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<5- l«dWlu«» wat"""* .rf»22S- a a I. As 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. Qv I'm a teacher. I'm required Jto get a master's degree in •education to hold on to my Job. 'Are my education expenses, in­ cluding tuition, tax deductible? #> . *A. Yes. If you meet the mini- Imum educational requirements Jfor qualification in your em­ ployment, and if your em­ ployer requires you to obtain •further education to retain .your present salary, status, or '.employment, you may deduct '.expenses for the least educa­ tion that will meet the mini- •mum requirements if they are .for a business purpose. For » jmore details, see IRS Publica­ tion 508, "Tax Information Jon Education Expenses." It's ^available free from your local JRS office. Q. Can an individual taxpayer ever deduct legal expenses? A. Yes. Legal expenses that are a necessary factor in pro­ ducing taxable income are normally deductible. For ex­ ample, you may incur legal expenses that are deductible because you need legal assist­ ance directly related to your employment, whether in per­ forming your duties or in litigating to keep your job; or you may require legal help •to collect alimony. Since ali- Jmony is included in taxable •income, you may deduct your Jlegal cost as an expense neces­ sary to produce such income. 1q. This fall, my son went laway to school. Because he no |longer lives with me, will I ilose him as a dependent? ;A. No. In general, a dependent •relative does not have to live Iwith you or be a member of ;your household for you to •claim him as a dependent. '.However, you must meet the other dependency tests, includ­ ing furnishing more than one half of the dependent's total sTHi support. Since your son quali­ fies as a student, the gross income test, which generally restricts gross income of a de­ pendent over age 18 to less than $750, does not apply. Q. When I retire, will I have to pay income tax on the pen­ sion I'll receive? A. It depends upon the kind of pension you will be receiving. Social Security benefits are not taxable. However, if yours is a company pension and you did not contribute to the fund, the pension benefits are fully tax­ able. If you did contribute to the fund and will recover your contribution within three years, the pension is not taxed until you have recovered the total of your contribution; the remain­ der is fully taxable. For more details, see IRS Publication 575, "Tax Information on Pen­ sions and Annuities." Contact your Internal Revenue office for a free copy. Q. I loaned my brother-in-law some money for a business venture that flopped. I know I'll never collect from him. How can I tell if the loan qualifies as a deductible bad debt expense? A. When you claim a bad debt deduction you must have good evidence that the debt is worth­ less and will remain so in the future. You must take reason­ able steps to collect the debt. It is not necessary to go to court if it can be shown that a judgment, if obtained, would be uncollectible. If, in the exer­ cise of sound business judg­ ment, it is determined that there is no likelihood of recov­ ery at any time in the future, the debt has become worthless. Secondly, gifts cannot form the basis of a bad debt. Thus, if an advance is made with the understanding that it is to be repaid and is later forgiven, the advance is considered a grift and not a loan. Loans to chil­ dren and other relatives are presumed to be gifts. This pre­ sumption, however, may be overcome by convincing evi­ dence. Facts, and not the form of the transaction, will deter­ mine whether an actual loan was made. For more information, see IRS Publication 548, "Tax In­ formation on Deduction for Bad Debts," available free from your nearest IRS office. Q. I pay a nurse to come to and take care of my disabled husband while I'm out work­ ing. Are these payments sub­ ject to the three percent-of- ad justed-gross-income limita­ tion on medical expenses? A.. Yes, if you decide to claim the payments as a medical ex­ pense. However, in the alterna­ tive, you may claim the ex­ penses as a deduction for dis­ abled dependent care. This deduction has more liberal