Troublesome Questions About Taxes On Certain CCinds off income Answered
Editor's note: Thli ii the last of
five articles designed to assist in
filling out and 111 i nr. federal in
come tax forms. The series was
prepared especially for United
Press by Russell C. Harrineton
commissioner of internal revenue,
By RUSSELL C.
HARRINGTON
Commissioner of Internal
Revenue
(Written for United Press)
Washington HP) In the
111th and final article in this
series, I shall try to answer
tome often troublesome ques
tions about taxes on certain
special forms of income.
Broadly speaking, there are
special rules affecting taxes
on pay while you are sick,
dividends you receive and
money from annuities and
pensions.
Sickness and Injury
Exempt from tax is money
received as compensation for
your injury or sickness.
Sick Pay
If you are protected by a
plan financed by your em
ployer which continues your
wages while you are absent
from work because of injury
or illness, you may exclude
from your income up to $100
a week of such payments.
There are several special
rules governing sick pay ai
lowances that can be best ex
plained with several exam
pies:
If you are sick at home for
seven days or less, the pay
you receive may not be ex
cluded from your income. It
Is fully taxable unless you
are hospitalized at least one
day of your sickness.
If you are hospitalized for
at least one day, you may ex
clude the entire amount of
pay you receive during your
period of sickness, up to the
limit of $100 per week,
whether you be sick for less
than a week or for many
weeks.
If you arc sick at home for
more than a week without
ever being hospitalized, the
pay you receive after the first
week may be excluded from
your income one-fifth of
your weekly pay (but not
more than $20) for each day
missed if you are on a live
day week; one-sixth (but not
more than $16.67) if you are
on a six-day week.
You may deduct your pay
(again up to $100 a week) for
the entire time you are absent
from work if the absence is
caused by injury received
on the' job or elsewhere.
If you make any claims un
der these provisions, be sure
to attach a statement or our
new Form 2440 to your re
turn to support the claim.
Diyidends
You may deduct the first
$50 of dividends you received
during the year. You also may
take a credit against your tax
up to 4 per cent of the amount
of dividends above $50.
Generally speaking, these
rules apply to dividends paid
on the common and preferred
INCOME TAX TIPS
Washington IIP Before
you seal the envelope and
mail in your tax return, be
sure you have:
Signed your name on the
proper line. If it is a joint
return, your wife must sign
too
Attached copy B of the
forms W-2 from your em
ployers showing how much
you earned last year.
Included a cheek or
money order for any addi
tional lax you owe.
Checked the right blocks
for personal exemptions
and properly listed depend
ents. Go over your addition,
subtraction and other com
putations to see that they
contain no errors.
Printed your name and
address legibly.
stock of U. S. corporations.
They do not apply to so-called
"dividends" paid on with
drawable savings accounts at
savings and loan associations,
mutual savings banks and the
like. Veterans Administration
dividends on GI me insur
ance policies are not consid
ered income lor tax purposes
Here are some examples
about taxation of dividends
a stockholder received $40 in
dividends last year. He re
ports this but need not pay
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VlrrU R. Wilkes I
113 South Central f
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Donald 1. Day
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ASHLAND AGENTS:
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tax on it because the law lets
him exclude up to $50 of div
idends. Another stockholder receiv
ed $110 of dividends. He re
ports the S110, excludes the
first S50 and pays tax on the
other $60. Of the $60 includ
ed in taxable income, he may
take a 4 per cent (or S2.40) as
a credit against the final
amount of tax he owes. That
is, he may subtract the $2.40
from his tax liability and pay
the remainder.
Next, consider a man and
his wife, he with $60 of divi
dends and she with $40. He
reports S60, pays tax on only
S10, and takes 4 per cent of
the S10 as a credit against his
total tax. She reports and ex
cludes her entire S40. She
may not apply her unused
allowance of $10 to her hus
band's excess, even though
they file a joint return.
For persons with invest
ments in certain regulated in
vestment companies mainly
mutual funds there is a new
credit allowed this year in
volving undistributed capital
gains. You must file Form
2439, which your investment
company will send you. It
contains instructions on how
to fill it out.
U. S. Savings Bonds
If you report ypur income
on the cash basis you do not
have to pay tax on the inter
est until you receive it. In the
case of E Bonds, that is not
until you cash them in. Then
you list the interest with the
rest of your income and pay
the tax due on the total. Note:
On an E Bond, the interest is
the difference between the
purchase price and the value
of the bond at the time of re
demption, whether you hold
the bond to full maturity or
not.
