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.
(Next: Deductions)
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