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PAGE 4 - PLAINDEALER-WEDNESDAY. JANUARY 26. 1977 Slate<Book-A-Thon' For Charitable Cause IRS Defines Tax Terms How can reading >6bks help hundreds of cerebral palsy victims"' The United Cerebral Palsy chapter in Aurora is organizing a program called a vBook-a- thon". in which boys and girls, raise money by reading books Persons interested in raising money to help the numerous programs assisted by UCP can participate in the Book-a-thon by obtaining sponsors »o donate a designated amount per book read The deadline for completing the books is Mar 31 It is required that a parent or teacher verify with a signature or initial that each individual book was read The reader turning in the highest amount of pledges will win a portable television set The runner-up will be awarded a portable radio All par­ ticipants will be given a United Cerebral Palsy Certificiate of Appreciation. Those who would like to particiate should send their name, address and telephone number to United Cerebral Palsy. P O Box 5&2, Aurora, 111 60507. or call 892-3858 Most of the money presently being raised by the UCP is being directed toward summer programs, such as day camps and residence camps Ac­ cording to UCP director Bob Conklin. the present lack of funds is threatening to eliminate the summer orogram s When vacationing in a foreign country, knowing the language makes it easier to get around The same holds true when making out a Federal income tax return--knowing the tax terms makes preparation of the form easier. 1 « To help you learn, the language of taxes, the Internal Revenue Service provides the following outline of some of the more common terms you'll run into They are presented in order of appearance on Form 1040. 1. Filing Status. Determines which Tax Rate Schedule or column in the Tax Table you should use to get the right tax. Types of filing status include: single, married filing jointly, married filing separately, qualifying widow* er) with a dependent child, and head of household (see I.A). For withholding purposes you should also know about: A. Head of Household. To qualify here, you must be unmarried or legally separated on the last day of the tax year (December 31 for mo6t people). You must also have paid over half the cost of maintainingsa household for at least one relative all year long. It is not always necessary for the relative to live with you. It depends on the relationship A parent who qualifies as a dependent does not have to live with you. but must live in a home you maintain, for example, a rest home or home for the aged. On the other hand, your unmarried child or stepchild must live in your home, but does not have to qualify as your dependent. 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LOVE YOU HORNSBYS ^ family centers -- 1*5* Open daily 9-9 Sun. 10-6 4400 W. Rt. 120 Mc Henry Rt. 47 & Country Club Rd. Woodstock CB RADIOS ^ NEW & USED LAKE & McHENRY CO. LARGEST SELECTION QAJe. • INSTALL • SERVICE • WARRANTEE - PLUS A COMPLETE LINE OF - ANTENNAS & ACCESSORIES PACE CB MODEL 133 $49 95 $1399s WITH 8 CRYSTALS Bearcat ID From the Inventors of automatic •canning monitor* With the Bearcat III you can to to all the trouble spots in your city. Without leaving the safety of your home. You see. the Bearcat III is an automatic scanning monitor that lets you listen in on your police, firemen, state patrol and other agencies in acUon. And unlike ordinary radios, the Bearcat HI eonstentiy scans for acUon. When one transmission ends, it automatically tunes to another Which means the Bearcat III can also help you avoid trouble. By filling you in on traffic and weather^ reports befora,you bear them on TV. It's available ttt our store now. FIRST COME, FIRST SERVED!! ( ( ( f « f ' < | V ' ' ) ) ) ) ) ) ) ) ) r a d i c o m g 2604 N. Chapel Hill Rd., McHenry, III. H 815-385-4224 Open Monday Thru Friday 8 - 6 Saturday 8 - 5, Closed Sunday relatives both must live with you and be your dependent for you to qualify. Widows (ers) who are entitled to benefits as a "surviving spouse" (see II.D) may not claim head of household status. U. Exemption. Each exemption entitles you to a $750 deduction. You are entitled toa deduction for yourself and your spouse. There also are exemptions for being 65 or over, for blindness, and for qualified dependents. A. Exemptions for Dependents. You are entitled to an exemption of 1750 for each person who qualifies as your dependent by meeting the dependency tests below: 1. Support Test. You must provide over half the person's support, which includes food, clothing, lodging, education, transportation, etc. 2. Gross Income Test. Generally, you cannot claim anyone who had at least $750 gross income during the year (see III. A.). The test does not apply to children who are undo* 19 years of age or who are fulltime students. 3. Member of Household or Relationship Test To qualify as a dependent, a person who is not related to you must be a member of your household for the entire year. 4. Citizenship Test. The person must be a U.S. citizen, resident or national, or a resident of Canada, Mexico, the Panama Canal Zone or the Republic of Panama for some part of the calendar year in which your tax year begins. 