Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-01-24
Bv G. X. HODENFIELD
Associated Press stAff Writer

Bv G.. X. HOnENFIELD
Associated Press stan Writer
There are certain types OF
income which are tax-free. and
which you don't even have 10
report in making out your in
come tax return. BY taking adj
vantage of these exclusions you
may be able to whittle down
your tax bill considerably.
On the other hand. you may
have had certain income which
you hadn't thought Of as being
taxable. The Government wants
you to exclude everything pos
sible under the law. but the tax
collectors also insist that every
bit of taxable income be listed.
This article deals with both
types of income.
First, because it's more pleas
ant to think about, let's look at
the income which you don't
have to declare:
l. State and Federal social
security payne nts. benefits
from the Railroad Retirement
Act. and Workmen's Compensa-
ton benefits. This includ IS
State and Federal unemploy-
ment compensation.
2. Inheritances tup to 500
000l and death benefits from
life insurance policies,
3 All Government payments
and DEMENT'S to veterans and
their families. except interest
on terminal leave bonds and re-
tirement pay not connected
with a disability.
4. Gifts. This includes money
or anything of value for which
you performed no service what
ever.
5. Interest on State and
municipal bonds.
s. Subsistence and rental al
lowances to members OF the
armed forces.
Z. Dividends on CT life insuI-
ance programs.
Any 1857 income you had
which falls into one of these
categories is beyond the reach
of the tax collector. Just forget
about it while making out your
return.
Some Are Conditional
There are several other cate
gories which have strings at
tached.
Prizes and awards las dis
tinct from gifts are exempt
from taxes only II they are
given in recognition of civic.
literary. artistic. educational.
scientific. charitable or religious
achievement.
But these prizes and awards
can't be excluded If you had to
enter a contest as a condition
of winning. and they can't
carry with them the reqnire-
ment OF performing any
substantial future service for
the donor. This means that
most prizes given on radio and
television giveaway programs
are not exempt and Uncle Sam
awaits his share.
Generally speaking. payments
made In the form of scholar
ships or fellowShips are tax
II the recipient Is a
candidate for a degree the en-
tire amount is tax free and
needn't be reported. II the re-
cipient is not a candidate for a
degree. the maximum amount
which is exempt is $500 a
Clock Winding Profits
Income earned outside the
scholarship. however. is tax
able. For instance, a football
player attending college on an
athletic scholarship wouldn't
have to report that he was
given room. board. books. tut
ton. laundry and expense
money. But he would have to
report any income he might
get for winding the eight day
clocks in the coach's Office.
With some restrictions, each
taxpayer may deduct from his
income UP to $50 received as
dividends during the tax year
from qualifying domestic cor
porations.
All dividend income must be
reported on Schedule A on page
3 Of the form l040, There's
place to list all dividend in
come and take your exemption.
Remember. so called divi-
dends from savings and loan or
building and loan associations
and from credit unions are not