Masonry Magazine May 1971 Page. 12
TAXES
By MIRIAM McD. MILLER
SOCIAL SECURITY AMENDMENTS
With the enactment of the new Social Security Act amendments, the cost of being an employer has once again increased. While the tax rate will remain the same in 1972, the wage base subject to tax will be increased from $7,800 to $9,000-thus causing the maximum tax payable by an employer and employee to be higher next year. The self-employment tax base has also been raised and consequently these taxpayers also will be paying higher taxes by next year.
The following chart was prepared by Commerce Clearing House and it shows the employment and self-employment taxes in effect for 1971 and the years following:
YEAR
RATE
1971
5.2%
1972
5.2%
1973-75
5.65%
1976-79
5.85%
1980-86
5.95%
After 1986
6.05%
EMPLOYERS AND EMPLOYEES
EACH MAXIMUM TAX
$405.60
468.00
508.50
526.50
535.50
544.50
YEAR
RATE
1971
7.5%
1972
7.5%
1973-75
7.65%
1976-79
7.7%
1980-86
7.8%
After 1986 7.9%
SELF-EMPLOYED PERSONS
MAXIMUM TAX
$585.00
675.00
688.50
693.00
702.00
711.00
REMINDER
Remember that the student or part-time employee may file a withholding exemption certificate with his employer and become exempt from withholding. It is no longer necessary that these individuals file returns solely to get a refund.
The withholding exemption certificate must indicate that the employee (1) incurred no income tax liability in the preceding year and (2) anticipates no liability for the current year. The Form to use for this purpose is W-4E.
TO CORRECT A RETURN
If you filed your tax return and then learned of an oversight or error of some sort, you would certainly not be alone. This happens fairly often. So should you want to make any changes or corrections on your individual income tax return after it has been filed, then you need only file an amended return. For this purpose the IRS has available Form 1040X. However, a Form 1040 could be used so long as the words Amended Return are clearly written across its top. An amended return may be filed any time up to and including April 15, 1972. However, after April 15, 1972 the acceptance of an amended return becomes discretionary with the IRS. In general, the policy of the IRS has been to accept amended returns to correct mistakes if they are filed within two years after the tax has been paid or three years after the due date of the return.
FORM W-2'S
If you have had difficulty obtaining copies of Form W-2 it is because the IRS held up the printing of these forms pending the enactment of the Social Security Act Amendments. Until it gives further notice, the IRS suspended the requirement that employers must provide copies of Form W-2 to employees within 30 days after their services are terminated.
INVESTMENT EXPENSES
Do you keep a careful record of your investment expenses? You should because investment expenses are deductible when a taxpayer itemizes his deductions. They should be listed under "miscellaneous deductions." This deduction is permitted because these expenses are regarded as made for the production of income. This deduction is applicable only to expenses incurred in the handling of securities, loans, etc., other than in a trade or business.
But, take note, brokers' fees or commissions paid to acquire stocks or bonds are not deductible. Such fees are added to the cost of the property.
Some of the expenses that courts have allowed to be deducted as investors' expenses include: office expenses in managing a large portfolio of stocks and bonds; use of personal residence, secretary's salary, safety deposit box rents, statistical services and certain travel expenses.
One final note, the expenses must be made in a transaction entered into with the intent of producing income and must not be an activity that can be classified as a hobby.
1969 TAXES
In 1969, the IRS reports, the 76 million taxpayers in this country reported more than $600 billion of adjusted gross income on their individual income tax returns.
This was an average of almost $8000 per return. On these returns the standard deduction was claimed on more than half of the returns. The total tax liability shown on individuals' returns for 1969 was $86.6 billion and of this amount the tax surcharge amounted to $7.7 billion.
WITHHOLDING
It is now possible for a person who receives a pension or annuity to ask the payer to withold any specified amount from each annuity payment so long as the amount withheld is at least $5 per month and does not reduce the net amount of any pension or annuity payment to less than $10.
In order to obtain such withholding the request should be made on Form W-4P which can be obtained at any IRS District Office.
EMPLOYEE EDUCATION
Many companies and independent businessmen have adopted the practice of reimbursing their employees for certain tuition costs. This practice has been found to benefit not only the employee but also the company. The question then arises that when an employer pays educational expenses