5. Joint Return Test. You may not claim an exemption for a dependent who files'a joint return unless the dependent and his-her spouse do not have to file but do so only to receive a refund. B Multiple Support Statement Normally you must provide over half a dependent's support to claim the $750 exemption. In «pme cases, no one person contributes more than half the support:jpf a dependent Instead, two or more persons might be able to clainr,the individual as a dependent except for the support test. When this happens, any one, but only one, of those who individually contribute ova-10 percent may claim the exemption. Each of the others provides that person with a written statement for his-her return waiving the exemption for the year C. Student. To qualify, a child must be a full-time student at an educational institution or in a qualifying program during some part of each of five calendar months of the year (not necessarily consecutive). D. Surviving Spouse. For the first two years after a spouse dies, the survivor may be able to use the tax rates that apply to joint returns. But these rates can only be used if the survivor has not remarried and maintains a home for a son, daughter, stepson or stepdaughter who qualifies as a dependent III. Income. A. Gross Income. All income that is not exempt from tax by law. B. Adjusted Gross Income. On the Short Form 1040A, this is the total of wages, salaries, tip6, interest and dividends. On the Long Form 1040, it is total income minus certain adjustments such as the disability income exclusion, moving expenses, employee business expenses, and payments to an individual retirement account. C. Dividend. A distribution out of a corporation's earnings and profits to its stockholder. It may be paid in cash or property. D. Earned Income. Amounts received as compensation for personal services rendered. Includes wages, salaries, professional fees and the like, and may be in the form of property as well as cash. E. Net Earnings from Self-Employment All income from a trade or business after deductions. Deductions are expenses incurred in the business, such as a farmer's cost for feed or a sales representative's travel and entertainment expenses. F. Taxable Income. Taxable income is your adjusted gross income less deductions and exemptions. G. Unearned Income. Income not received as payment for personal services, such as interest and dividends. IV. Standard Deduction. Taxpayers may choose between taking the standard deduction and itemizing their nonbusiness deductions but they should use the standard deduction only if it is more than the total of itemized deductions. The standard deduction comes in the form of either a percentage figure or the low income allowance and is the larger of the two. A. Low-Income Allowance. A tax-free allowance for low-income taxpayers. For single people, the low-income allowance is $1700; for married people filing jointly and for surviving spouses, $2100; for married people filing separately, $1050. B. Percentage Stnadard Deduction, litis is 16 percent of adjusted gross income, with the following maximums: for singles $2400; for married filing jointly, $2800; for married filing separately, $1400. There are special rules for dependents who have unearned income. . V. Itemized Deductions. A. Charitable Contributions. A deduction for contributions to any qualifying organization. These must be established and operated for charitable, religious, educational, scientific,/ or literary purposes, or for the prevention of cruelty to children/or animals; to fraternal organizations if the contributions are used for charitable purposes; to veteran's organizations; or to government agencies that will use the gifts for public purposes. B. Interest. You may deduct the following types of interest : mortgage interest; "points" if you are a buyer; mortgage prepayment penalty; finance charges, separately stated; bank credit card {dan interest; note discount interest; redeemable ground rents. C. Medical and Dental Expenses. Certain medical and dental expenses may be deductible to the extent they exceed 3 percent of adjusted gross income (AGI). Medicines and drugs may be included only to the extent they exceed 1 percent of the AGI. Not subject to the 30 percent limitation is one-half of what you paid for medical insurance, to a maximum of $150. The rest is deductible as a medical expense under the 3 percent limitation. D. Taxes. To be deductible, taxes must meet three requirements. 1. The tax must be deductible, falling into one of these categories: te a. Income tax (State, local or foreign) b. Real property tax (State, local, or foreign) c. Personal property tax (State or local) d. General sales tax <State of local) e. Gasoline tax (State or local) 2. The tax must be imposed on you. 3. You must have paid the tax duru% l&,o. E. Miscellaneous Deductions. Your estate might add up to trouble. Add up the value of your life insurance, real estate, stocks and bonds, bank accounts, and other property. " Surprising? Well estate taxes can take a surprising chunk out of what you want to leave your family. Help protect them with estate planning. You can often reduce taxes by thousands of dollars and distribute your estate the way you want. See your attorney and talk to your Country Companies agent about Country Life's full- time estate planning service. # The Country Companies. We're a little dif­ ferent than most insurance people. Keith Sonntchsen McHENRY, ILLINOIS PH, 344-2772 Loren Millar RICHMOND, ILLINOIS PH. 678-6691 I 1. Alimony. You may deduct alimony, separate maintenance or similar periodic payments you aire required to make to your spouse or former spouse. Certain other support payments also may be deductible. For the 1977 tax year, alimony payments will no longer be claimed as an itemized deduction. Instead, they will become a. deduction in arriving at adjusted gross income, similar to moving expenses, and may be claimed by those who take the standard deduction as well as by those who itemize. 