(Dividends, Skh Pay Are Among
items To lEe Reported on Form
(Editor's note: This is the fifth
and final dispatch on how to pay
your Federal income taxes)
By EDWARD COWAN
United Press International
Washington-fliPD-Dividends,
sick pay, pensions, savings
bonds . . . Reporting these on
your income tax return re
quires knowledge of a few
special rules.
Like all other forms of in
come, dividends and interest
must be reported on your tax
return. Lots of people do not
know this, or conveniently
forget it. The Internal Rev
enue Service estimates that
last year some five billion
dollars of dividends and in
terest went unreported and
Uncle Sam lost about $500
million in taxes.
To get people to pay taxes
on dividends and interest, the
IRS is making a special ef
fort to remind people they
are taxable. Commissioner
Dana Latham has also prom
ised that tax agents around
the country will be checking
individual returns more close'
ly for dividends and inter
est. .
Interest All interest re
ceived or credited to your sav
ings or building and loan ac
count is taxable like ordinary
income, even though it is not
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Dividends-The first $50 of
dividends you receive during
the tax year are not taxable.
In addition, you may take
a credit against your tax of
up to 4 per cent of dividends
above $50.
Generally speaking, this
rule applies to dividends paid
on the common and preferred
stocks of fully taxable U.S.
corporations. They do not ap
ply to so called "dividends"
paid by savings bank and sim
ilar institutions. These "divi
dends" are actually taxable
interest. Dividends on life in
surance policies are not con
sidered income for tax pur
poses. Here are examples of how
the dividend rule works:
A taxpayer received $25 in
dividends last year. He re
ports this income but does
not include it on his taxable
income because it is less than
the $50 exclusion.
A stockholder received $90
of dividends from his shares.
He reports the $90, excludes
the first $50 from his taxable
income and pays tax on the
remaining $40. But he then
may take 4 per cent of the
$40 as a credit against his
tax bill, thereby reducing it
by $1.60.
A husband and wife filing
jointly may not combine the
$50 exclusion but may take
two separate ones. Suppose
he had dividends of $60 and
she received $40. He reports
the $60, pays tax on only $10
and takes 4 per cent of $10
as a credit. Her $40 of divi
dends is reported but exclud
ed. Her $10 of unused allow
ance may not be used against
the husband's dividends.
U.S. Savings Bonds If you
own U.S. savings bonds, you
may report the interest each
year or defer reporting until
the bonds are matured or
cashed. On an E bond, the in
terest is the difference be
tween the purchase price and
the bond's present cash val
ue. Once you elect to report the
interest each year, you must
continue to do so for all bonds
owned and those subsequent
ly acquired. You may not
abandon annual reporting un
less you first received per
mission from the IRS.
Sick Pay-You may deduct
up to $100 a week for sick
pay under certain conditions.
If you were sick at home
for more than seven consecu
tive days, the pay you receiv
ed starting with the eighth
day may be excluded from
your income. You may deduct
one-fifth of your weekly pay
(but not more than $20) for
each day missed if you are
on a five-day week; one-sixth
(but not more than $16.67) if
you work a six-day week.
You may deduct sick pay
starting with the first day if
you were away from the job
because of injury, no matter
where suffered, or if your ill
ness caused you to be a hos
pital patient for at least one
day. Again, you may not de
duct more than $100 a week.
If you claim sick pay de
ductions, be sure to attach
form 2440 to your return to
support the claim. This form
can be obtained at your near
est Internal Revenue Service
office.
Retirement income-Certain
kinds of income are not tax
able and need not be report
ed. They include Social Se
curity benefits, Railroad Re
tirement Act pensions, veter
ans pensions, benefits to fam
ilies of veterans, or payments
for injury or sickness to mili
tary personnel disabled in ac
tive service.
Some retirement income is
only partly taxable. In gen
eral, any contributions you
made toward a pension dur
ing the years you were work-
What Are Chances
Return Is Checked?
Washington -QCPD- What
are the chances that a
Treasury agent will check
your tax return?
As far as arithmetic goes,
every return is checked. It
pays to go over your addi
tion and subtraction an ex
tra time before mailing
your return.
You can't tell whether a
Treasury agent will dig
into your return to see if
you have omitted income,
taken excessive deduction
or made some other mis
take, accidental or other
wise. Returns get a full au
dit on a random basis. The
chance goes up with in
come. Returns which are
flagrantly fishy are more
likely to get a going over.
In 1958, the Revenue Serv
ice examined about 1 in 50
of the short-form returns
and about 1 in 21 of the
long-form returns.
The service says it will
check about as many this
year, but that agents also
will be looking closely for
reporting of dividends and
interest.
ing come back to you tax
free. If your employer paid all
of the costs of the pension
system ,you are taxable for
the payments as you receive
them. 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
receive tax-free the portion
you paid in or paid taxes on.
Can Get Credit
In some circumstances you
can get a credit for part of
the taxes you pay on retire
ment income. The credit-an
amount by which your tax
bill is reduced-is 20 per cent
of your retirement income up
to $240 per person.
