 Income tax 2022-2023. Educator expenses tax software example. Let's do some wealth preservation with some tax preparation. Here we are in our example of Form 1040 populated with LASERT tax software. You don't need tax software to follow along but it's a great tool to run scenario. Scenario. With you can also get access to the Form 1040 related forms and schedules at the IRS website, irs.gov, irs.gov, irs.gov, v for victory over tax form. Okay, we've got our starting point here. Single filer, Mr. Anderson, Dependence none, W2 income we've got 100,000 and then 12,950 for the standard deduction getting us to the 87,050 for the taxable income that's mirrored. 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. On our worksheet in a formula basis here 87,050 letting the tax software do the tax on page number two numero does 14774 15,000 withheld gets us to the 226 and there we have it mirrored in our formula. So now we're going to be focusing in on the educator. So these are the above the line deductions. So we're looking at the adjustments the above the line adjustments to income as opposed to the standard deductions and the itemized deductions noting that most of the deductions people often think of charitable deductions home mortgage interest deduction taxes deduction property tax and so on are the itemized deductions which can only be taken if they're greater than the standard deduction or only should be taken if greater than the standard deduction the above the line deductions or adjustments to income are up top you can also call them schedule one deductions because in a fairly recent change we've got the schedule one items now their important difference between them and other deductions in part as well because they're going to be getting us down to this kind of stop point or pit stop along the way to taxable income of the adjusted gross income which is going to be the number typically used when we think about phase outs of credits and whatnot okay that in mind let's i'm going to hit that little item here and go to the schedule one so page this is schedule one additional income and adjustments to income part one is the income part adding more lines to the income part two is on page two these are the adjustments to income or the above the line deductions the schedule one deductions we're looking first at the educator expenses now note from a practical standpoint you can kind of think about the educator expenses as if someone qualifies as an educator for the purposes of the educator expenses they're probably going to be eligible to take the deductions because they probably have spent more than three hundred dollars which is the minimum per educator for qualified education expenses of course they would need to support and whatnot in order to provide that evidence in the event of an audit but it's a fairly low threshold so you would kind of you just kind of have to know because this is going to be one of those types of rules that are specific towards a particular industry which the tax code you know usually you kind of would think that they wouldn't do things that are particular for a particular industry in other words normally the idea of the tax code is that the kind of deductions that you would get are those that you would think you needed to get in order to generate revenue as we can see on the schedule C where we have the deduction of the expenses here which we had to expend in order to generate the revenue therefore we're taxed on the bottom line of the income statement that pulls into the form 1040 that's not the case for other income on the 1040 like W2 income because it's assumed that the expenses for us to generate that revenue are provided by the employer which isn't always the case for instructors as well as many industries so but that's kind of the assumption so that kind of simplifies the tax code and that means we don't have all these deductions that are there for what you would think would be a natural purpose for a deduction and then they start adding deductions for political purposes and because they're trying to manipulate your behavior and whatnot in certain ways which may be beneficial or may not be beneficial depends on your perspective I don't like being manipulated personally but in any case that means that if I go then to the schedule one page two these are kind of deductions that are that were kind of political you would think with the teachers unions possibly putting them in but they happened a long time ago and they've kind of stuck around so although they might have increased the amounts a little bit they haven't been increasing them with inflation since they first put them in there so now you've got these expenses related to that industry of a teacher so whenever you see a teacher you're going to say okay maybe they qualify for the educator expenses most likely they do if I populate in the educator expenses like $500 it's going to cap it at $300 because that's the cap for the educator expenses so it's a fairly low low cap on it so you might want to just realize that if you see there's an educator just realize okay I'm going to have to pick up the educator expense it's a pretty low cap but it's something that I can at least you know be able to pick up so there we got the $100,000 and the $300 for the adjustments to income if I want to mirror that on my tax formula over here we've got the the schedule one I have the alimony unemployment let's add some more lines here more lines I'm going to insert and say that we have what do I want to call it teacher expenses what do they call it what do they call it they call it educator expenses I knew that educator expenses now you might just have one line item but I'll make two lines because you might have a married couple both of them being teachers and you could just put 600 if they were two teachers but I'll break it out separately so that we have the two lines you shouldn't have more than two lines I'll make that blue and this will be the total total educator expenses I'll pull out to the outside sum it up and there we have it so this is going to be edgy edgy okay edgy capital tour one $300 at the cap boom so it sums it up now you might you might come up with a fancy formula here you could you could say if it's if it goes over $300 you cap it at 300 but I would just kind of memorize the cap or maybe put it up top and just say there's your cap $300 per person so that you can kind of memorize that that's what's going to be that's how it's going to be that's just how it's going to be you know so then I'll pull that over if that pulls over to the first page and uh and so now it didn't pull over uh hold on a second I just did that whole thing to the wrong schedule I should have put it onto the adjustment schedule over here that's embarrassing all right let's see if I can fix that fairly easily I'll try to put a note so you don't do that insert but now that I'll just fix it here I could fix it it's not a problem don't worry I'm going to just cut this whole thing I'm just going to cut it control x and I'll bring it on over to right there that's where it should go idiot okay okay there's no there's no reason to get all hostile let's go back to the to the and so now this is picking up this column and let's pull these out to the right and then I'm going to pick up this outer column I'm going to pick up this outer column here okay so there's the 300 now that should pull over or there's the 300 so 100 000 minus the 300 gets us to the 99 7 so there if I pull this over to page one there's the 99 7 12,950 so the 12,950 is here so we've got the taxable income 86 750 boom page two letting the software do the calculation 14708 so I'm going to say let's just plug that in uh 14 14708 boom 15 000 still on the withholdings we're going to say it's fairly well paid teacher here at the 100 000 and that's the two uh 292 okay and just for the just because let's say what if they were a married couple then we can go up to 600 so now I said they were married but now I've got 500 and 500 and they're going to cap them both both so that it'll it'll be capped at 600 toll 300 and 300 and you can't do something like if I so for example if I pull this on over and then go to the schedule one and page number two there's the 600 now note if I did something funny like this I said like one spouse had had uh what happened k pos oh where's my educator expenses there they are okay so if I said something funny like one of them had like 500 or let's say a thousand but the only the other one only had 200 and they were both teachers teacher then I'd go back on over and it capped it at 300 plus 200 which is less than the cap that you would think would be 600 right but that's not typical I mean you would think if they're both full-time teachers you would think they would have something over 500 uh over 300 each which would come to a total of 600 and so if I sum that up bring that on over to page one of the form 10 40 600 if I mirror that on my worksheet over here let's do that we've got educator two educator two I'm an educator two no I mean the second educator the second one not that you do it the same thing that's a different two they spell them different 99 I think they do I don't know if they do I'm pretty sure anyways 99 400 uh standard deductions up to 25 9 now which I can mirror over here because now we're married couple doubling the deduction doubling it doubling it gets us to uh 73 5 73 5 there it is page two letting the software do the tax is now at the 8 4 1 2 which is smaller due to the taxable income being lower and because the tax table the progressive tax tables being applied are different so that's the 8 4 1 2 so 8 4 1 2 let's say uh is here 8 4 1 2 and I didn't change of course the wages now we have two educators so I mean if they both made a hundred thousand I should have doubled the wages in order to have an a proper comparison between the two but I didn't do that I'm just have the same hundred thousand here so there's the uh total of the 6590 we've got a a calculation of the 6588 6588 it's a little different poor K the 8 8 4 1 2 because this is wrong 4 1 2 2 dollars off it's not a big deal but still should be exact because I just copied the number over okay so that's the general idea of that it should be fairly straightforward as long as you remember educator teachers union they have their own special above the line schedule one deduction or otherwise known as an adjustment to income it's right at the top of the schedule too as you can see prominently displayed at the first one in part two