.
Since that surtax net income Is
not over $4,000, he can apply the 20
per cent surtax to 1t and finds his
surtax is $500.
Now, he takes that same net in
come Of $500 to find his normal
tax. From that IS 500 net income,
explained above, he cannot subtract
his seven surtax tax exemptions be-
cause he's working on his normal
tax. But he can subtract his normal
tax exemption of $500, which every
taxpayer gets. That leaves him
$4,000, which Is called his normal
net income.
He applies his normal 3 per cent
tax to that normal net income of