2. Educational Expenses. You may deduct educational expenses such as tuition, lab fees, the cost of books and supplies, etc., if you are going to school to meet requirements set by law, regulation, or your employer, for keeping your job, salary or status; or to keep or improve skills you need in your present job. You cannotdeduct these expenses if you go to school to meet the minimum educational requirements to get k job; or if your schooling will qualify you for a new trade or busihess, even though the courses otherwise meet the requirements outlined above. > 3. Political Contributions. You have the choice of taking a deduction or tax credit for money given as a political or newsletter fund contribution. Contributions must have been made in connection with a publicly announced campaign; however, newsletter funds of incumbents do qualify. The deduction is limited to $100 ($200 on a joint return). The credit may be half the contribution, to a maximum of $25 ($50 on a joint return) and not exceed your tax. i, You have to itemize to claim the deduction, but you can take the tax credit even if you prefer the standard deduction. However, you cannot take both the credit and deduction. You can also designate $1 of your taxes ($2 on a joint return) to the Presidential Election Campaign Fund. This designation, made right on the tax return, neither raises the tax due nor lowers any expected refund. On a joint return, the election to designate or not designate is available to both taxpayers. 4. Certain Other Expenses. Employee and income producing expenses, such as dues to professional societies, malpractice insurance premiums paid by physicians who are employees; the portion of your home that is regularly and excusively used in work; fees and licenses, the cost of a safe deposit box used to store financial papers, etc. are other deductible items. VI. Four Other Terms You Should Know. A. Estimated Tax. Your estimate of total taxes reduced by withholding taxes. It is normally paid yi four installments and is claimed on your return as a reduction of total taxes. B. Schedules. 1. Tax Rate ASchedules. Are used to compute your tax if your taxable income is more than $20,000. 2. Schedules Attached to Form 1040. Are supplemental information sheets for special purposes, such as showing itemized deductions, reporting interest and dividends, or computing the Credit for the Elderly. C. Tax Table. It is used to compute your tax if your taxable income is $20,000 or less. D. Withholding. The pay-as-you-earn way to meet your tax obligation. 1976 Food Program Stamped" A Success i I The 956,000 low income people in Illinois who received food assistance through the Food Stamp program in Fiscal Year 1976 were not the only individuals to benefit from this program. Illinois food dealers saw their profits rise and farmers incomes were definitely expanded as a result of the increased food sales generated by the program. According to the U.S. Department of Agriculture's (USDA) Food and Nutrition service, Illinois participants in the Food stamp program were issued bonus stamps worth in excess of $318 million during Fiscal Year 1976. The bonus value of the coupons is the difference between what participants pay for coupons and their actual value and is USD As contribution to the program. As food stamps can be used only for the purchase of food for human consumption (or of seeds and plants to grow food for the personal consumption of the eligible household), the value of the bonus stamps is reflected in increased food sales almost dollar for dollar. Low income households could not have made the increased purchases without food stamp assistance. Because needy households could buy more food with food stamps, cash receipts of the nation's farmers were noticeably increased. At the end of Fiscal Year 1976, the farmers' share of the retail cost of the Farm Food Market basket hovered around forty cents of each dollar or con­ sumer expenditures. Committee Meets On Hospitalized Children Dr. Leo Reyes will meet with the McHenry County Com­ mittee Concerned fori Hospitalized Children Thur-' sday, Jan. 27, in the home of! Mr. and Mrs. James Klocek, 13911 Washington street, Woodstock. The meeting will begin at 8 p.m., with a short business session preceding the speaker. Specializing in pediatrics Dr. Reyes will speak of the role parents must assume when a child is hospitalized. "How a Parent Can Prepare a Child for a Hospital Stay" will be another topic covered. Inasmuch as 50 percent of children under 5 will either be hospitalized or be treated in hospitals, parents are urged to attend. Through its work, the committee hopes to alert the public to the need for parents to remfrin with their children during a hosptial stay and-or emergency room treatment. Ample parking will be available across from the Klocek residence. Tax Receipts Federal tax receipts of $298 billion are estfmated for 1976. "Hiat represents an average ccn tribution of $4,150 from each American household -- double the take in 1968 and four times that of 1956. Additionally, the federal government this year is expected to run up a record $78 billion deficit, thus going into debt an added $1,073 per house­ hold. CLEARANCE MERCHANDISE (WE'RE MAKING ROOM FOR SPRING) 1216 N. Green Sfr. McHenry