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» December .cut •-»' iHuibaf 5 « ZR ' VOUtw This column of questions and answers on federal tax matters is provided by the local office of the U.S. Internal Revenue Service and is published as a public service to taxpayers. The column answers Questions most frequently asked by taxpayers. Q. I've been out of work and looking for a new job Tor two months. Are any of my expen­ ses related to the job search tax deductible? A. Yes. In a recent ruling, the IRS has determined that ex­ penses directly incurred in seeking new employment are tax deductible under certain cir­ cumstances. (Previously, em­ ployment agency fees paid only after actually obtaining a job were deductible.) Among the deductible costs of a job search are counseling and employment agency fees, resume prepara­ tion, mailing and postage. In addition, reasonable travel and out-of-town food and lodging expenses are now deductible. However, the IRS says that such job hunting expenses for a trade or business differfent from the one in which you pre­ viously worked are not deduct­ ible. If it has been some time since you worked in the field in which you are presently look­ ing for a job, the IRS may dis­ allow your expense deductions. Furthermore, people entering the labor market for the first time may not deduct their costs for a job search. Q. I'm starting a business and expect to hire one or two employees. What kinds of tax records should I keep on these employees? A. You must keep all records pertinent to the amounts you deduct from their salaries for Federal and state income tax and social security tax. No par­ ticular form of records is re­ quired but they should include the amounts and dates of all wage payments subject to these taxes, the names, addresses and occupations of employees receiving such payments and the periods of their employ­ ment. In addition, record the periods for which they are paid while absent due to sickness or personal injuries and the amount and weekly rate of such payments. Furthermore, you must keep on file their social security account numbers, their income tax withholding exemp­ tion certificates (Forms W-4 and W 4E), your employer identifi­ cation number, duplicate copies of quarterly and annual returns filed and the dates and amounts of deposits made for these taxes, if any. You should keep such records at least four years after the date the tax to which they relate becomes due or is paid, whichever is later. For further information, you may wish to call your local IRS office and obtain a copy of "Your Business Tax Kit.". Q. I'm just beginning my practice as a dentist. What tax deductions are available to me as a result of my profession? A. If you practice a profes sion-, you can deduct the or­ dinary and necessary expenses incurred in your practice. These include memberships in profes­ sional societies, subscriptions to technical journals, expenses for the care and maintenance of your car used in your pro­ fession (however, commuting expenses from your home is> your office are not deductible), office rent and telephone. Books and professional equipment with a useful life of more than one year must be capitalized and a depreciation (eduction may be taken each year until the asset is fully depreciated (but not below a reasonable salvage value). For more infor­ mation on business deductions, you may wish to call a nearby IRS office and request a copy of "Your Business Tax Kit." Q. I started building a home last year and finished some of the construction on it in Janu­ ary, 1975. Can I add on two more rooms before moving in­ to the home later this year and qualify for the house purchase credit? A. The Tax Reduction Act of 1975 provides that construction of a new residence must have started before March 26, 1975, in order to qualify for the credit. However, if a taxpayer is building a residence, only that part of the cost of con­ struction properly allocable to work done after March 12, 1975, and before January 1, 1977, is subject to the credit. This means that you may qualify for the credit, but only for the construction of the two rooms and any other construc­ tion since March 12.- Of course, the new house must be-your principal residence, and you must be the first occupant. The credit is equal to five percent of the construction costs after March 12, subject to an over­ all limit of $2,000. The credit may not exceed your tax lia­ bility. Q. I recently bought a house which I will rent to a family. Is the security deposit I will receive, from my tenants con­ sidered taxable income? A. Security deposits received for the lessee's performance under the lease are not usually included in income when re­ ceived. They are included in income when and to the extent they are appropriated by the lessor because of a default by the lessee. If an amount desig­ nated as a security deposit is to be applied as payment of rent for the last year of the lease, it is advance rent and must be reported when re­ ceived. Q. Please explain the new personal exemption tax credit. A. Taxpayers filing their 1975 returns will be able to claim a credit of $30 against their tax liability for every personal or dependency exemtpion of $750 they take. The credit is not applicable to exemptions for blindness or old age. Letter from Washington by Senator Charles H. Percy Welcome Lady Bug To Home In Illinois "Lady bug, lady bug, fly to your new Illinois home," is the plea of entomologists to a new insect predator just released in central Illinois. Approximately 4.500 imported ladybird beetles were released into corn and alfalfa fields on the Agricultural Experiment Station farms at Urbana earlier this month by entomologists Clarence White and William Luckmann of the - Illinois Natural History survey. The larva and adult stages of this ladybird beetle, known as Coccinella septempunctata, and more commonly known as the lady bug, feed primarily on aphids. According to Dr. Luck­ mann. "If the beetle is able to live in Illinois, it will aid in controlling aphids that attack agricultural and ornamental crops." The beetles will be carefully monitored during late summer, fall, and winter for dispersal and establishment of per­ manent populations in Illinois. This beneficial insect is found throughout Europe, and natural colonies of the beetle were discovered living near Bergen, New Jersey, in 1974. Plans were initiated last fall for collecting the beetle, which Turkey threatening close U.S. bases. to WESTINGHOUSE UPRIGHT FREEZER MODEL FU182P • 630 lb. capacity -- 18.0 cu. ft. (AHAM) • Slim-Wall insu­ lation -- store 1/3 more food without increasingfloor space • Fast freeze shelves -- • Bulk package storage--. IV2 bushel capacity with sturdy wire food guard • Porcelain enamel interior -- is rust-proof, chip resistant • Plus magnetic door gasket, Pre­ cision temperature control, $339 95 20 CUBIC FOOT • J39995 CAREY 1241 N. 