Show T Terms er s of New T Tax ax Law as Affecting Small Man ManIs Is for Guide This Years Year's Returns Explained to Exemptions and Rates Given Those Who Come Under Scope of Statute Are Named Editors Editor's Note Note This This is the first of ofa ofa ofa a series of articles by George Britt writer for The Telegram and NEA Service explaining In detail the new federal t tax x law By George W. W Britt WASHINGTON March 6 The 6 The new tax law just passed by congress will relieve approximately 2 small taxpayers from In Income income In- In come tax ta Thousands who paid small driblets of 10 and 15 last year will not be taxed at all this year rear Those with slightly larger Incomes will find their their payments cut cut considerably By so much I therefore the new law will be good goodnews pews news to the poor man as well as to the rich Taxes of many are reduced beloW belon prewar levels The surtax which applies only to incomes in excess of is is' is no ito concern of the present story It will deal with the small taxpayer whose payment represents the price of a new V pair of shoes or a suit or ora ora ora a dress for his Wife Here is it how the new law law wo works tS for such a citizen All the tax rates are applied to tonet tonet tonet net Income that Income that Is the amount re remainIng remaining remaining re- re after certain deductions from gross gross gross' Income These Include contributions to religious or charItable charitable charitable char char- c causes causes ses interest payments on debts taxes except federal income tax tay losses as a result of storm and fire not cover covered d by by insurance and nd 1 bad ad debts EXEMPTIONS INCREASED After the net income is reached there still remain the exemptions The elimination of names from the tax ta list Is chiefly made bYthe by bythe bythe the increase of the exemptions Under the old ld l law w each single person person per per- per per- son eon was wa V allowed d a a. personal ex exemption exemption ex- ex emption of but 1000 and each married couple 2500 2500 The new law lawand lawro ro a. a t. t 1 lt Q and for fora a. a ie Iz II In addition there Is TS exemption un unchanged hanged allowing for each child or other dependent At the same time that the tha exemptions exemptions exemptions ex ex- ex- ex are increased there is a further concession through the re reduction reduction reduction re- re of rates On the first Income after the deduction exemptions exemptions exemptions ex ex- ex- ex and credits the old law collected 2 per cent tax The new collects 1 2 1 per cent On the next of Income the rate Is cut from 4 per cent to 3 per cent ent On all Incomes above this the rate is cut from 6 per cent to 5 per cent I For the tile small smaIl taxpayer Er the credit for earned inc Income me is the same as before Earned Income may be de defined defined defined de- de fined roughly as as' as that derived from ones one's o own efforts r rather ll er than thE the lazy Income from Investments or I proprietary Interests After the tax is figured a credit creditor or rebate of 25 per cent Is allowed for the earned income Every In Income Income Income In- In come of or less Is considered as earned and receives s. this 25 per percent percent percent cent credit The maximum which can be proved as earned Income now is increased from to WHAT YOU HAVE TO PAY Now how hoy do all these technical sounding clauses apply Here Is a married man without children with annual salary of He has paid out interest on the mortgage on his home and for charitable gifts leaving net Income He lie deducts his exemption and has taxable Income He ap applies applies applies ap- ap plies the rate of or 1 2 1 per cent to that a d gets deducts 25 per percent percent percent cent for earned Income and arrives at This is all he owes for Income tax Last year It would have been 2250 A bachelor with t the e same Income this year must pay 2813 Suppose our married man has net income His exemption makes that On the first he pays 1 2 1 per cent or 60 On the remaining 2500 2600 he pays at atthe atthe atthe the 3 per cent rate making an ad additional additional ad- ad 75 total Deducting his 25 per cent earned Income credit credithe he figures his income tax at Last year it would have been The deadline on filing returns is March larch 15 WHO FILES RETURNS Every single person or married person not living with husband or wife having a net Income of 1500 or more must file a return Every married person or husband and wife wire having a net Income of or more must file a return Every single pers person n or married person or couple having a gross income of or more is la liable for tor a return even though their net income might be less than their exemption In a great many cases persons are liable for a return but due to allowable deductions and exemptions are not liable Hable for any tax A married couple Is entitled to only one personal personal personal per per- exemption and where husband husband hus bus band and wife each have Income single returns may be filed by each or a joint return may be filed flied combining the income of both If single returns are filed flIed the personal personal personal per per- exemption of may be betaken betaken betaken taken by either or may be split between between between be be- tween the two In an any proportion desired The credit for dependents however must be taken by the one actually furnishing their support A single person maintaining a home and antI someone therein is entitled to toan toan toan an exemption of as the head of or a a family the same as a a. married person Tomorrow Tomorrow Surtaxes t I ff |