 Income Tax 2022-2023. Certain business expenses of reservists performing artists and feed basis government officials. Let's do some wealth preservation with some tax preparation. Support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as excel practice problems PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. Most of this information comes from the forum 1040 instructions tax year 2022 instructions for schedule one additional income and adjustments to income adjustments to income section which you could find on the IRS website irs.gov irs.gov irs.gov v for victory over tax questions or something in our income tax formula we're now focused on the adjustments to income line two of the formula remembering that the first half of the formula is in essence an income statement although a strange one where we have income up top minus the equivalent of the deduct of the expenses being deductions equals the equivalent of net income that being the taxable income our objective flipped on its head we want taxable income as low as possible as opposed to normal income statement rules where we typically want the net income i wanted the money to be as high as possible in prior presentations we talked about what needed to be included in income now we're looking at one of the components of the deductions these being the adjustments to income you can call them above the line deductions schedule one deductions they could be called a adjustment to income which you might say is like a counter income or a contra income account because they're getting to this other subtotal on the way down to the net income equivalent number that being taxable income and that subtotal is adjusted gross income which is an important number an important subtotal because that's the one that's going to be used when we apply phase outs into the system for phasing out say credits or phasing out say deductions as income levels go up remember there is a distinction between these types of the deductions the above the line deductions or adjustments to income and taking one of the two of the standard deduction or itemized deductions meaning the standard deductions will be taken if they're higher and we would only be categorizing this the itemized deduction exactly good deduction ends if they add up to going over the threshold of the standard deductions but the above the line deductions we're looking at now if we qualify for them we don't have that same kind of restriction we don't have to clear the threshold of a standard deduction in order to get a benefit from them if we qualify for them okay that said we're down here on line number 10 adjustments to income from schedule one line 26 if we look at schedule one then we're looking at schedule one this is actually page two of schedule one and we're focused here on 12 certain business expenses for reservists performing artists and fee basis government officials attached form 2106 now let's just give a quick recap here because the thing we really need to know is that there was more of an expansion of the capacity to have deductions for say w2 employees for say business expenses in the past on schedule a and that has kind of been limited so that's the main thing that we have to understand here and then know where these limitations are so remember the general rule in an income tax system raise taxes at your income is that the thing that you would expect to be able to deduct are the things that you had to consume in order to generate revenue so we're taxing people on the net income not their gross income which we can see most clearly on a business tax return like a schedule see where you have an income statement in essence income minus the expenses or the business deductions getting to the net income that being the taxable amount when we have w2 income it's not as clear because when we're looking at the w2 income we don't get other deductions that we consumed in order to generate that revenue because the assumption is that the employer is the one that's providing what we need in order to generate the revenue and therefore many of our deductions are kind of geared towards other weird things political purposes the government trying to incentivize our behavior and so on and so forth now it used to be well if i had a w2 income that you might be able to deduct some of the business expenses for w2 income but instead of doing it directly it would have to be something that was an itemized deduction like a miscellaneous deduction on the itemized but they removed that so we don't we have severely removed that capacity so you might have people asking well what if i have all this these kinds of deductions that that i want to deduct because i needed to have them in order to generate income even though i'm a w2 employee well that capacity has been greatly restricted and now we have this form 2106 which is now feeding in here to schedule one part two but only in these really restricted areas where we have once again certain business expenses so again the business expenses are things that we would assume would be a natural kind of expense but which are kind of limited if you're a w2 employee but these are for the special areas our reservists performing artists and fee-based government officials and you can attach form 2106 for those very limited items this of course will sum up and be pulled on over to page one of the form 1040 okay so line 12 certain business expenses of reservists performing artists and fee-based government officials very limited include the following deductions on line 12 certain business expenses of national guard and reserve members who traveled more than 100 miles from home to perform services as national guard or reserve members so again very specific very specific type of situation also note that sometimes you you might think in in some of these like military situations that if you get reimbursed for the travel then you may not be able to take it and take the because you'd be double dipping if you got reimbursed and then you and then you paid for it but in this case it's likely that you may not get reimbursed for the travel time in that particular situation but we'll take a look at some other situations where they did a similar thing with the moving with you used to be able to move if you go to a new job for example and used to be able to deduct on that but they did another kind of restriction type of thing that we'll see in a following presentation but possibly if you're in the military then you might still be able to get a deduction for that situation but oftentimes there the military might compensate you in which case you might not get the deduction in that case because that would be kind of like double dipping so performing arts related expenses as qualified performing arts and business expenses as fee based state or local government officials so very specifics for more details if you have people that fall into that particular very specific category as opposed to people coming in saying yeah i'm a w2 employee for the vast other amounts of areas trying to say can i get a deduction for this that and the other thing because these are business deductions then again that's been limited and if you have more areas on these specific areas more questions about them then you can go to the form 2106 on the irs website and take a look at more detail there