 Here we are in our example, Form 1040, populating it with LASERT tax software. You don't need tax software to follow along, but if you have access to it, it's a great tool to run scenarios with. You can also get access to the Form 1040 related schedules and forms at the IRS website, irs.gov, irs.gov. Our starting point as normal single file, or Mr. Anderson, no dependence, 100,000 W2 income. We got the 12,950 for the standard deduction. Getting us to the taxable income, 87,050, mirroring that over here on our worksheet in a formula. Formula! The format, the 100,000 income, 12,950, and the taxable income, 87,050, letting the software do the tax, getting us to that page two of 14774, 15,000 on the withholdings, brings us to the 226 at the bottom line for the starting time. Let's go back on over and now we're thinking about the IRA deductions. So we're starting off with the single filer. Normally the IRAs are gonna be fairly straightforward if someone doesn't have access to another type of retirement plan would be the general rule. Then we can deduct 6,000 or 7,000, depending on if we're younger or older, age 50. The rules get more complicated when we're moving to possibly a married filing joint return. And if we have access to, or if our spouse has access to a 401k plan, 403b or other type of retirement plan. So that's the general idea. Remember also that when we're looking from a tax planning standpoint and a tax preparation standpoint, the IRA is oftentimes the last thing that we can do. We can't do it from the extension point, meaning we have to be putting money into an IRA by the time we file the deadline, April 15th generally or April 18th, 17th or whatever. But we have to put it in by that point not including the extensions. But if we're able to get to say a client for example and do their tax return before the deadline, we wanna be able to advise them that hopefully they can have some cash on hand that could possibly put into an IRA and we can determine at that point in time the maximum amount that they can put into the IRA which is great because if they can put money into say a 401k plan or a 403b plan, the idea would be maximize those out if you've got the cash flow to do it generally. And then after the year has ended, we might still be able to do some last minute tax planning not for the 401k, not for the 403b because you have to put that money in by the end of December but we might be able to do some last minute planning for the IRA. All right, that's the general idea here. So let's say single filer, a lot of software will allow us to kind of jump to the IRA to do the calculation and also give us some information. Let's go to page two of this item and in the diagnostics to see if we can still put money into the IRA. So for example, this software, if I say I wanna put the maximum in, so let's say I've completed the tax return and I'd said I want you to put the maximum IRA contribution in, that's the number one. Then it's gonna max out the contribution which in this case is the $6,000 because the W-2 income I put over here notice I indicated that it's not, we don't have access to a 401k plan at all to take that kind of off the table. So if I go back into my wages, this box right here for the retirement plan is important to check off or not check off when you're trying to figure out whether or not you could put money into the IRA and that would be indicated on the W-2. So now we've got the $6,000 that's being put in place on the schedule one, page two right here. And of course that pulls over to line 26 which pulls in to page one of the form 1040 and there's the $6,000 above the line deduction bringing the AGI, the adjusted gross income to $94,000, the $12,950 for the standard deduction gets us to the $81,050. I can mirror that over here in our tax software looking at the adjustments to income and go on to the adjustments to income tab. Do I have anything for an IRA? I've got an IRA deduction up here with one line. So I'll just say $6,000, pulling that over to the first page, $100,000 minus the $6,094,000 minus the standard deduction, $12,950 gets us to the $81,050 and that matches what we have here. Tax software doing the tax calculation, $13,454. Let's plug that in here, $13,454 and that gets us to the $1,546 at the bottom. So there we have that. So now let's assume that the taxpayer does have access to a 401K plan through their work. Now note, if you have access to a 401K plan through the work, it's similar in concept to an IRA but you don't have to do anything on the tax return because box one of the W-2 will be decreased already. So you kind of like already got the deduction it being deducted from box one of the W-2. Therefore it's deducted before it even reaches in essence the tax return. So for example, if I go back on over here and I say I'm gonna say that they have access to the retirement plan, then down below, here's the 401K. This would be the amount you could put in for the amount that goes into the retirement plan that would be shown there on box 12, I think, box 12. And the software is disallowing the IRA now because I had access to the 401K plan. So I believe the general rule would be if you have a 401K plan or other retirement plan at work you could take the full deduction if your modified AGI is 68,000 or less. So let's bring this down to 68,000 and see if the software populates it. So we'll go, okay, let's bring this down to 68,000, boom. And so now the 6,000 is back, right? So there's our kind of income threshold because I had access to the 401K plan even though I didn't put anything into the 401K plan. Now if you go between 68 and I think 78 then it's gonna start to phase out. So I'm gonna say, let's go to like 70,000 and then it starts to phase out. Now I only get 4,800. Notice the nice tool here in that I told the software to maximize the contribution. So it's basically if I populated everything properly hopefully given me the correct result in terms of how much I can put into the IRA.