DON’T OVERPAY YOUR INCOME TAX!

IT SEEMS strange that after all these years of income-tax paying, the Bureau of Internal Revenue should find it necessary to warn taxpayers making income returns not to pay more than they actually owe. But such is the case, observes Bradstreet’s, noting that the issuance of such a statement was found necessary by the Bureau “because the earliest returns received this year showed a wide-spread failure on the part of taxpayers to give themselves the benefit of the 25 per cent. deduction credited to earned income under the new law.”   As Bradstreet’s gives the substance of the official statement:

In explaining the provisions of the law, the bureau calls attention to the fact that all net income for the year 1924 up to $5,000 is considered to’be earned income for the purpose of the 25 per cent. deduction. As an example, the bureau’s statement cites the case of a taxpayer whose net income from salary in the year was $2,000, and who made a profit of $3,000 in a real-estate transaction, his total net income amounting to $5,000. Such a person, according to the bureau, is entitled to consider the whole amount as earned net income in computing the 25 per cent. deduction allowed him. On the other hand, the earned net income for 1924 is not to be considered as in any case exceeding $10,000, so that a person having a net income of $15,000 from salary is only allowed to consider $10,000 of that amount as earned net income in deducting the credit of 25 per cent. The substance of this statement has been made public before, but, as has been wisely said before, mankind needs to be reminded.

Source: The Literary Digest for February 14, 1925

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