u
Income Tax Primpr-6
Compare Itemized, Standard Deductions
EUGENE REGISTER-GUARD, Wed., March 21, 1962 ; Page 7B
Thu it the sixth of eight
Brttolej in the Newspaper
Enterprise Assn. Income
Tax Primer, for readers
who want more information
than is supplied in the of
teal instructions.
By RICHARD A. MULLENS
Written for NEA Servio
tvery taxpayer has a choice
of subtracting from his income
tuner:
1. His deductible items
uch as charitable contri
butions, state and local
property, income, and sales
taxes, interest paid on in
debtedness, medical ex
penses over a certain mini
mum, and casualty losses
nd thefts.
OR
2. The so-called standard
deduction, 10 per cent of
income under $10,000.
Qs & As
Q I am required to entertain
customers of my employer as a
part of my official duties, but
no reimbursement is made for
such entertainment expenses in
curred at the home city of the
company. My supervisor says
the entertainment is required
but recognition for the expendi
tures is taken into account in
fixing my salary. Are these ex
penses out of my own pocket
deductable?
Yes. Expenses required to
be incurred by an employe in
the performance of his official
duties are deductible by him.
Q As sales manager, I often
entertain and present small
gifts to sales employes under
my supervision. May I deduct
them even though the company
does not require that I make
these expenditures? My job and
my commissions and bonuses
depend on the employes doing
good selling job.
A Yes. If there is a direct
relationship between the em
ployes' efficiency and efforts
and your job and particularly
your earnings, courts have per
mitted such deductions, even
though the expenses were not
required by the employer.
Q I am a traveling salesman,
on commission, and although I
try to keep all stubs, canceled
checks, credit card vouchers, and
receipts, I make cash payments
on trips for things like tolls, in
dependent motels and restau
rants and tips which I cannot sub
stantiate. Do I lose the deduc
tion for the lack of these rec
cords? A No. Substantiation should
be kept where possible, but a
daily diary or trip book of ex
penses has been accepted as
sufficient records as long as en
tries were made about at the
time the business expenses were
paid.
The smart taxpayer always
compares the total of his item
ized deductions with the stand
ard deduction and uses which
ever is the larger amount.
This and the next two articles
of the primer will help you
make the right choice.
Contributions to recognized
charities, churches, schools, and
hospitals are deductible if you
itemize deductions. A pledge
in 1961 to make a contribution
in 1962 is not deductible in
1961. Only the amount actually
paid during the year is counted.
A contribution may be in
money or property but not in
the form of services. A blood
donation is not deductible be
cause it is considered a service.
Most taxes except federal in
come and excise taxes are de
ductible. Do not overlook state
and local sales taxes and gaso
line taxes.
Since it is almost impossible
to keep a record of your pur
chases subject to sales or gaso
line taxes, the Internal Reve
nue Service will not question a
reasonable estimate of such
taxes. In fact, it has issued
tables showing reasonable de
ductions for sales taxes. Ask
your IRS office for the table
for your state.
Property taxes are also de
ductible. For many homeown
ers, the property taxes and in
terest on the mortgage will ex
ceed the standard deduction.
Most interest you pay on your
indebtedness is deductible. (If
you borrow money to buy tax-
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One disadvantage of itemiz
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claim. Canceled checks or re
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retained for at least 3 years to
show if requested.
Q I pay the mortgage and
taxes on a house owned by my
mother. May I deduct the in
terest and taxes? -
A No. Such payments are
on another person's property
and are not deductible by you.
Q I paid $100 In 1961 as lo
cal assessment by the city for
sidewalks in front of my house.
Is that deductible as taxes?
A No. Such payments are
not considered taxes. They are
an improvement to your prop
erty which should increase its
value.
Q May I estimate the state
gasoline tax by starting with
the total mileage driven in 1961
divided by the number of miles
per gallon my car gets and mul
tiplying the result by the state
tax per gallon?
A Yes. Remember NOT to
include the federal tax on gas
oline, however.
IF YOU ITEMIZE DEDUCTIONS, YOU CAN TAKE:
Contributions to recog
nized charities. Shite and locat gasoline
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