 Most of this information comes from the Schedule 1 tax year 2022 instructions you can find on the IRS website, irs.gov, irs.gov, looking at the income tax formula. We're focused out here on the itemized deductions, remembering that the first half of the income tax formula is in essence an income statement, although a strange one where we have income minus the equivalent of the expenses being the deductions equals the equivalent of net income, that taxable income. Everything's upside down with taxes, everything's topsy-turvy, meaning that the taxable income we want as low as possible as opposed to normally we want net income as high as possible. Now, in prior sections, we went over some of these other line items in the equation. We'll just recap it right now as we then focus on the itemized deductions. So we went over the income line up top. Now, clearly income is good. Yes, the money is good. We want income, but for taxes, it's bad. So we would like to have income but not have to include it as taxable income if we're not legally required to because it's exempt or something like that. And then we have the adjustments to income, which you can think of as deductions and sometimes are referred to as above-the-line deductions or as Schedule 1 deductions as opposed to possibly below-the-line deductions here, or in our case, the itemized deductions are going to be the Schedule A deductions. You can also think about these up top deductions, the adjustments to income, as contra-income accounts because they're going to go decrease the income like a deduction, but they're going to arrive at this sub-total of the adjusted gross income. The AGI, that adjusted gross income is often the number used or at least based upon when we have phaseouts for income thresholds as income thresholds go up and we phase out certain deductions and certain credits. The below-the-line deductions, whether that be standard or itemized, are not going to have an impact on the phaseouts because we don't calculate the phaseouts generally on taxable income but rather on the adjusted gross income. So that's another kind of component it's useful to keep in mind. So now we're down here and we take the greater of the standard or itemized deductions. Exactly. Good deduction. We talked about the standard deductions before. It's important to understand the standard deductions to the extent that when you think about the itemized deductions because you have to clear the hurdle of the standard deductions before you're able to take the itemized deductions. And it's a fairly substantial hurdle that went up in a few years ago. Therefore, most people are going to be taking the standard deduction. And if there's no hope of taking an itemized deduction, if it's not going to be anywhere near as high as the standard deduction, then you don't have to go through some of the burdensome task of pulling together all the information for the itemized deductions because the person's going to take the standard deduction, which would be more of a simplified situation. So that leads to kind of some discussions in terms of your tax planning. If you're doing tax return preparation, your strategy might be either I'm going to focus on more basic tax returns, which means you might not be looking for clients that are itemizing the higher income clients. For example, because you might be saying I'm focused on scaling up the lower income tax returns, which means that I'm going to do more of them. I'll try to I'll try to scale them up at a lower profit margin, or you might have a strategy that you want to take on the higher, more difficult high income tax returns. And then you're going to do less tax returns because they're more difficult and higher income tax returns are often going to require more research and stuff like that. But you can have a higher profit margin per return. Also note that higher income tax returns because they have more cash flow also leads to the need for more income tax planning and that kind of stuff. You also could specialize as we've talked about before on terms of do you want to just focus on individual tax returns or take on business tax returns like a schedule E, a schedule F, and those types of things. Do you want to focus and take on bookkeeping needs, which often small businesses need to help them shore up those types of needs? Do you want to specialize in certain industries if you're taking on those more of business needs like escort or types of entities as corporations LLCs and type of industry construction and that kind of thing. So those are other things to think about when specializing. Now, the next thing to kind of understand is when would someone be pushed up from a standard deduction to an itemized deduction. The normal thing is is related to the home, the home purchase because the home mortgage interest is quite significant of a deduction. And then you've got the property taxes and state taxes are often deductible for federal income tax purposes. So the purchase of the home that combo, the property taxes and the interest on the home often pushes people over to the point where they're no longer stand am I standardizing but itemizing. Now, there were changes to the law a few years ago, which increased the standard deduction, which I believe is an attempt to simplify the tax code, right? If everybody just took a standard deduction and we didn't do all this itemized deduction, it would be a simplification to the tax code. So you've got more people, even if you're purchasing a home that might still be taking the standard deduction, which is a significant thing to keep in mind. Because oftentimes when you talk to mortgage brokers and whatnot, they will tell you that the government is incentivizing you to buy the home, which they kind of are. But you've got to be careful in terms of how big that incentive is because it's really only kicking in until you clear the standard deduction before you're really picking up the incentives related to home mortgage interest and property taxes. There's also caps on it.