Retirement Pay and Annuities
You owe no federal income
tax at all, and need not re
port, social security benefits,
railroad retirement act pen
sions, veterans pensions, ben
efits to families of veterans,
or payments for injury or
sickness to military person-
52nd Year
MEDFORD
Price 10 Cents
Tribune
2nd SECTION
MEDFORD, OREGON, FRIDAY, FEBRUARY 21, 1958
Pages 1 to 6
Intelligent- Persons Choose
When To Play Their Hunches
By DELOS SMITH
United Press Science Editor
New York HP) Although
you may want to argue about
it, scientific experimentation
has shown
that more in
telligent per
sons choose
when to play
their hunches
while less in
telligent per
sons play their
hunches. Psy
c h o 1 o g i sts
Deios smith have been
striving to understand the so
called gambling "instinct."
They have, found that people
generally like to risk a loss
in order to obtain a gain, even
when they could have had the
gain without risking the loss.
They've also found that
people generally are poor
odds-figurers for their person
al gambles. This has been
snown by a number of ex'
periments in which sizeable
groups were asked to figure
the probability of a person
ally desirable thing happen
ing. Used Statistical Rules
These persons figured the
probability was higher than
it was actually when figured
according to strict statistical
rules, which explains why
betting on long shots and
trying to fill straights from
the inside are popular
pastimes.
Now comes H. C. A. Dale,
of the British Research Coun
cil who undertook to find out
what all this has to do with
intelligence or lack of it.
He gave to 40 persons the
task of finding an object
which might be in a number
of places. There are two ways
of going about such a task.
You can go about it syste
matically and move from pos
sible place to possible place
in some kind of orderly man
ner, say, from left to right.
This way you're certain to
find the object although if
your luck is bad, it will be
in the very last of the places
where it could have been.
Or you can go about it on
a hunch basis. This way you
flit about at random. With
luck, you find it quickly.
Without luck, you may never
find it because of the risk
of forgetting where you've
looked and ' of overlooking
places where the object could
be.
Measured Intelligence
Of Dale's 40 persons, 22
played the game the hunch
way which, when you think
about it, doesn't make much
sense. Dale then measured
the intelligence of these 22
by psychological testing, and
found that they were less in
White to Address
Farm Loan Meeting
Harold White, superintend
ent of Southern Oregon Ex
periment station, and E. C.
Prestbye, attorney for the
Federal Land Bank of Spo
kane, will address the annual
meeting of the Southern Ore
gon National Farm Loan as
sociation in Gold Hill Feb. 26.
About 100 farmer and
idiiuuer memDers or. tne as
sociation from Jackson and
Josephine counties are ex
pected to attend, according to
F. E. Bowman, secretary-treasurer.
Registration will be at
11 a.m., with a free dinner at
noon, followed by the busi
ness session. The meeting will
be held in the Gold Hill
Grange hall and the. dinner
will be served by Gold Hill
Grange ladies. Entertainment
will be provided by the Cra
ter High school dance band.
Bowman said association
members will elect two direc
tors for a three-year term. The
terms of Andrew E. Stevens
of Medford and Albert L.
Straus of Gold Hill expire
this year. The annual report
on association activities will
be made by Oliver H. Round
tpee of Williams, vice-president
of the association.
Reserve Requirements
Of Banks Reduced
Washington OP) The
government has released up
to three billion new dollars
that U. S. banks may pump
into the nation's faltering
economy.
In its most sweeping anti
recession action since aban
doning the "tight money"
policy, the Federal Reserve
Board Wednesday cut the
reserve requirements of its
6,400 member banks by $500
million.
telligent than the 18 who had
searched for the object syste
matically. But rather than answering
a question, this result asked
one. Had superior intelligence
permitted the 18 to figure out
in advance that the laws of
probability made the syste
matic way more likely to be
profitable than the hunch
way?
Dale found that the 18
actually were no better at
figuring odds than were the
hunch players. They, too, had
had hunches, but they had
chosen to put their hunches
to one side. In short, they had
hunch-control, and the less in
telligent didn't.
27 Initiated
Into Knights
Twenty - seven members
were initiated into the Knights
of Columbus at ceremonies
last Sunday. The third degree
was conferred late that after
noon. Joe McCormick of Portland
conducted the third degree,
assisted by a ritualistic team
from Klamath Falls and aided
by Otto K. Smith.
