Show I i What Is Income Tax I i Ii The federal income tax is as the name implies a tax levied upon in in- and it is payable in relation to the amount of or income Income for Federal Federa income tax purposes means in general any compensation on for ones one's services whether the com corn on be in money or in iii goods or other services it includes also the net value received for the prod prod- produce uce tice in the case of a farmer income from investments profit from frani bus business iness mess operations and other gains from sales and exchanges es of goods and property Certain limited cate cate- categories categories gories ories of or income are arc however tax exempt and to the extent of such exemption arc are excluded in computing com put jug ing in the time tax Because of exemptions from the tax given ghen to persons having less than certain stated amounts of or in income in in- income come as well as because of or various deductions and credits allowable only a a. small proportion of or the num num- number ber her of persons persons receiving income have until recently been subject to the tax Thus of or the estimated 55 million persons in this country who received income in one form or another during the calendar year 1941 only some 26 million persons were required to file federal income tax returns for that year while of these same 26 million more than 9 million were not taxable due to credits and deductions allowable As a result of the lowering of exemptions many more persons are arenow arenow arenow now subject to the federal income tax than before and for the calen calen- calendar calendar calendar dar year ear 1942 it is estimated that more than 35 millions persons will file federal income tax returns To the large lar e number of persons now subject to the federal income tax who have never reported income before for federal tax purposes an understanding of or the law and ap ap- applicable ap- ap applicable regulations is of or prime im mi- mi An income tax return is a declaration declaration on the part of the lie taxpayer of or his total taxable income for the year together with the various de de- deductions dc- dc exemptions and credits to which he lie is entitled It is in re reliance re- re liance upon voluntary disclosure and the integrity inte rity of taxpayers gen gen- generally generally that the tile cost of or administration tion ion of or the income tax can be kept at a minimum Though the return is a voluntary statement any per per- person perSon person son who wilfully makes a a. return which he does not believe to be true and correct in every material matter is subject to the penalties provided by law The first requirement t of the time taw Jaw aw is the filing filin of or an appropriate re re- re turn For individuals generally this must be lC done by March 15 follow follow- following ing in the end of or the calendar year The return must be filed with the appropriate Collector or of Internal Revenue for the district in which is located the tile legal le al residence or prill cipal c pal place of or business of the per per- son making makin the return Under the lie present law every sin sin- single gle person and every married per per- person person son not living l lin in with husband or wife having havin a total income earnings s to to- to together gether ether with other income income of or more and married persons living with husband or wife throughout the taxable year who have an ag ag- ag aggregate regate income total earnings of or both husband and amid wife together with other income of 1200 or more re ardess of the time amount of or ornet net income must file a return |