 Here we are in our example, Form 1040, populated with LASERT tax software. You don't need tax software to follow along, but it's a great tool to run scenarios with. You can also get access to the Form 1040 related forms and schedules at the IRS website, irs.gov, irs.gov, starting point as usual. We've got the single file or Mr. Anderson, W2 wages 100,000, 12,950 on the standard deduction, 87,050 for the taxable income, mirrored over here in our tax software tax formula, 100,000, 12,950, getting us to the 87,050, page two, doing the calculation of the tax, 14774, 15,000 withheld to get to the bottom line of 226, mirrored over here as well. However, we're focused up top on the calculation of the taxable income and focusing in on the itemized deductions and the particular deduction of the charitable contributions. Now remember, the charitable contributions are gonna be in the itemized deduction area. You might have remembered in a prior year where they basically tried to kind of move some charitable contributions on the first page of the 1040, but now we're back to basically where we were. Before that, that all the charitable contributions are in the itemized deduction area. Therefore, you're only gonna get a benefit, generally, from the charitable contributions if you're doing the itemized deductions. So remember, you're gonna only itemize if you have itemized deductions that are adding up to greater than the standard deduction of 12,950 for single filers, 25,900 for married filers. If you're talking with people or yourself filing tax returns that are nowhere near that threshold, it might not be worth your time to track all the information that you're giving to charity in as much detail if you're only doing that for your tax records because you might not be getting a benefit for your tax records. Now, you would also wanna check out your state as well, sometimes state regulations if you have an income tax, might have some benefit from charitable contributions as well. We're focused on the federal tax side of things at this point in time. So also note, what's the main thing that usually pushes people over to be taking the itemized deductions owning a home because that's where they have the real estate loan, the loan's gonna have the interest on it typically and they're gonna have the property taxes. Those are the two big ones that push us over. Once we are over the threshold, once we are already itemizing, then picking up anything else we can would be good such as the medical, although they also have that floor such as now the charitable contributions. So now they're gonna kick in and be helping us out if we're over the threshold. So let's first imagine we're not over the threshold. Heading your threshold, Christmas caroler. And we plug in some itemized deductions. So I'm gonna most jump on over this way. I'll just go right into it here, deductions. And we're gonna say itemized deductions and we're gonna say contributions. Now generally we're gonna be, for most of them, I'm gonna be plugging into the 60% limitation up top and I'm gonna say that these are gonna be the normal kind of categorizations which would be things like cash contributions for churches, mosques and so on, the scouts, boys and girls clubs and so on, the normal type of charitable contributions. It'd be good if we can list out the actual charities here but I'm just gonna put various, various charities and I'm gonna put, I'll say 500 into various charities and I'm gonna say okay and then bring it on back to the forums. Now we've got the 500, but the only other thing that has been included up top is I gotta get rid of those points is gonna be the taxes you paid. So that means, even with the points here that I'm gonna remove, that's still way under nowhere near that close enough to get us to where we need to be to clear even the single filer standard deduction of the 12,950. So for most people, the charitable contributions aren't gonna be the thing that does it. Could be if they had an outstanding, they just gave a lot of money one year but that's kind of rare. That's not usually the thing that's gonna be kicking people over. So what is gonna kick people over, let's add the home information and then we'll tack on the charitable contributions and we'll have a better benefit. Okay, so now I have added, I've removed the charitable contributions for now and just added the big item, which is the interest on the home, let's say it was 12,1098 mortgage interest and then the property taxes of 3,000 and I'm just gonna add the 1,017 for the state tax. So let's put that over here and mirror that in our worksheet. I'm gonna say schedule A, mortgage interest 12,000, real estate taxes 3,000. The system is calculating the state tax at 1,017, 1017. That brings us up to the 1617. Is that what shows here? 1617, that pulls into page one of the form 1040. So that's gonna be pulling into the 1617 because it's greater than the standard deduction of the 12,950 as we see in our worksheet here. We can see the 100,000, the greater of itemized deduction 1617 over the 12,950, therefore pick it up the 1617 to get us down to the 83,983. And then we've got the taxes. Let's let the software do the tax calculation, which is the 1492. So we're gonna say, all right, 1414, this is 14092, boom. Okay, I'm gonna delete this for now. And now we can add the charitable contributions and they should give us some more benefit at this point. So we're gonna go, let's add the charitable contributions now. We're gonna say this is gonna be the various items. Let's just put 500. And then now it's worthwhile for us to track that stuff, make sure we have the receipts and whatnot from the charitable organizations and we get that oftentimes shoebox full of charitable contribution type of stuff. And it's worth going through and adding those up to get the 500 because that's gonna add a little bit more benefit here. So now it's tacking on because we're already itemizing. So I can go back on over here and say, let's go to the gifts charity 500 is going up. That brings us to the 16, 517. Is that what we have here? Yep. Let's go to the page one of the 10, 4, 0. 10, 4, roger that, roger out. So there's the 100,000, the 16, 517, and that gets us to the 83, 483. And then if I let the software do the calculation, 13, 982. So we were at, we were at this 1409 and now we're at the 13, 982. So there now we've got a benefit lower in the taxes by 110 if I did that right. 13, 982 from the charitable contributions. So that's how that's the general process that work if they're nice easy cash contributions. Now there is a limit on the contributions and it's based on the AGI limit here, right? So if I put in a whole lot of contributions, which would be somewhat unusual for me to put like what 80,000 contributions in, let's say when I made 100,000. So now I made 100,000, I put 80,000 contributions and we're gonna go down and say that it's been limited to the 60,000.