 Also, just remember that rules over time can change with regards to the capacity, what you can do with losses, carry them back, carry them forward and so on and so forth. So just remember when you're looking at losses, you wanna make sure to kinda double check. Double check the log. Where you stand with regards to the type of loss and what your capacity to do with the loss is. And again, the tax software is often a useful guide to help you with that. All right, let's do the gambling. So gambling's another common one because people might get like a form 1099G or I'm sorry, a W2G and that might come from a casino or a horse track or whatever like that. If they're gamblers and they gamble a lot, then they're probably kind of have an idea of how the gambling winnings are going to work. If you get a documentation for it like anything else, you're gonna have to report at least that amount on the tax return or you're likely to run into a problem with it. Now, can you deduct the losses? Not often because if you could deduct the losses, you'd have to deduct them on a schedule A and only some people are gonna be able to categorize for the schedule A because they're gonna be taking the standard deduction. So and the losses are typically just limited to the amount of income that you received as well. So there's a severe limitation in the amount of losses that you might be able to take. Now, if you could claim that you're a professional gambler or something and if it's a legal activity, then maybe you could do the schedule C and then have losses but obviously that's not typically the case. And then you might have some clients that just get a win, they just go to Vegas and they win a car or something. You know, they win a significant amount of money at one time. That could be a shock to some people because it could have a significant impact on their taxes. So when you do that, we're gonna say, okay, gambling income possibly on a W-2. So let's say this is a W-2G. So let's say W-2G and then I'm gonna say that we had a winnings of, let's say, let's say it was significant like 30,000, right? And then I'm gonna go back on over. And so now we've got the winnings of course that are gonna be populated here and that's gonna be significant going on to the 1040. Now, just something to kind of be aware of. So obviously we're populated here on the 1040 and so our income is going up and then our taxable income is going up. I won't do it on the tax software because I think it's a fairly straightforward for our formula because I think it's fairly straightforward right here and I wanna do a couple more of these but let me just do an example. If I was to remove that and then I was to say that the wages income was, let's say they were earning 40,000 and they withheld 5,000. Now you've got 40,000, 12,950 gets us only 27,050 of income. The tax is at 3,044. If I look at my tax summary, then I'm at a highest tax bracket of 12% average 11.3. Now if I had a significant amount of gambling earnings then of that 30,000, that's gonna come as quite a shock. Someone in that situation might win a car or something or whatever and they're gonna go or they get a lot of money and they're just gonna spend it possibly but the tax bill is gonna be painful because that's a huge increase which is gonna have an impact on their highest brackets and now their highest bracket is at 22%. So that's gonna be a significant increase. So if you get a big windfall profit for whatever reason like you won the lottery or you won a prize or you went to Vegas and won a car or something like that, if you're gonna receive that at one time, this is what needs to be taken into consideration and if you run into that classic kind of scenario of would you rather have an annuity of payments or a series of payments over the next so many years or a lump sum today, then the lump sum when you do that figure in that calculation it's better to have money today than the annuity if the payments were equal but there's also a big tax implication on it as well because if you take the money today then you're gonna be paying possibly higher rates because it's gonna push you possibly into higher tax brackets. So it's just something else to kind of consider if you have someone that runs into that kind of situation. Also, if they got a windfall amount or they got winnings they might withhold from it. Something that most people don't do but it would be smart. I mean, you might do that obviously because now if there's a significant increase to your taxes then you might have to withhold and you might have to withhold more than even your marginal tax bracket before in order to be okay because now you're gonna be taxed at your highest tax bracket which now in this case got pushed up to 22% so in the form 1040 page two then we'd have our withholdings here from the W-2s and then other withholdings the other 5,000 was withheld here. Then we got the cancellation of debt. Now this one's often a shocker for people as well because if you get cancel of debt you didn't actually receive money so people often don't see it as income but obviously if you owed someone money legally and then they said you don't have to pay me that's kind of like they gave you money and then you gave it back to them, right? They canceled debt so that would be an income so unless there's a rule that says the government it's kind of like the government it's the same standard rule for income unless there's an exception which there often could be because most of the time when debt cancellation happens it's gonna be because people are insolvent incapable of paying the debt then you would have to include it in income so what you'd wanna do is have the 1099C is what you would receive you're not gonna see that all the time but if you see it you say okay it's a 1099 so I would think I would have to include that which would include it in our income line on schedule one and if I have to include it it would pull over to the form 1040 and then it would pull in here and now our income has going up and so on and so forth. Now next we have the foreign earned income exclusion from form 2555 and again that's more of a kind of specialty area so if you have people like I say if you're a professional tax preparer you might specialize in people that are in the same state and that might be some cheaper in some ways as well to do the tax preparation and get software for it or people that are in multiple states or possibly people that have income from multiple countries obviously when you have different taxes from different areas there could be a possibility for double taxation and the United States could have agreements with other governments in order to not have a situation of double taxation and whatnot and then you could dive into basically the detail on that possibly by going to the form 2555 which is right here and then you can look at the instructions on the irs.gov if you wanna dive into this in more detail and dive into that in more detail as well so I won't go into a lot of detail on the example here but we might maybe we'll go into it more in a future presentation but let's go back to the schedule one.