 Income tax 2021-2022, software example, educator expenses. Get ready to get refunds to the max, dive into Income Tax 2021-2022. Lassert tax software. You don't need access to tax software to follow along, but you might wanna have the Form 1040, which you can find on the IRS website at irs.gov, irs.gov, starting point here, single filer, Adam Smith, living in Beverly Hills, 90210-100,000 at the W-2 income standard deduction, 12,550, getting us to the 87,450, mirroring that in our tax equation in Excel, 100,000, 12,550, getting us to that 87,450. The tax being calculated from the software page number two is gonna be that 1515. So if I go back on over here, net page 1515 for the tax. Now we're just gonna open up our schedule number one, and we're gonna go to page two. Schedule one, page two is what we're on, or part two, page two and part two. We're looking at the educator expenses. So anytime someone comes in, if this was Adam, Adam is an educator, for example, K through 12. And that's usually the biggest thing to, where there could be gray areas. So if they work in a school setting and they're not an educator, but they're a principal or an admin, that could be a little bit more confusing because you might not have to check the hours and so on. But if they're an educator and they're a teacher, then clearly you're gonna say, okay, they probably qualify for the deduction, which is capped at 250, which is an above the line deduction. Note that it is not an itemized deduction. So we don't have to worry if they itemize or not. It's specific to a particular industry because back when this was implemented a while back, you know, the teachers unions were able to push that through to have a specific industry kind of related deduction, which is a bit unusual here. Now they're gonna need the qualified expenses, but because this deduction's been around for a while and it hasn't really increased with inflation, it's quite likely that most educators have expended more than $250 for their, that would be qualified expenses, but they would wanna have that support in the event of an audit or something. I highly doubt that the IRS is gonna come after someone with a $250 deduction and be like, ah, did you spend $250? But obviously you do wanna log in the deductions that you have and have it ready as support in the event that there's a problem. So I'm gonna jump on over and say that we got the 250. Now, obviously, let's say they spent 500 and they're like, dude, I spend like thousands of dollars. I spent like $5,000 on educator stuff that I wasn't reimbursed by that would be qualified. Well, you're still gonna be capped at the 250. The 250 is the cap at that. So page number two, page number two, there's the 250. So put 5,000 in, it's capped at 250. The software, of course, helps you out. With that, that pulls over to page one of the 1040. 1040 now is down here. We're on line number 10, where we have the adjustments to income from schedule one, bringing us to the adjusted gross income 99,250. We can mirror that in our tax formula over here, looking at the adjustments to income, schedule one. So we've got the adding to again, income, adjustments to income. And I'll just add like one line item. This will be educator expenses. Educator expenses. Did I spell that right? Let's check out the spell check. Check out my spelling. Check it out, total, I spelled total wrong. What kind of and educators spelled wrong? Whatever, that's what spell checks for. I make sure to get my money out of my software. It checks my spelling and I put it to work. I spelled things on right on purpose. So we got the 2,000. Now you could put like an if then formula if you wanted to get kind of fancy here. So for example, if the client says, well I spent 5,000 on it, you could put the 5,000 here and then do a logic test over here formula that I'll put in white because I won't do the data input into it. And I'll say this is equals if and we'll do a logic test and say if this cell, if that cell is let's say greater than 250 then comma, we want you to put in some 250, the cap. So if that number is greater than 250 then comma, you put in the value of 250. If not, if it's less than 250 and other words, what do you wanna do? I want you to take whatever in that cell and that should cap it at 250. So then if this was like 100, which it almost never is, it's gonna be something over 250 generally. Then it would be there and if it was 5,000 it's gonna cap it at 250. It's gonna sum up down here total adjustments to income 250 pulling over to the first page of the 1040, there's the 250 bringing the adjusted gross income to the 99, 750 matching what's on the tax return. And then we've got the standard deduction, 12, 550 bringing us to the taxable income 87, two, 87, two. There we go, page two now. Calculating the tax at the 14, 955. So there's the tax calculation down here, 149, 555. And there we have it. Now if I go back on over, what if they were married? What if Adam got married to Eve and Adam met me Eve and he's like, madam, I'm Adam. And then they got married. And then they're both educators, let's say. So if I switch them up to say they're married now, they're married. And so now if I go back on, if I don't change anything I still put 5,000 that Adam spent. Now they're married filing joint and you've got two of them but I didn't change the two educators here. So on page two, it's still capped at the 250. Let's jump back on over and say that both Adam and spouse, so now I've got spouse over here is paying the 250 or spouse and even spouse, whatever you, whatever, not trying to, any case, I'm gonna go back on over to the forms. Now it's capped out at 500 because obviously you doubled it up there. And that could be a little confusing in our worksheet the way I did it in our worksheet over here, by the way. Cause if I go back on over here I might have to educate or expense spouse one. So then I can say educator expense maybe spouse two if applicable, which I'd have the same thing, copying that down. So now she spent another 5,000 and that gives us the 250 cap capped at the 500, pulls over to the page one of the 1040, there it is, bringing the 100,000 income down by 500 to the 99.5. Obviously I didn't double their income when they got married. We just left it at the 100,000 which we can assume two teachers earning 50 at this point, now married. The standard deduct, now we've got the 500 which is the adjustments to income which brings us to the AGI adjusted gross income of the 99.5, matching what we have on over here. The standard deduction has now going up because they're married. So we doubled it because there's two of them now. So that makes sense. So there we have that taxable income at the 74.4. 74.4, there it is, page two, page numero dose, tax calculated 8533, 8533. Substantial difference not because of the extra 250 deduction but because they got married and they got the standard deduction is now twice and the income stayed the same even though you got two people to it. But in essence, so keep that in mind obviously when you go from single to married. But if married, then you could be capped at the 500 if both of the people involved, the two spouses were educators, then you might have been up to the 500 as we see here.