Air Force the Official Service Journal - Air Force Historical Studies ...

If a man dies in mil it.rrv sen icc, all income taxes which
he O\\es to the gO\ernnle;lt at the time of Ins death arc
forgi\en. This ;rpplies not only to taxes on ArIny P;I\, hut
to all income t.ixc». If a SlT\ieenlan's wile, not yet notified
t hat he has been killed, makes a p;IYllIellt OIl his'ineonle tax
.rf tcr his death, she is entitled to a refund.
lxccpt for these special provixiuu», the income tax returns
tor soldiers arc figmed cx.utlv like tllme of civili.m-, ,\s
;i1\\;I:'S, the t.ixp.rvcr Likes h i-, dcduction-. for such itcm s as
eontrilmtions, I;\xes ;md inteIT,t. thus arri\ing ;\t his net
mcomc. lrom th i-, he subtr.rcf s S :;1)0 [nr Iii, OI\n person:11
exemption. To determine thc normal tax he SUhtLlctS the
personal exeluption from the net incouic and takes three
percent of wl ia t is left. If it is a joint return, a personal
exemption of S 1.000 nLlY he taken, prm ided the gross
income of each spollSe is S :;00 or more. If one of the parties
to the joint return has a gross income of ]ess than S :;O(). tIllS
amount plus S:;OO IS the .uuou nt of pcr-ou.rl exemption.
In addition to the uonu.il LIX, there is a graduated len'
known as the surtax. To compute this ta x, hegin wit h the
net income .md xubt ruct S :;IlO for the ta'\p:l\'er's personal
exemption, S :;00 for a spome .md S :;IlO for each dependent.
Tlie remainder is known as tile sur t.rc net income. The sur-
I;IX starts at 20 percent for :1 smtax net income of 52.000 or
less. It is 22 percent on the .uuount of surt.i x net income
between 52,000 .md 5-+.()OO. 2CJ percent on the amount
xtwccu 5-+,OO() .md 5(1.000, 30 percent on the .uuouut between
S(),OOO and 5S,OllO, .mr! so on up.
There is :1Il c.r.icr \\ay th.m goim; th roueh all the COl!lpUt.itious
explained .ibovc, If his gross iucouic is 5:;,000 or
less, the t.rxp.rvcr lila:' mcrclv consult a table wh ich shm\'s
t.i xcx for v.uiou« lnels of income .iud pa\' accordingly, This
t.iblc nutomuticaliv ,11Io\\s the t.rxpuvcr an arbitr.irv (leduction
of app roxu u.rtclv 10 percent, wh icl: is in lieu of the
.rctual deductions he would he pcrurittccl to take if he figurccl
his I;IX step hv step. If his gross iucouu- is over 5 :;.000,
the taxpayer may elect to tIkc a slam\;m] 5:;00 credit in
lieu of the various specific deduct ions.
1100\'e\Tr, the tuxp.tvcr. if he prefers, 11];)\' make his return
the hard wav, figming out his deductions. net income, sur-
LIX net income, and the uon n.i] and surt.rx lcvicx.
Persons who filed deeLn:ltiollS of estimated tax for 19++
will recall that in making tlicir computation, they included
:1 victorv tax. Suli-cqucu tlv. that t.rx \yas abolished. but in
effect it has lxcn replaced bv revised uorm.rl tax and surtax
rates. The final rcturn on ] 9-+-+ income, wh ich will be filed
hv Vlarch I:;, 19-+:;, will he computed on the new LItes, uud
the taxpavcr will he credited with a 11\' pa\'m('llts he h.is m.rdc
on the hasis of his 10-+-+ dccl.uu t iou. whicl: included the
I ictorv tax, This ehallge will not ru.ikc an:' subxt.mti«! difference
in the amount of tax involved.
:"01\' h.ivc a look at some of the priucipal differences
bctwccu the current t:IX provisions and tlro-«: wh ir.l: were
.rppl ic.iblc in prcviou-, vc.i rs.
The most com pl ic.rttcl changes \\'eIT tlro «: wh icl: ;r!teeted
the tr.mvit ion from the fOl'lner tax p:I\'mellt S\'stem to the
P:I\'.;ls.\'ou.go pl:m. Uut il I ()-f3, ull iucomc taxes were p.rid
durius; the vcar follOl\ing the tax:lhle vc.u. T:I'\es on ] (HO
income were paid in I(Hl, tlWS on ]0-+1 iucomc in IIH2.
The fOrInula for elte'cling the ch:lnge.mTr \\':IS cOillplicated,
since it \\;IS Ill'cess:\r\' for nlmt t;"jl:1\lTS to Stilt
p;l\ing their I IH) t:IWS hefore thl'ir ] 0-+2 t:I'\ ohlig:ltiollS
had heen diseh:nged fulh', The ci,ili:ln t:I'\P:IHT heclmc
c\lrrcnt hy paling the Ln~er of the h\o \T;H': I:1xcs p1\1';
one.fomth of the sndler I:1x. Thm, if a eilili:Ill's ]0-+2
t:\X lIas 5] 00 :Illel !tis ] 0-+) t:1'\ \\:h S] :;0, hc p;liel for the
t\\'o lears 51:;0 plus 52:;, or SI-;-:;,
The ('han~e.()\er plan \\'as more gcnerous for so]elicrs.