To be eligible for this cred
it, you must have reached
65 by the end of 1959, unless
you were a civilian employee
of federal, state or local gov
ernment or a member of the
Armed Forces, and are receiv
ing income under a public
retirement system. You (or
your deceased spouse) also
must have earned $600 a year
in each of the 10 years prior
to 1959. They need not have
been consecutive years.
If you are 65 or older, re
tirement income for the pur
pose of computing your tax
credit includes your taxable
income from pensions, annu
ities, interest, dividends and
rent. If you are under 65, the
only retirement income on
which you can get credit is
that which comes from a pub
lic retirement system.
Regardless of your age, re
tirement income does not in
clude money you are now
earning.
O MAIL TRIBUNE, Medford, Or.
A Friday, Jan. 29, 1 960
A DOG'S LIFE
New York -flJPB- A total of
$500 million will be spent on
dogs in the U.S. this year on
items ranging from pajamas
and opera cloaks to reversible
raincoats and lounging robes,
according to the Quaker Oats
Co., makers of dog food. The
company also predicts that
the poodle, the "clothes
horse" of canine society, will
be the country's most popular
pure bred dog next year.
RX EQUALS $
New York -(UPD- Approx
imately 655 million medical
prescriptions were filled in
the U.S. last year at a total
cost of about $1,600,000,000
according to industry esti
mates. The average price of
prescription drugs was $3.08
while "miracle drugs" cost
about $4.40 each.
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Statement Termed
As 'Laughable'
Portland -UPD- Democratic
State Chairman Robert Straub
today termed as "laughable"
a recent statement that the
Republican party has worked
for labor's interests in Ore
gon. Straub said State GOP
Chairman Peter Gunnar and
his public relations man
"really strained to make a
press release. Almost as hard
as he has on his trivial at
tacks against Senator Richard
Neuberger."
Straub cited the anti-pick-eting
law he said was passed
by a Republican - dominated
Legislature and repealed by
the Democratic - controlled
1 9 5 9 Legislature. He also
charged Republican Legisla
tures allowed industry lobby
ists to "nearly wreck" the un
employment insurance fund
by lowering contribution
rates.
"I also might ask whose in
terests Governor Mark Hat
field was trying to serve when
he vetoed the independent
log truckers bill which would
have permitted small log
truckers to make a living,"
Straub added.
VETERAN EXERCISE BOY
Miami, Fla. (UPD - Pinky
Browne has been an exercise
boy for Ben Jones of Calumet
Farm for 36 years.
Small Worlds
Around Us
By Lynn M. Watkins
Some Can Sleep Soundly
Balanced on One Leg
The sleeping habits of the
wild things are often dictated
by the necessity of the mo
ment; some, of course, follow
a regular pattern, seldom dev
iating from the established
habits of their kind; others
may use considerable ingen
uity or foresight in selecting
a safe place.
Sleeping while standing on
one foot would seem to be
about as difficult a way of
relaxing as could be imagined,
yet many of the shore birds
do. - The great blue heron
sleeps soundly while balanced
on one leg. The flamingo does,
too, and complicates it by hid
ing its head under one wing
at the same time. About the
only time these creatures sit
down is while incubating eggs.
The perching birds sit down
to sleep, holding onto a tree
branch.
Much more comfortable are
the sleeping habits of sea
gulls as well as most mem
bers of the duck family. Along
with the pelicans, most of
these creatures sleep on the
water, the . distance from
shore giving them a cushion
of safety from land predators.
Many of th2se birds, while
sound asleep, paddle occasion
ally with one foot. This pro
pels them slowly in a tight
circle; it also holds them in
position when a water cur
rent is present. Usually too,
many individuals gather in a
group, or "raft," and sleep in
a social gathering.
Waterfowl 'Talk
And, too, many waterfowl
appear to maintain a close i
contact with other members
of the group by quietly bab
bling in .their sleep as if con
versing drowsily with one
another.
No more interesting sleep
pattern could be exhibited1
than that of the quails. These
little brown birds go to bed
in a tight little circle, all
heads pointing out, all tails
pointing toward the center.
Regardless of the direction
from which an enemy might
approach, one or more of the
birds would be facing it and
would be alarmed.
If the enemy is near and
flight is indicated, the entire
circle "explodes," every indi
vidual having an uncluttered
path with no danger of col
liding with a neighbor.
Sea Creatures Differ
In direct contrast to an
established sleep pattern and
location, where habit has in
dicated survival is more or
less assured, are the animals
of the sea. Many of these are
"homeless wanderers"; they
must sleep wherever night
o'ertakes them. The porpoise,
for one, has the entire ocean
for a bedroom. Most of the
fish, too, are terribly short
DISPOSAL UNIT
Rutland, Vt. -(UPD When
fireman Frank Walsh an
swered an alarm at his own
home, he learned the blaze
was started when his daugh
ter emptied an ash tray into
a pair of shoes.
of "home ties." To them
"home, sweet home" is a mat
ter of time rather than loca
tion. (Released by The Register and
Tribune Syndicate. 1960)
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