 Income tax 2023-2024, Alimony received tax software example. Get ready and some coffee so we can stave off the government attack with income tax preparation 2023-2024. First, a word from our sponsor. Yeah, actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us. But that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our crunchy numbers is my cardio product line. Now, I'm not saying that subscribing to this channel, crunching numbers with us will make you thin, fit and healthy or anything. However, it does seem like it worked for her. Just saying. So, subscribe, hit the bell thing and buy some merchandise so you can make the world a better place by sharing your accounting instruction exercise routine. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. We are in our Form 1040 example using LASERT tax software. You don't need tax software to follow along but if you have access to tax software it's a great tool to run scenarios with. You can also get access to forms, schedules, reports at the IRS website irs.gov, irs.gov, starting at our normal starting point with our taxpayer, Adam Taxman. We're just trying to avoid the dang Taxman living in Beverly Hills 90210, no dependence starting off with W-2 income at the 100,000. We have then the standard deduction $13,850 to get to taxable income $86,150. Hearing that here in our income tax formula, income $100,000 standard deduction $13,850, taxable income $86,150. The tax calculated at the $14,266 calculated by LASERT tax software page 214266. Let's go back to page one. We're now thinking about an alimony type of situation focusing in on the recipient of alimony remembering, however, that most transactions have a symmetry to them. So if we're talking about two individuals that have tax implications, then the person receiving the money, the question is do they have to record it in income? And if they do have to record it in income, we would think that the payer of the money might get a deduction for it. And so we're looking at the recipient side of things this time to see whether or not you'd have to report the income. So note in this scenario then, we would have a married couple typically, the married couple breaks up within the divorce agreement. The question is, are payments going from one spouse to the other? If they are, are they allocated or categorized as child support or alimony, which used to be a very important distinguishment for tax purposes, because alimony was deductible to the person paying and taxable or includeable to income for the recipient and child support was not. But under the new change to the tax law, both alimony and child support typically are not deductible by the pay or included by the payee. But we have this cutoff date kind of situation that we have to deal with. So for example, let's see we're going to be going to schedule once we're looking at line number eight here, and then I'm going to hit the added schedule is going to schedule number one, and we're looking at this alimony line. So let's imagine that Adam here, although he's making 100,000 right now, but he seems to be doing quite well. But let's say he's getting some alimony too as well. So we're going to say, let's jump to the alimony. I'm going to right click and say jump to the alimony data input. And we have the alimony and let's say alimony received. Let's say it was 10,000 for alimony. Note that there's a date that we have to be recording here because this is going to see if it's past the date that we need in order. If it's past a certain date, typically you wouldn't include it in alimony. So you would think it would be before like 2018. So let's say this was on 011 2017. So non-taxable pre-2019 agreement. So if it was non-taxable, we'd put a 1 there. But I'm going to say, okay, so now we've got the 10,000. If I go back on over, then we can see now it puts the alimony here. So alimony has been included and then it puts the date to help the IRC and double check that the date is recorded and lines up to kind of make sense because if that date was after the cutoff date where the change to the law happened, the IRS might then say, well, maybe that's not correct would be the general idea. That's why they want the date line. So if I add this up, then adds up to the 10,000. That's going to pull over to page one of the form 1040. So now we have the 100,000 of income. We've got our 10,000 from alimony that is pulling in here to get us to 110,000. If I go back to our worksheet, we can add it to our worksheet. So we have this here, schedule one income is feeding into that line item. So I'm just going to add some items here. So I'll just pull this down and I'll say we have alimony received, received. And there's probably not like a lot of alimony received. So you might only have one line item for it, for example, per return. So I'm just going to say maybe I don't need any other boxes. I'll make this black and white right there. And then I'll just say I'm going to do the data input right here. And then it was for 10,000. And then I'll just sum it up on the right. And let's put some brackets around this home tab font group, put some brackets around it, summing it up. So this is, let's just sum this up equals the sum of these items now. There's going to be this and this. That comes out to 10,000, 10,000 plus. And I probably misspelled alimony. Let's see if I can just fix that. We'll say spell check, spell check. Alimonies, alimonies. Okay. I think I got it. Schedule, schedule change that one too. Okay. So then plus the 100,000 here, it's going to pull into line one 110,000, 13,850 standard deduction gets us to the 96,150. So if I go here, we're at the 96,150 tax calculated on page two, which is now 16,482. So I'm going to put 16,482. Was that right? Is that what I said? 16,482. Okay. So then I'm going to go back on over and to page one. So that's the general idea. Now obviously, if it was a date after, meaning if I go back on over here and I say that the date was after that point. So 2019, let's say, so January, let's say, January 30th, 2019, then you might get a diagnostic about it or it's not including it at this point in time in our schedule. And schedule one, not including it because that would be after the cutoff date. Now just to note what's going to happen here, remember what happens is the pay or if it was alimony, it used to be before the date, what would happen is if we determined that it was alimony and let's imagine Adam here was paying the alimony instead of receiving the alimony, then Adam, if I go to schedule one on page two would have possibly the ability to have the alimony paid. Let's jump to that one, right click and say, go into here and say let's imagine he was the payer of alimony. Note if he pays the alimony, he might get a deduction. Therefore the IRS wants to know the recipient. Let's say Jane is the recipient, recipients last name, tax man, tax man, and social security number. I'm not paid, let's say 10,000. So now he's the payer date. Let's say it happened before the cutoff date. So 01, let's say 18 and okay. So then if I go back on over, if he was the payer, he'd get a deduction, right? So now we've got the 10,000 here and that feeds into the form 1040. Where we see the 10,000 being a deduction. So see how there's symmetry here. The person that is paying, if they get the deduction, the IRS says, okay, if we're going to give you that deduction, then what we want from you is to rat out who you gave the money to. Just like we do with the W-2 wages with the W-2 telling the person that you paid, just like with the 1099, ratting out the sole proprietor that you gave the money to, because if you get that deduction, we're going to get our money from someone, says the IRS, and we're going after this social security number. So that means that if you're the recipient of the money, then you have to know, it'd be just like you got a 1099, in essence. If your spouse reported a deduction, then the social security number is telling the IRS that you got income in a similar fashion as a W-2 or 1099 tells the IRS that you have income. Therefore, your side needs to mirror this 10,000, or else you would think that there's going to be problems and the IRS is going to send out letters saying that they have a source of income that you didn't record, and then you get into issues there and then you have to hire the lawyers and then the lawyers drain you dry and then you pay them and they laugh in your face as they take your money and then further aggregate the already tense situation and frustration. So to avoid that, you'd like to be able to communicate enough to have the symmetry on these two side of things. Now, I think it's actually good, in my opinion, that the IRS is removing this for later agreements, because then you might say, well, that's not really fair to the person that gets the deduction, but what will happen is that you would think that the negotiation of the agreement will then take into consideration the current tax situation and it should be easier to do. So it will simply be reflected in the tax situation and you won't have to hopefully deal with this added complication of tax implications with payments going from one ex-spouse to another ex-spouse. So that's the general idea with the alimonies. So don't make the alimony payments like the alimos last stand that you want to make it so... Anyway, that's that.