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About Medford mail tribune. (Medford, Or.) 1909-1989 | View Entire Issue (Jan. 27, 1960)
Residents Mot Taxed on ADD Income Reported on Return (Editor's Not: This, the third of fiv dispatchas on how to pa; your Federal income lax, tells about the exemptions you can lake to lower your taxable income.) By EDWARD COWAN United Press International Washington -TOPD- You must report your total income on your Federal tax return. But you are not taxed on all of it. Under the law you can sub tract big chunks of income from your earnings before you settle on your taxable in come." For most taxpayers these chunks are either exemptions or deductions. An exemption is usually an allowance for your dependents, including yourself. We'll discuss exemp tions in this article. In the next one, we'll take up deduc tions. For each exemption that you are entitled to claim, your income is reduced by $600 for tax purposes. Every taxpayer gets an exemption for himself - automatically. That's why a single person with no de pendents pays no income tax if his earnings for the year are $600 or less. Married Person A married person gets one exemption for himself and one for his wife - unless she is listed as a dependent on someone else's return, such as a parent's, or unless she has filed a separate return of her own claiming herself as an exemption. The rule is that a person can be a full dependent of only one taxpayer. This means that when a couple file separate individual returns, each must list himself and neither can claim the other Both can be listed in a joint husband-wife return even if the wife (or husband) had no income in 1959. Two special types of exemp tions are for old age and blindness. If you were 65 or older before the end of the year, you get an extra $600 exemption. If you were blind on or before the last day of the year, you may take an extra $600 exemption regard less of your age. If you qual ify on both counts, you may take two extra exemptions. Four Exemptions Suppose you turned 65 last year (or on Jan. 1, 1960) and your wife did too. If you file a joint return you may take four deductions - the one apiece everyone is entitled to and one each on account of age. That means the first $2,400 of income reported is not taxable. If you and your wife file separate returns, you take two exemptions each. You may take blindness and old age exemptions for a wife or husband who died last year. But these special types of exemptions may not be claim ed in any circumstances for a dependent other than a spouse. A parent, child or other dependent counts as only one exemption for you regardless of age or blindness. To claim someone as a de pendent your relationship must meet these five tests: Three Forms Are Available for Tax Return Filings Washington (CPU T a x payers can file their re turns on one of three forms. Here's how to tell which one to use: 1040A, short form if your income, (or combined income in a joint return) was less than S10.000 in 1959 and included not more than $200 in diridends, in terest or wages that were not subject to withholding. No itemised deductions. 1040W, middle form Un limited salary, not more than $200 of dividends and Interest, no other income. Taxpayer may take stand ard deduction or itemised deductions. 1040, long form All taxpayers who do not file on other forms must use this one. Required for re porting rent, capital gains or losses, retirement In come. Either standard or itemised deductions may be taken. 'On the Air' Code Training Available "On the air" code training classes will start Monday at the Civil Defense center. The classes are open to Civil Defense Control Center personnel and amateur radio operators. Instructors will be Chuck Thurston, W7BEG; Ed Gilkey, W7EGM; and Dwight Albright, W7HLF. It was re ported that there are openings for four interested persons. Instruction will include the proper handling of messages along with routine operating procedures. Code practice will be held from 8 to 8:14 pjn.; Civil De fense network, 8:15 to 8:30 ajh.; with code on the air from 8:30 until 9 pan. 1. You must have furnished more than half of his or her support in the past year. 2. The dependent's gross in come must have been less than $600 for the year, unless the dependent is your child under 19 or a full-time stu dent. (Details on this excep tion below.) Closely Related 3. The dependent must be closely related to you, or, if not, must be a member of your household who is living in your home. 4. The dependent must be a citizen of the United States. If he is not, he must be a resi dent of this country, Canada, Mexico, Panama or the Canal Zone. 5. The dependent must not make a joint return with his or her husband or wife. Here is the special excep tion the government makes for your children. A son or daughter who earns $600 or more may still be claimed as a dependent by a parent who provided more than half the youngster's support: -If the youngster was un der 19 at the end of the year. -Or if he or she was a full- time student, regardless of age. To be legally a full-time student, a person must have I engaged in full-time study at a recognized school for at least five months of the year, or have been enrolled in one of several full-time on-the-farm training programs. Cannot Claim Remember: even if your child qualifies under one of these special rules you cannot claim him as a dependent un less you provided more than half his support. Regardless of whether you claim him as a dependent, a child who earned $600 or more must file an income tax return of his own. He may claim his own personal ex emption without affecting your right to claim him as a dependent. If the child earned less than $600 and taxes were withheld - this applies to adults, too -he is entitled to get the taxes back. To do so, he must file a return. A modest tax break is also provided in the law for per sons who qualify as "heads of households." Usually, this means a person who is unmar ried or legally separated but who furnished for the entire year more than half the cost of maintaining a household for at least one relative. An example would be a single man who provides a home for an elderly mother. Lower Rates A "head of household" is taxed at slightly lower rates than other taxpayers. If the relative he supported was an unmarried child, grandchild or stepchild who shared a home with the taxpayer, he need not qualify as a depend ent. If the relative is a parent who qualifies as a dependent, the household you maintain for him need not be where you live. "Heads of Household" may file their tax return on either Form 1040W or Form 1040. The rule which says you must furnish one -half of a person's support in order to claim him as a dependent is modified in the case of per sons whose support is provid ed by several individuals. If all other criteria for claiming a dependent are met except the "support test," any person contributing more than 10 per cent of the dependent's support may make the claim. Other contributors of more than 10 per cent of support must file with their returns statements waiving their right to take an exemption for the dependent. They use Form 2120 to make this deduction. Here's an example: An eld erly mother is supported by two sons and a daughter, each of whom provides one-third of her support. One of the three may claim the mother as an exemption if the other two waive such a claim on MAIL TRIBUNE, MedforJ. Or. J Wednesday, Jan. 27, 1960 Form 2120. But the exemp tion cannot be divided. Other points about exemp tions: -You may not claim an ex emption for your spouse if you were divorced or legally separated during the year, re gardless of support payments. - You may take an exemp tion for a child born to you last year who died before the year ended. You may claim the child even if it lived for only a few seconds or minutes - but not if it was still-born. 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