Evening star., 1952-02-04

This is the sixth OF 10 stories explaining
how TO moke out your income tax re-
turn for 1851.
man, or a professional man, like
lawyer, or a man in business fol
himself-may have various ex-
penses.
All three men may have personal
expenses, like medical bills. Il
those expenses are large enough
to require itemizing, all three mer
handle them the same way: They
itemize them on the 1040 long
form and claim them in full.
Deductions Are Separate.
And all three may have had ex-
penses connected with their work.
In that case the professional man
or the businessman can claim his
business deductions separately
from his personal expenses.
But the expenses Of some one
who is an employe, even including
expenses connected with his work,
are all treated as personal ex-
penses. He can't claim them sepa-
rately from his personal expenses.
It's easier to understand If you
start with the basic rules:
Under-$5, 900 people using form
1040-A or the 1040 short form
automatically get a deduction Of
about 10 per cent for personal ex-
penses, like medical bills. They
don't have to itemize or claim
them. They're allowed for in the
tax table used with those two
forms.
II understood people have
personal expenses greater than 10
per cent of income, they should
use the 1040 long form. There.
because they are under-$5, 900
people, they must itenize their
deductible personal expenses but
can claim them in full.
Must Use Long Form.
The $5,00-and-over people must
file their return on the 1040 long
form anyway. They don't have to
itemize their personal deductions
unless they're unusually large. be-
cause:
They get q standard deduction
Of 10 per cent of their income up
to a limit of $1,000 which they
Just take OF their income before
It's taxable. If any Of the $4,000
and-over people want more than
the 10 per cent they, too, must
itemize.
The itemizing for all personal
deductible expenses on the 1040
long form is done on Page under
six headings: Contributions, in
terest, taxes, losses from natural
causes and theft, medical and
dental expenses, and miscella-
neous. That miscellaneous" is q
catchall. as you'll see.
Now see the difference between
q professional man, like a lawyer
Cor a businessman), and news
paperman who is an employe.
Example or Business Expense.
Say the lawyer spent $400 for
subscriptions to law journals and
law societies. For him they'd be
O. business expense connected with
his work.
He'd list that business on a
separate form-called Schedule c
which is where professional men
and businessmen list their busi-
ness expenses in order to deduct
them from their income before
it's taxed.
Now his total income for the
year was SO, 400. After deducting
that $400 for business expense, he
finds his income was $1,000. Now
he shifts over to the 1040 long
form where he reports his income
and figures his tax.
On that long form he could take
for personal expenses the standard
deduction Of 10 per cent $500 in
his case) Of $1,000. But suppose
he had deductible personal ex-
penses, like medical bills and
charitable contributions. which
ran to more than 10 per cent Of
his income.
Must Itemize Expenses.
In that case-in addition to
listing and taking his $400 in
business deductions on Schedule
C-he'd itemize his personal ex-
penses on Page 3 Of the 1040 long
form and claim them in full. too.
But it's different with some one
who is an employe, like that news
paperman. Say he spent 500 for
things to help him in his work,
like newspapers and magazines.
(This 500 was in addition to a
number of personal expenses like
medical bills and charitable con-
tributionS.)
But in his case he couldn't list
that 500 spent to help him In his
work on Schedule C. In fact.
d person classified as an employe
can't use schedule c at all. That's
strictly for professional and busi-
YeSSmen.
Let's say the newspaperman's
salary was $1,000. # the total Of
his personal expenses including
that 500 for newspapers and
naco zines- doesn't amount tO