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Show Many Deductions Allowed by Treasury On Income Tax; Every Worker Can Claim Credits Under the New Levy Dy ALFRED SINGLER Released by Western Newspaper Union. Although wartime necessity demands that Uncle Sam collect the highest income taxes in history, there is nothing unpatriotic in taking advantage of legitimate ways to lower your payments, as provided by law. Tax laws are carefully written instruments. In writing them, congress included a list of deductions which taxpayers may claim. These deductions were included for excellent reasons and with the expectation that all taxpayers who could honestly claim them would do so. The big taxpayer usually finds it advantageous to hire an expert who is familiar with each permissible deduction. The smaller taxpayer is not so likely to secure outside assistance. The latter would do well to determine for himself the deductions de-ductions he can make legitimately. miums, unless they exceed 5 per cent of your income. Any expense over 5 per cent of income, and up to a maximum of $1,250 for a single person or $2,500 for a family, may be deducted. This includes hospital bills, treatment, diagnosis and everything ev-erything connected with medical and dental care. Farmer Deductions Wages, Seed, Repairs, Tools, Fertilizers, Depreciation. In general, a farmer who operates a farm for profit is entitled to deduct de-duct from gross income as necessary neces-sary expenses all amounts actually expended in carrying on the business busi-ness of farming. The wages paid for hired labor are deductible. The value of products furnished by the farm and used in the board of hired labor is not a deductible expense, but food purchased and furnished to hired hands is deductible. Farmers may deduct the cost of grain and hay, amounts paid for grinding and processing feed, amount paid for hire of machinery, cost of farm supplies, gasoline for farming, repairs and upkeep of cars. Amounts expended for repairs and which cost the customer 55 cents, represents a 5 cent deduction. Automobile owners are entitled to deduct state and local license fees, the federal use stamps (which cost $7.09 in 1942), driver's license fee and state gasoline tax. Automobile i owners may not deduct the federal gasoline tax because it is constituted consti-tuted as a tax on the manufacturer and not on the consumer, even though it was passed along to him. For the person who makes not! more than $2,000 of taxable income which means a single man earning not more than $2,500. or a married man or heac of a family earning not more than $3,200 every $100 of deductions claimed will mean an $18.40 reduction in income taxes paid. Where larger incomes are involved, in-volved, savings are proportionate!;? -greater. JL The following are important deductions de-ductions which will aid the average taxpayer. maintenance of farm buildings, (except (ex-cept the dwelling), fences, drains and other farm improvements, and for repairs and maintenance of farm machinery and equipment are deductible. de-ductible. Amounts expended for replacement re-placement of, or additions to, farm machinery, farm buildings, or other farm equipment of a permanent nature na-ture are not deductible as such expenditures ex-penditures are regarded as investment invest-ment of capital which is returned to the owner through depreciation allowances during the useful life of the property. The cost of small tools of short life may be deducted. The cost of commercial com-mercial fertilizers and lime, the benefit of which is of short duration, dura-tion, is deductible as an expense. The amount expended in the restoration resto-ration of soil fertility preparatory to actual production of crops and the cost of liming soil to increase productiveness pro-ductiveness over a period of years are capital expenditures, and thus are not deductible. Fees paid for advertising farm products; expenditures for stamps, stationery, account books and other office supplies purchased for farm use; expenditures for travel in connection con-nection with the farm business and other similar miscellaneous expenditures expendi-tures are deductible. ' An allowance for depreciation of buildings, improvements, machinery, machin-ery, or other farm equipment of a permanent nature is deductible. The amount claimed on account of depreciation de-preciation should not exceed the original cost of the property. Repairs on depreciation on the dwelling occupied by the farmer or on his personal or household equipment equip-ment are not deductible. It is not permissible to claim as a separate item depreciation on livestock or any other property included fn the farmer's farm-er's inventory, as such depreciation is taken care of in the reduced amount of the inventory at the close of the year. However, depreciation may be claimed on livestock acquired ac-quired for work, breeding or dairy purposes which are not included in the inventory of livestock purchased pur-chased or raised for sale. payergets credit only for those taxes levieff directly upon him. For that reason state and federal taxes on cigarettes and liquor are not deductible. deducti-ble. They are stamp taxes levied on the manufacturer or dealer. The transportation taxes paid on railroad, airline and other personal transportation last year is deductible. deducti-ble. The rate was 5 per cent of the fare for the first 10 months; 10 per cent for the last two months. The tax on transportation of goods, amounting to 3 per cent on all freight and express bills, is deductible. Taxes imposed by the federal government gov-ernment on jewelry, furs and toilet goods are not deductible. They are excise taxes levied on the maker or dealer and are not collection taxes levied on the taxpayer. Also deductible are traveling expenses ex-penses required by one's employer when such expenses are not reimbursed reim-bursed by anything over salary, wages or commissions. When your car is used partly for business and partly for private purposes, deduction is allowed only for the portion used for business, and then only when the driver is not reimbursed. The loss on the sale of a car, used partly for business busi-ness andpartly for private purposes, is divided similarly, but only when actually sold and not when used as a trade-in. In addition to deducting the three-cent three-cent state tax on all gasoline used in your car, you can also deduct the cost of the gasoline and other supplies for business use of the machine. ma-chine. Dues to labor unions, assessments by unions for out of work benefits, but not for sick, accident or death benefits, cost of indemnity of fidelity bonds required by your employment, and cost of tools and patterns necessitated neces-sitated by the type of work, are deductible, de-ductible, but only if their life is less than one year. If their life is longer than one year the owner can discount dis-count depreciation only. No deduction is permitted for medical med-ical and dental expenses, including accident and health insurance pre- You Can Deduct License Fees, Business Expenses, Contributions, Interest, Taxes. All contributions, for public purposes, pur-poses, made to the United States, any state, city or town, are deductible, deducti-ble, as are contributions to a domestic do-mestic nonprofit organization operated operat-ed exclusively for religious, charitable, charita-ble, literary, educational or scientific scientif-ic purposes or for prevention of cruelty cru-elty to children and animals. Church contributions include pew rent, assessments, etc. Organizations Organiza-tions such as USO, Army and Navy Relief, Red Cross, community chests, etc., come under the charitable heading. Literary and educational organizations include such institutions institu-tions as nonprofit colleges and schools, the Boy Scouts, voters leagues, and study groups. The scientific sci-entific heading includes all nonpartisan nonpar-tisan scientific societies. It is not permissible to deduct contributions con-tributions made to a bar association, associa-tion, a medical association, a prohibition pro-hibition association, political campaign cam-paign committees, volunteer fire companies, social fraternities, athletic ath-letic clubs or gifts to needy friends or relatives. Generally speaking the taxpayer may deduct any interest paid on borrowings, bor-rowings, including business, personal person-al and family debts. Because interest in-terest paid on behalf of a relative or friend is not a legal obligation on the taxpayer, such interest is not deductible. As a broad general rule, the individual in-dividual can deduct all taxes he personally per-sonally pays to the tax collector, except ex-cept federal income, estate and gift taxes and state and local benefit, inheritance, estate, legacy or gift taxes. Federal taxes which are deductible deducti-ble include those on admissions, dues, telephone, telegraph, transportation, auto use, safety deposit boxes, etc. Admission taxes collected at theaters the-aters and other places of amusement amuse-ment during 1942 amounted to 10 per cent. A 50 cent theater ticket, |