lim­ itations than those for medical expenses: (1) You must be gainfully employed, (2) have an adjusted gross income of $18,000 or less (for every $1 your income exceeds $18,000 your deduction is reduced $2, disappearing completely at $27,600), and (3) maintain a household for you and your husband. In addition, the de­ duction is limited to $400 a month for dependent care serv­ ices performed in the home. More details may be found in IRS Publication 503, "Child Care and Disabled Dependent Care," available free from your local Internal Revenue office. Q. Is it true that when it comes to claiming the child of divorced parents, the parent who has custody usually is en­ titled to the dependency ex­ emption? A. If the parents furnish more than half the child's support for the year, the general rule is that the parent who has cus­ tody of the child for the greater part of the year is entitled to the dependency exemption. However, there are two ex­ ceptions to this rule. The par­ ent not having custody may be entitled to the exemption: if (1) that parent contributed-at least $600 toward the child's support during the year, and the decree of divorce or sepa­ rate maintenance, or a written agreement between the parties, specifies that the parent not having custody is entitled to the exemption; or (2) that par­ ent provided $1,200 or more of support for the child for the year and the parent having custody does not clearly estab­ lish having contributed more support than the parent not having custody. Q. My employer pays the pre­ miums on my group-term life insurance policy. Coverage is $25,000. Do I have to include the cost of the premiums as income on my tax return? A. No. The cost of group-term life insurance coverage of $50,000 or less provided to an employee under a policy car­ ried by his employer does not have to be reported as income. Q. I purchased contact lenses from an optometrist. Can I de­ duct the cost of the lenses as a medical expense? A. Yes. Payments for such glasses are deductible as a medical expense if you itemize your deductions. Remember that medical expenses are de­ ductible only to the extent they exceed three percent of your adjusted gross income. PAGE 1JJ- PLAINDEALER-WEDNESDAY, NOVEMBER 28, 1973 3 &SSHSS0S3B •V TMB OLD TIMKN From D. B. Satterfield, Tren­ ton, Ml.: I remember going to school in a log schoolhouse in Bath County, Kentucky in the early 1900's. It was known as the Chestnut Grove School. I also remember the 1910 visit of Halley's comet. Before the comet became visible, newspapers and magazines were making dire predictions of possible calamity, since astronomers warned that the comet would enter the plane of the earth's orbit in its passage around the sun. Some predicted that the tail would probably en­ velop the earth, others thought the earth might collide with the head of the comet. Wherever peo­ ple gathered it was a ready sub­ ject of conversation. The first ap­ pearance of Halley was in the east before dawn. It was an inno­ cent looking object with a short tail that pointed upward. On May 18 the comet passed through the plane of the earth's orbit and on Q. While cleaning out my desk, I came across the con­ tract, bills and other docu­ ments relating to the remodel­ ing job I had done on my kitchen several years ago. Can I throw these papers away or are they still important for tax reasons? A. In the event you ever sell your home, the basis of the property (generally what it cost the taxpayer), increased by the cost of the improve­ ments to the house, will have to be computed in order to fig­ ure out your gain or loss. Thus, such records should be kept in­ definitely. the 21st the comet's tail grazed the earth. Nothing happened, ex­ cept that I noticed an eerie change in the brilliant blue of the Kentucky sky. (Sand contributions to this column to The Old Timor, Sox 439, Frankfort, Ky. 40401.) Deep Freeie? Underlying 20 percent of the world's land, permafrost in some places extends only a short dis­ tance beneath the surface, but on Alaska's North Slope it reaches depths of 2,000 feet. c Q ~ JL 3 m h\ ONE OH ONE! FOR EVERY KERNEL ON EVERV EAR OF CORN - THERE IS A SEPARATE SILK STRAND! OAV