The system establis]led for cili]i:ms ,lpplieel to a solc1ier olll\'
20
in the event his I ()-f 3 tax \\as l.ugcr tli.m his ] ()-f 2 t.ix. If
the ] 9-+2 tax \I;IS the !:tr~er- .rucl this \\'as the case wit]:
the great majority of m ilit.trv men-hc \\',\S permitteel to
recompute his 19-+2 tax, disregarding his c.uucd income for
th.rt year .md. in cilcct, p:I:' oulv t hc I l)-f) tux plus one.
fourf h. In other words, .ixxun«: a soldier's 1 (H2 t.rx. ;111 of
it on earned iutom c, \\as S :;()(), and his] ()-f) tux \\:I.S S2(1),
I:or the hIC1 years, then. he paid 52()() plu-, oucfomth 01
S2 :;(). I':,trlll'(! income is xul.uv, cou nnisvion or bonus. IIO\\.
ever. the first S 3,OOll from .mv source is deemed c.uncd ill'
COllie for ineomc tux plllposes'.
This meant th.it if a sold icr's ] 9-+) t.ix turncel out to he
zcro, he \\;IS entitled to a refund of :I11 he h.id p.i«] on his
] (J-+2 tax, prOlldcd all of th is tux had been on c.uncd in.
come. This \\':IS a wiuclfull to a man wlio c.uncd a Lm;c
civilian "dar:' in 10-+2 aud suhse(!ueutly entered the service
at a reduced incomc.
The victorv t.rx \\'as effective ou]v for the t:Jxahle vc.u
10-+). I'or ll;ost milit.nv men with 'no outside incom~', it
lISu:I1l:' .nuouutcd to onlv a fe\\' dollars. It \I:IS computed
on the t:Jxp,I\'er's so-cal led "victorv tax net income," which
would normally be a scrviccm.ms Armv P:I\' less his S I, SO()
cxcluviou. The t.rx, then, would be five percent of thc \ie.
ton' tax net income after a personal cxcru pt ion of S()2-+,
minus 2:; pcrecnt of the tux if the t.txpuvcr \\as single, -+0
]K'leent if he \\:IS married. An additional two percent of thc
\,1.'1: \\:IS deductible for each depenelcnt.
In ! 9-+), the exemption for caeh dcpendent \I,IS S) :;0,
a nc] a dcpcndcut \yas defined as a child under I S or a person
physicalh' or mentally incapable. ;\'0\1 a dcpendent is
a clove rclntivc \Iho receives trou: the ta'\P:IHT :;0 perccnt
or more of his m oncr.uv support from tllc t.rxp.ivcr .md
wh o:«: gross iucomc from other sOllices is less th.m S :;00 a
\TaL A m.micd m.ms pcrvou.il cxcmpt iou \\':IS S 1,200 in
I l)-f), ,1I1d a single pcrson's 5 :;110.
Thc c.uncd income credit \\as clcd uct ihlc in 10-+) for the
bst time in r.om pur.n iou of the norm.r] I:IX. Th:lt credit \I;\S
] 0 perccnt of the net income or the c.u ncd income, whichever
\I'as the snLlller figure.
The first special provision for scrviccmcu \\'as made for
the 10-+2 tux.rhlc yeaI'. In com pnt inr; their gross income:
that ycar, enlisted personnel \\'l'IT permitted to deduct from
t luir Armv pa:' 52:;0 if single and 5 )llO if m.u ricd , The
S1. :;Ollmi]itary sen icc exemption \I:IS first cffeeti\e in 10-1),
,\!:Jll\' state inc-ome tax h\\'s h.ivc been modified in favor
of men and women in m il itnrv service. ~ lout.ru.t and Kent
ucl.v exempt tliciu cOlllpletel~', In Virginia the first 5:;O()
of military pa\' and ullow.mcc-, is not considered iurornc for
st.itc tax purposes. Oregon c'\empts the first S ).000 and
~[inuesota the first 52,nOO. ~[ost state iucomc I:1x Ja\\'S proviclc
subvt.mt ial pcrsonal oxcmpt ion-, in :111\' c.r-.c. so th.i!
rcl.i tivclv fc«: iuilit.uv men arc affectl'(1 1)\, thr-.c LI\\,,;. IIo\\,.
C\Tr, fm: pmpmcs of ~,t:lte iucon rc t:Jws, a' soldier's rental and
suhsistcnec ,IlIO\I':lnecs arc gClllT:I1h' eonsi(lcred income,
Obviou-Iv, it has lxcn iUI))()ssihle to ;rn\\lcr (kt:lileel ljncstiou.
ah(lllt tl«: t:IX !:t\\'S in tlic sp:ll'e of tllis .ut iclc. TIll'
bcvt tllis C'\pl:nl:ltion could ,Ittempt \I:IS been to cover the
import.mt provi-ious :!flecting sen iCCllll'l1. If \'I)]] arc OHT.
Sl',IS, pcrh:lps \lh,lt IOU h.ivc rc:«] hne will h'l']p von pl.m
yom person:I1 :Ifhirs \\hen \'(lll nl!llIl 111!lIC llilited St;ltes,
T:I'\ 1:1\1' is ]](l\\' e\:treulch' COl1lpl,''\, "[mt persons require
guid:lnl'e to computc properh' !lleir LI'\ ohlic;;rtiollS to thl'
gmernl1lent. Yon arc entitled to qn;I1!fll'el :lssisLlnee, and
SIll'h ;\ssishnec is ;11;lihhk, If yJ)Jl h;\\c ;\UY 'llll'stions, either
llm\' or \\'hen thc tillle COlnes for nl'\\' t:1\ returllS. (leClar:l.
tiollS or p:ll'lllents, the ]egal aSSist:lllce officer :It \'om st,ltion
\\ill he glael to help you, If there is no leg:I1 :lssist:lnce officer
;It \'I)]]r station, IOU nl:l\' \\Tite elirect to TIle J\ir In(h;c J\d\ocate,
Leg:1! Assistance Di\ision, \\':Ishington 2:;, D. C. .... "'r
AIR fORCE