Masonry Magazine April 1972 Page. 25
TAXES
By MIRIAM McD. MILLER
POLITICAL CONTRIBUTIONS
The manifestation of so many candidates for president in the first year that a deduction for contributions to candidates for public office is allowed prompts the question of whether there is a relationship.
The IRS has just issued a series of questions and answers on this new deduction. Briefly, the law now provides that a credit of one-half of a contributor's total contributions to all candidates and committees or $12.50, whichever is the lesser, is available to taxpayers. In the case of a joint return, the limit on this credit would be $25.
On the other hand, should a taxpayer desire, he could avail himself of the alternative deduction (provided he itemizes all of his deductions) only to the extent of his total contributions to all candidates and committees but not exceeding $50 ($100 on a joint return). The political contribution can be to a candidate for election to a federal, state or local office, in a primary, general or special election, or to a political committee.
The IRS advises taxpayers to be aware that the credit and deduction are for contributions for all candidates. Thus a taxpayer may exhaust his credit or deduction on one candidate. A candidate or a campaign committee may be misleading donors by stating categorically that the contribution to them will give rise to a tax credit or deduction.
The contribution must be made to or for announced candidates. The IRS explained that contributions made any time during a calendar year will qualify if the candidate involved has announced his candidacy by the end of that calendar year.
The question was posed as to just what verification will the IRS require of individual taxpayers claiming a deduction or credit? Taxpayers must have a written receipt in order to substantiate a deduction or credit. In no event, the IRS stated, will a deduction or credit be allowed without a written receipt. A cancelled check alone will not be enough.
In answer to the question: "Are contributions for the purchase of tickets to a political dinner or function eligible for deduction or credit?" the IRS said YES. The entire cost of the ticket will be eligible for deduction or credit so long as the dinner or function is clearly in the context of a campaign of an announced candidate and is not primarily a device to confer private benefits in the form of meals or entertainment to the contributor.
In order for a contribution to be eligible, the candidates or committees must file Form 4908 or Form 4909 with the IRS before the end of 1972. Any receipt from a candidate or committee should state that the proper form has been filed. (T.I.R. No. 1145.)
ONE EMPLOYEE
Can a pension plan qualify for tax purposes where it covers the employer's one employee? It happened that one masonry corporate employer dealt exclusivly in the services of its sole employee who happened also to be the only shareholder of the corporation.
The IRS ruled that a pension plan that otherwise meets all of the requirements for qualification will not lose that qualification merely because it is established by an employer operated for the purpose of selling the services, abilities or talents of its only employee who is also its principal or sole shareholder. (Rev. Rul. 72-4.)
TO MARRY?
Due to the recent change in the tax rates for single taxpayers a hardship has been created on married working couples. Now a decision to marry may involve the advice of the tax consultant. A working couple filing a joint return will find that they must pay considerably more taxes than if they were not married and filed separately. This inequity in the rates is not cured by a married couple filing separately. It is just one of those things. Perhaps the only cure is for all taxpayers to be treated equally regardless of their status.
STUDENT-EMPLOYEES
No sooner do we mail in our last year's return than we must turn our attention to the present year's tax picture.
Working students should file a new Withholding Exemption Certificate (Form W-4E) with their employer after April 30, 1972. The old certificates expired on that date.
Generally, single students with income of less than $2,050 and married ones filing jointly with income less than $2,800 will not owe any Federal income tax for 1972.
The IRS did caution students to check with their local IRS office if they are a dependent of another taxpayer and if they have income such as dividends or interest in addition to the wages. In such circumstances, they may still be required to file a return and pay tax on income less than $2,050. (IRS News Release No. 1208.)
CHILD CARE
The 1971 Revenue Act increased and liberalized the deduction for employment related child care expenses for 1972 and later years. The limit has been raised from $600 a year per child to $400 a month, and the income level above which no deduction is allowed also is higher.
"WIN" EMPLOYEES
This is a complicated government program, and only time will tell if it is workable. The Revenue Act of 1971 gives a credit to those who employ workers under the Work Incentive (WIN) program. The aim is to help people end their dependence on welfare by placing them in jobs or on-the-job training.