TO DAY... .. LIVING CAN EAT UP A LOT- INCLUPING THE MONEY YOU SET ASIDE FOR THE FUTURE! BUT THERE'S A FOOLPROOF WAY TO AVOID THIS HAPPENING TO YOU­ THS PAYROLL SAVINGS PLAN WHERE YOU WORK! AN AMOUNT YOU SPECIFY WILL BE SET ASLPE YOUR PAYCHECK AND USED TO BUY U.S. SAVINGS BONDS o o o o o FIRST COUSINS! --- THE ONION IS A MEMBER OF THE LILY FA/VULV... AND THE MOSS THAT GROWS ON SOME TREES IN THE SOUTHERN PART OF THE U.S. IS DIRECTLV RELATED TO PINEAPPLES! ± Does bad weather always accompany a very low pres­ sure system? Bad weather invariably ac­ companies a very low pres­ sure system unless the pres­ sure dips only for a few > hours and then rises quick- %ly. A freak situation does ^ occur occasionally and mo- ^mentarily the weather will >hold good, even as the mer- >cury column falls. ;« But, invariably, this de- feline, if not reversed, will £ bring winds and probably •"precipitation. Very low pres­ sure means a valley on top >of the layer of gases sur­ rounding the earth is above %you. Air swirls into this £ valley from mountains (high •^pressure areas) and sets up >a counter-clockwise rota­ tion motion and a weather > disturbance--in this hemi­ sphere. 1 Below the Equator, the * motion is reversed-- it is clockwise in low pressure areas, counter-clockwise in % high pres systems. •masaammi I KIWANIS I NEWS f WONDER LAKE CLUB Z* Wives and members will take »«the traveling gavel to the t*Round Lake club's charter I-night Dec. 12 at Wooster Lake. -iRound Lake is the newest club -*in District 20. T* Four members reported on ^making an inter-club meeting -lof the Landmark Kiwanis club •*at Las Vegas last week. Since '•they were in Vegas, they also told of visiting Hoover dam and other area sights including night clubs and gambling -casinos. JOINS SQUADRON I Alan F. Estis, son of Mr. and ;Mrs. Frank Estis, has been -recently activated into the Jake -Schaefer squadron of the Ar­ nold Air society, University of •Illinois. Alan graduated from -McHenry Community high •school in 1973. He is now pur­ suing an Industrial Education •degree at the U of 1 The Arnold >Air society is a very active ;-elub, getting involved both in "community and university "'functions throughout the year. '-The Arnold Air society is sponsored by the AFROTC. Qntsr 1 » w/ Sale Prices Effective Nov. 28 thru Dec 2 Our Reg. 6.87 '""i V-LX HORNSBYf family centers ,̂ /T ristmas Cards Box of 25 87 Save 2.24 on our ontlro slock of rog. 6.87 blousosl Asst. stylos, fabrics, colors In all sixes. Ladies Stretch Pants I Now lacquer finish. | Chrlitmo* dimension* I In cords that say what I you fool. with on- | vol 09 OS. °ur Reg. 1.37 Brach's 3 lb. Christmas Choc. A scrumptious gift Idea from Brach's. Contains • grand ossortmont of ntllk ond dork chocoloto covored nougats, coromols, Our Reg. 2.76 Homo Decorations that will give your house the Christmas spirit." Christmas Wreath YOU* It" Ufa-Ilk a wroath of dark oroon hallo CHOICE TSZS "* * 1* Holly Door Swag Clont llfo-llko door iwso of rich aroon hallw golly docoratad with flowed rod cRerrlos and Our **9. ] ,93 v.vXv 1 Northern Elec. Blanket 1287 Just the thing to wear for work or around the house. Comfortable pull- on stretch denim. Navy only In sizes (12-20). Our Reg. 5.96 Our Reg. 17.76 Model No. 501 S" T £?UgIy ,w?rm ,h,» winter with u IL ,doubl* «ixo oloc. blanket. Single control. Cholco of colors. Schick Flexamatic Electric Shaver Our Rog. 26.76 OO 87 Modal No. 400 Mm A doluxo cord shaver in a gift and travol caso. 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Cat Bed Z (22" « 14 » 7") . S.*7 Soft foam sides and separate bottom cushion. Completely machine washable. A greot gift for your pet! Scovill-Dritz Sewing Basket 2*7 Our Reg. 3.58 Sooutiful plaid sawing chost. Nic<o to own or for gift givlnfl. A Slfl vcluo Scovill-Dritz Elec. Scissors 587 4400 WEST ROUTE 120 McHENRY, ILL. Our Reg 8.87 Variable spood od|u» « for various fabrics. Mondy worklight 10 ft cord Mode to so lHor JI6 A greot buy for o g»t yo"r»#l" April Showers Bath Powder Our Reg. 83c 67c Refreshing From Head to Toe SOW' 12 oz. Our Reg. 47c Helps Bubble Kids Clean and Eliminates Bath tub ring. HORNSBYS RT. 47 & COUNTRY CLUB RD. WOODSTOCK, ILL.