MONDAY, OCTOBER 28, 1957
HERALD AND NEWS. KLAMATH FALLS, OREGON
PAGE FIVE
Income Tax Tips
Editor's Note: This is the first
In a series of four articles on
federal income taxes. The articles
are based on information provided
by the American Institute of Cer
tified Public Accountants and the
Oregon Society of Certified Public
Accountants.
You still have time but not
much time to do a little year-end
tax planning and assure yourself
of the best possible bioak when
you file your tax return next
April.
Millions of high, low and mid
dle income taxpayers, realizing
that careful planning of their fi
nancial affairs between now and
the first of the year can pay off
handsomely when the tax collec
tor calls next spring, have al
ready begun to establish those
extra deductions and special ex
emptions that will reduce their
tax bills.
To alert you to the tax-saving
steps you may be able to take
before the end of the year, this
newspaper is printing a series of
articles prepared with the help of
the national and state organiza
tions of certified public account
ants. These articles if you keep
them and follow their advice
may save you money. And re
member that a tax penny saved
is more than a regular penny
Lions To
Push Project
Providing glasses for underpriv
ileged children is the annual proj
ect of the Klamath Falls Lions
Auxiliary. To raise money for this
project, committee members, plan
ning a rummage sale, met a', the
home of Mrs. Estin Kiger for a
coffee hour October 24. Many ex
ceptionally good items have been
collected. The sale will be held
in the building formerly occupied
by Garcelon's on November 1 and
2. The door will open at 7 a.m.
on Friday.
During the coffee hour. Mrs.
Vera Moore conducted a refresher
course in operating the telebinocu
lar machine. For several years the
Lions auxiliary under the guidance
of local eye doctors, has examined
the eyes of Klamath Union High
School and Sacred Heart freshmen.
These students are examined with
the use of the telebinocular at the
beginning of the school year.
earned, because you don't have to
pay tax on it.
Many taxpayers have eood and
bad income years, depending on
the success or failure of personal
investments and business condi
tions in general. While this can
not always be avoided, the effect!
should be anticipated. Sound year
end tax planning requires that you
know fairly well what your in
come prospects will be for 1957
and 1958.
If you are like most individual
taxpayers, your goal at this time
should be to level out income for
this year and next year. Needless
or careless bunching of income
in either year can be costly. The
sharp bite of today's progressive
tax rates which you can assume
will be as high or possibly only
slightly less in 1958 makes it
much belter to have an income
I of $3,000 in each of two years.
I rather than SG.OOO in one and $10.
i 000 in the other.
Taxpayers who are in danger of
being whiplashed from one tax
1 bracket to another because of wide
I fluctuations in their 1957 and 1958
income should act before Decem
ber 31 to try to average out their
taxable earnings. This can be done
by careful shifting of income and
deductions from one year to the
next.
If your two-year income esti
mate shows that your income for
this year will be significantly
higher than next year's, you
should take immediate steps to
throw as much income as pos
sible from 1957 to 1958. At the
same time you should speed-up
the payment of all expenses that
can be deducted on your 1957 re
turn. By concentrating deductions
in the higher year and switching
income to the lower, you will
keep your taxes for both years in
the lowest possible tax bracket.
Should you be facad with the
more desirable problem of a siz
able increase in your 1958 in
come, reverse this procedure de
lay expenses and speed-up income
if you can.
Timing income and deductions
to gain a tax advantage is not too
difficult for the millions of tax
payers who file returns on the
basis of cash receipts and cash
disbursements. Since their earn
ings are taxable only after pay
ment is received, "cash basis"
business and professional men can
shift income by simply delaying
or speeding-up the collection of
accounts receivable near the end
of the year. Salesmen and con
tractors can do the same thing
by extending or closing deals that
may be pending in November or
December.
Farmers who operate on a cash
basis can accelerate or postpone
income by proper timing of the
sales of their crops or livestock.
While their income will be taxable
in the year cash is received, the
full costs of raising crops or cat
tle are deductible for the year in
which the costs were paid.
One look at an Internal Revenue
Service table of tax rates will
GETTING AROUND
OTTAWA Uft Turnabout is fair
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reau official, has decided to play
tourist himself. He and his wife
are holidaying in Ottawa.
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prove the hard dollar and cents
advantages of a few" year-end in
come shifts. The taxpayer who ex
pects his income to drop, from the
: 40 per cent bracket this year to a
30 per cent DracKet in iso, can
save $100 for every $1,000 of in
come he manages to put off until
after January 1.
There are special situations in
which it can be advantageous to
I bunch income in a single tax year.
For example, a husband and wife
lean file a joint return to gain the
'benefits of income splitting.
! Should one of them die, the sur
Ivivor may file a joint return for
ithe year in which the spouse
jdied and also for two succeeding
years under certain conditions.
Thus, a widow or widower may
profit by throwing more income
into this year and less into next
I if his or her spouse died in 1955,
since the Drivilpop rr filina n
; joint return will be lest in" all
cases in ltios.
I you are Dlanninp In ho m.-ir.
ried in 1958. remember that the
income - splitting privileges vou
gain will act like a rate cut 'for
you. At $7,000 of income, your
taxes will be $240 less than if vou
were single, assuming that you
take the St.ind.irH ritwlltrtinn onrt
claim only exemptions for you and
your wife. For this reason, young I however, is that In the future you
couples planning marriage might will have to go on reporting in
consider postponing income fromlterest as it accrues, rather than
1957 to 1958, while accelerating de
ductions from 1958 to 1957.
A final suggestion to holders of
U.S. Savings and War Bonds: if
you are trying to accelerate in
come on your 1957 tax return,
you might consider reporting the
interest that has acrrued on your
bonds. A point to keep in mind,
in the years the bonds mature.
Next Article: How to Plan Your
Federal Income Tax Deductions.
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