Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-01-24
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Exclusions Moy Help
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considered true dividends by
the tax collector. They're con-
sidered interest. and must be
listed with your other income.
Two General Rules
The tax laws also let you ex-
clude from your taxable in
come part or all Of your in
come received In the form Of
annuity or retirement pay.
There are two general rules
which apply;
/, Uncle Sam feels you have
a right to recover. tax-free. as
much as you have paid into
your annuity or pension plan.
For instance. II over the years
you paid $500 into your COM
pany's pension fund. $500 OF
what you get back is tax-free,
>. You can't exclude any part
Of the payments If you did not
bear part OF the cost. However.
even If you made no direct con-
tributions, you paid part OF the
cost II you were taxed for part
or all of your employers pay
ments TO the plan.
Page Is OF the instruction
book with the Form l040 tells
you how to figure that part Of
your annuity or pension which
may be excluded from your
taxable income.
There's chance for real saw
ings by excluding your sick
payday received from your
employer while you were of
work because Of illness or in
jury.
Here. too. there are certain
conditions 10 be met. and GER
tain limits on how much can
be excluded.
The amount OF sick pay you
can exclude from your taxable
income cannot exceed 500 per
week and the plan must be
financed by your employer.
When II Begins
II your absence from work is
due TO an injury. your sick pay
exclusion begins with the first
day you miss.
II your absence is due to ILL.,
ness. 1t generally begins only
with your second weeks sick
pay. However. II you are hos
pita.ized for even one day be-
:ause OF Illness. the exclusion
begins with the first day you
missed. Just as for an injury.
Remember that $i00-per-week
Remember that $l00-per-week
ceiling. If your pay is over 500
per week. here's how to figure
how much you can exclude:
divide 500 by the number OF
working days In your normal
work week. That gives you
your maximum daily exclusion.
Then multiply that amount by
the number Of days you were
of work. That gives you your
total excludable sick pay.
When your pay for the period
while you are out with illness
or injury comes entirely from
your own contributions to a
plan OF policy. the 500 limit
does not apply. The entire
amount may be excluded.
II YOU use Form l040A, or
punch card type return. you
cannot claim sick pay exclusion.
On the form 1910. 1t should be
on line s tbl and you
should attach a statement TO
your return showing the dates
you we're absent. the nature Of
your illness or injury. whether
or not you were hospitalized.
and when. and how you figured
the amount excluded.
Types Of Pay 70 List
That about covers the ex-
illusions. Now there's the mat
ter Of income which the Gov
eminent wants to see you list.
With the exceptions noted
above. Uncle Sam wants his
full share Of all wages. salaries.
bonuses. commissions. fees and
tips. Interest on bank deposits.
savings bonds and securities
are taxable. So are any profits
you make from the sale or ex-
change Of real estate. secur-
tiles. automobiles or other
property.
You must list income from
rents and royalties. business or
professional profits. income
from estates or trusts and even
alimony and separate main
tenance or support payments
received from your husband or
wife and deducted by him or
her.