'Greet Appliance fff McHenry, III. T T T 385-55U0 I -I Instant Replay Midwest crops are the cen­ ter of attention as economists weigh the impact of increased * Soviet demands for grain against projected bumper crops in the United States. Memories of the 1972 Rus­ sian grain deal, which caused domestic food prices to sky­ rocket, have made economists, farmers, workers and con-"* sumers cautious about another large grain sale to the So­ viet Union. Dock workers, for example, have pledged not to load grain bound for Russia if the sale causes increases in domestic food prices. The AFL-CIO says it will back the dockworkers in their resis­ tance to the Russian grain sales if the salesf mean higher prices for American consum­ ers. _ : As the ranking member of the Senate Permanent Inves­ tigations Subcommittee I con­ ducted hearings recently to explore the impact of the grain sales to Russia. Esti­ mates of the expected Rus­ sian purchases vary, but one conclusion emerged from the hearings: we must carefully monitor the Russian harvest and our own crop yields to as­ sure that we do not oversell our supplies, thus causing shortages at home that could raise food prices. The Agriculture Depart­ ment estimates that Russia will need at least 20 million tons of imported grain this year to offset shortages. If bad weather continues to de­ stroy crops, the Russians may need as much as 29 million tons of grain. All but 10 mil­ lion tons of this amount would come from the United States. So far this year, the Soviet Union has arranged to buy 4.7 million tons of corn, 4.5 million tons of wheat and 1.1 millions tons of barley from the United States. The Agri­ culture Department has asked export companies to notify the Department before negotiat­ ing additional grain sales. Careful review of expected crop yields and anticipated exports will help assure that we avoid the mistakes of the 1972 grain deal between the U.S. and Russia. By oversell­ ing to the Soviet Union, we severely depleted our grain supplies. This shortage causel a dramatic rise in the costs of many food products. Meat prices soared, consumers launched a meat boycott and farmers killed cattle they could not afford to feed. This poorly managed export deal brought hardship instead of benefits to American consum­ ers and farmers. We must be especially care­ ful this year to assure that U.S. grain sales to Russia are beneficial to our economy. We are just beginning to re­ cover from a period of severe recession and soaring infla­ tion. Excessive grain sales abroad could inflate food prices and, in turn, have a recessionary impact on the economy. A healthy and growing ex­ port market, however, is es­ sential to our economic re­ covery. It can improve our balance of payments position and reduce unemployment. Many industries are highly dependent on a steady export market to sustain their busi­ ness. The railroads, for ex- ampl3, are counting on rec­ ord agricultural exports this year to help them recover from the slump in freight traffic. (The Chicago and North Western Railway re­ ported a 16 percent drop in grain shipments during the first three months of the year, compared to the same period in 1974.) In Illinois we have good reason to be optimistic about the expected bumper crops and a healthy export market. Illinois farmers expect record crops this year. Our state is the nation's leading exporter of soybeans and barley and ranks second only to Iowa in the export of corn. If we ex­ perience good weather for the remainder of the growing sea­ son, and if exports grow with­ out causing inflation at home, then farmers can expect good profits as well as excellent crop yields. The next few weeks will be the most crucial growing pe­ riod for corn and wheat. By mid-August the Agriculture Department will have a bet­ ter estimate of U.S. crop yields and Russian grain needs. Until then, farmers, commodity speculators and ex­ port dealers should maintain a wait-and-see position. "Ikl ' I • TMlki (> •' SCHOOL BUS (tWoFTHEOT) U N C O N D I T I O N A L L Y G U A R A N T I E D underwear rolls back the cost of back-to-school This quality underwear is styled for comfort and good fit. Because the fabric is 100% cotton, it's wonderfully absorbent and perfectly wash­ able. Where there's elastic, it's made to stand up under lots of wearings and wash­ ings. Fruit of the Loom . . . they keep making it better -- not expensive. TEE SHIRTS sizes 2-16 KNIT BRIEFS sizes 2-16 3/$2.06 4400 W. ROUTE 120 MCHENRY, ILLINOIS MARKET PLACE SHOPPING CENTER HORNSBYS ^ fami ly centers --- RT. 47 &. COUNTRY CLUB RE). WOODSTOCK, ILLINOIS Feeder Cattle Prices, Supplies Telenet Subjects The first fall TeleNct session to discuss feeder cattle supplies and prices will be held from 8 to 10p.m.. Wednesday. Aug. 27, at the McHenry County Cooperative Extension office. 11909 McConnell road, Wood­ stock. Brice Kirtley, University of Illinois Extension livestock m a r k e t i n g s p e c i a l i s t , w i l l coordinate the, telephone conference from Urbana. TeleNet is a closed-circuit, telephone conference network based in Urbana. The special telephone system allows county a d v i s e r s t o c o n d u c t d a i l y business and producers from throughout the state to meet with specialists. D u r i n g t h e W e d n e s d a y eve n i n g s e s s i o n , c a l l s w i l l b e m a d e t o K . C . W i l l i a m s o n , E x t e n s i o n m a r k e t i n g specialist, Virginia; John Gamble. Extension marketing specialist, Kentucky; and Carl Rylander, Interstate Producers Livestock association, Peoria: They will report on feeder cattle supplies, the amount of movement, prices from local cattle sales and pasture and feed supply conditions in their respective areas. Following the discussion and q u e s t i o n s o n t h e m a r k e t situation, some northern I l l i n o i s c a t t l e f e e d e r s w i l l discuss the factors they con­ sider when purchasing feeder cattle* J ' V t • I . i . » ' » M . I . K - , A H . 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