New members initiated in
cluded Thomas W. Dugan,
Francis D. Harden, Donald C.
Jackson, James E. Messer,
Neal J. Murphy, Frank B.
Pallo, Donald E. Prom, James
A. Redden Jr., Martin Spiel
bush, Dr. Mario J. Compagna,
William F. Crowning Jr., Ed
ward E. Ford, Theodore C.
Holmes, William L. McKib
bin, Robert Messer, James C.
Murray, Dr. John Porto, John
L. Raapke, Gerald J. Scan
nell Jr., and Robert B. Sutton,
all of Medford.
Others were William H.
Baum and John E. Walker,
Central Point; Ernest H.
Cooper, Gold Hill; and Mich
ael J. Barrett, Raymond J.
Salisbury, Paul Berg and
Charles Snell, all of Grants
Pass.
About 100 attended mass
at Sacred Heart Catholic
church, which was followed
by a breakfast in the church
annex; More than 175 attend
ed a banquet at the Rogue
Valley Country club.
40 To Be Initialed
Into Local Elks
A class of 40 candidates
will be initiated into the Med
ford Elks club as part of the
lodge's observance of the 90th
anniversary of the Benevolent
and Protective Orders of Elks.
Initiation ceremonies are
scheduled next week, Elks of
ficials said.
The Elks club was started
in New York City, Feb. 16,
1868, when 15 actors, music
ians, theatrical managers and
others in show business or
ganized a society for social
purposes and to aid people in
distress.
Charles A. S. Vivian, a sing
er, was leader of the group,
which during the past 90
years has grown to a nation
wide organization with more
than a million members in
1,815 clubs.
Among projects by the Elks
are youth projects, including
the annual Student Govern
ment Day project sponsored
in this area by the Medford
Elks lodge. The program orig
inated in Medford, and has
received national recognition.
Salem (IP) The Oregon
Livestock and Poultry Feed
ers association has' been
formed here.
Salem (Ifl The State Ag
riculture Board meets here
next Tuesday and Wednesday.
nel disabled in active service
Provisions for other kinds
of retirement income are
somewhat like those for divl
dends; you need not pay tax
on part of it and you may be
able to claim a tax credit for
some of the amount you do
pay tax on.
You need not be retired to
enjoy these tax benefits, but
in some cases you must be 65
or older.
Generally speaking, any
contributions you made to
wards a pension during the
years you were working come
back to you tax free.
On the other hand, if your
employer footed the bills, you
are taxable forvthe payments
as you receive them now.
However, if you paid taxes on
the contributions as he was
making them to your pension
fund, or if you paid part of
the cost, you may now re
ceive tax free the portion you
paid in or paid taxes on.
Those are the general rules
for pension or annuity income
for which you are not taxable.
The law also provides rules
for the amounts on which you
do pay tax.
Under certain conditions, it
allows you a credit against
your tax. The credit is 20 per
cent of your retirement in
come, up to $240 per person.
To be eligible for this cred
it, you must have reached 65
by the end of 1957, unless you
were a civilian employe of
federal, state or local govern
ment, or a member of the
armed forces, and are receiv
ing income under a public re
tirement system.
Retirement Income
If you are 65 or older, re
tirement income, for the pur
pose of computing your tax
credit, includes pensions, an
nuities, interest, dividends
and rent. If you are under 65
and are a retired government
worker, your only retirement
income on which you can get
a credit is that which you re
ceive under a public retire
ment system. In neither case
does retirement income in
clude money you are now
earning, and it may be neces
sary to deduct part of your
current earnings in figuring
out your retirement credit.
One further qualification:
You (or your deceased hus
band or wife) must have earn
ed more than $600 in each of
10 years prior to 1957. The 10
years do not have to have
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been consecutive.
Before I close this series
and I hope it has been helpful
to you here are several
points worth repeating:
File your return as early as
you can. The deadline is mid
night, April 15.
Be sure you have figured
your tax correctly and have
looked into all the rules
which may apply to you and
may give you a lower tax.
Our job is to collect every
cent of tax which is owed,
but no more.
Late filing or errors can
make it necessary to charge
you interest or penalties.
If you need more assist
ance, consult your - Internal
Revenue Service.
Sudan To Take Case
To Security Council :
Khartoum (IP) Th Su
dan, abandoning hope that its
border dispute with Egypt
could be settled by local n
gotiation has decided to take
its case to the UN Seeurity
council.
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