The journal. (Caldwell, Ohio) 1934-1961, 1954-08-19

penses exceeding three percent
- gross income, instead of five
aPercent as provided in the old
law. The maximum medical ex-
pense deduction is increased
from $3.50 to $500 per exemp-
ton, and the maximum in the
case of a couple filing Joint re-
turn is increased from $4,000 to
$4,000 Drugs and medicines
MAY be included in medical ex-
penses only to the extent that
they exceed one percent of gross
income.
Dividend Income
The first $50 of dividend in
come will not be taxable to the
individual. In addition, the in
dividual will be allowed to sub
stract four percent of the re-
mainder of his dividend income.
The four percent credit is APP
plicable only to dividend income
received after July 81 this year.
Dividend tax relief will be limit
ed to two percent of taxable in
come from all sources in 1854,
and to four percent of total tax
able income IN future years. EX-
pertS estimated that dividend
recipients will save 204 million
in taxes this year and 362 mil
lion in later years.
Working Mothers
A working widow, widower or
divorced person, or a married
couple with a combined income
of less than $500 year, can
deduct up to $500 a year for the
care of children up to age l2
while the parents work. A work
ing woman regardless Of preVi-
Gus marital status or a WidoWer
also can take a deduction Of up
to 5000 for expenses in the care
of any dependent who is ment-
ally or physically incapable of
caring for himself
Retirement Income
The first $1,000 of retirement
income Of persons over IS will
be exempt from income tax.
Persons who retire under public
retirement plans - school teach
ers, firemen, policemen and gov
ernmental employees - can retire
before 65 and still get the $1,000
exemption. The amount of retire
ment income up to $1,000 is TO
be reduced, for purposes Of com
putting the tax credit, by any So
cial Security, railroad retire
ment, military retirement pen
sion already excluded from gross
income.
Working Children
Children earning more than
5000 a year still can be claimed.
as dependents by their parents
if they are under l9, or over 19
if they are attending school and
provided the parents continue to
contribute more than half of
their support. Under the old law,
a parent could not claim child
as a dependent when the child
earned more than 5000 in a single
year The effect of the new law
is to give the parent the bene-
- of an extra exemption
er Dependents
N@7The new law also makes other
adjustments affecting depend
ents. A taxpayer now can claim
a $500 dependency exemption for
a foster child, or for a child
awaiting adoption. An aged par
ent or other dependent cared for
by several members of a family
can be claimed as $500 eXemp-
tion by one of the members of
the family. A taxpayer can claim
a 5000 exemption for any other
person, regardless of relation
if the taxpayer supports that
person in his home.
Charitable Contribution
Allowable deductions for
contributions TO
hospitals and educa-
tional institutions are increased
by the new law to 80 percent.
The maximum under the old law
was 20 percent.
Credit
A deduction for interest of up
to six percent may be made
where the taxpayer makes an in
stallment plan purchase.
Sickness and Accident Benefits
Accident and health benefits
paid by an employer as reim-
bursement of actual medical ex-
penses to employees or to their
wives or children are exempt
from tax. Payments to employees
for loss of wages due to injury
Or illness are exempt up to 500 |
a week. The employe will not |
qualify for this 500 exemption
the first week of illness, how
ever, unless he is hospitalized
for at least one day during his
period of illness. In the case of
an accident, he can qualify inn
for the 500 exemp-
ton,