 Income tax 2021-2022. Software example. Other itemized deductions. Get ready to get refunds to the max. Diving into income tax 2021-2022. LASERT tax software. You don't need tax software to follow along, which might want to have access to the form 1040, which you can find on the IRS website at irs.gov, irs.gov. A starting point. The single filer. Adam Smith. Living in Beverly Hills, 90210. 100,000 on the W-2 income. 12,550 standard deduction. We've got the 87,450 for the taxable income. Mirroring that over on our income tax formula. 100,000. We got the standard deduction. 12,550 taxable income. 87,450. Depending on the tax return to calculate the tax on page number two. 15,15. Pulling that on over to the Excel worksheet. 15015 and back to the tax return. We're going to be going up to page one. We're focused on the standard deduction or itemized deduction. First, we're going to take a look at one of those unusual kind of circumstances. Let's open this up to take a look at it and go to the schedule A. And we're going down here to the other itemized deductions. And we're looking at a federally declared disaster kind of area, which is something you're not as likely to see, of course, hopefully. But if there was a federally declared disaster like in your area, and you're expecting that your clients, if you're working as a tax preparer or yourself, are dealing with, then you're going to want to do more research about that. And you can dive into the form 4684 and publications to do so. But this is an area where it's on like the itemized deductions down here and other itemized deductions. But we want to be able to give the benefit if someone's not itemizing. So that's an area where we might have another form. It's kind of an exception to the rule where we might have this component that's usually on the itemized deductions and the standard deduction in place. Let's see how that could work. And I'm just going to use the software to basically help out to do that calculation. So we're going to go back on over here and let's say that we had a casualty loss. I'm basically in where a sale takes place in this software, in LASERT, like a sale of stock, for example. And I'm just going to put a generic thing in here. So I'm going to say there's personal property that was acquired at various time periods that we lost in whatever disaster, federally declared disaster that happened. And so I put a negative so it says various. The date sold, I'm going to put at the disaster date. Basically it wasn't sold. It was lost at that point, $1215. I'm going to put the sales price as zero because it was a loss. It wasn't actually a sale. And then we've got the cost is going to be the $10,000. That's going to be the loss that we're looking to put into place. I'm going to then go down into the casualty and theft losses and populate some of this information. So we can say the description for whatever took place in terms of the disaster. I'm going to say it's a personal loss that is here. Then we have the disaster loss. And so we can say I'm going to say that it was a federally declared, qualified disaster. And you can look at the IRS website or FEMA website to find that list of the declared last disasters because you're going to need the code. So I'm going to pick up the FEMA disaster code for, I'm going to say it was a 2021 disaster that I'm looking into. I'm going to say it's in California. And I'm just going to pick one, noting that the software can kind of help you out to determine what the disaster is because they're going to be on a list. That means that LASERT can kind of put them in place here. So you should be able to find the disaster here. If you can't, then that might be an indication that it's not a qualified disaster and you might want to go to the IRS website to do more research. Qualified California disaster. So I'll keep that, I'll keep that here. Fair market, fair market value before casualty or theft. So I'm going to say that the market value before was 10,000. Fair market value after, I'm going to say a zero to start out with at least and then fair market value under the safe harbor. I'm going to keep, well, let's see if I put that zero for now and insurance. I'm not going to say there's any reimbursement at this point to start off with for multiple personal casualty. I'll keep that and we're going to need an address that will be necessary to populate the form. So that's the minimum information to just get an idea or a feel for what's going to happen here. If I go back to the forums, you'll note what happened is it didn't make a schedule A there. It basically put this added schedule that we're going to be looking at, which is basically a schedule A, so itemized deductions. But it's got this added kind of component down here where it says that we got the net qualified disaster at the 9005, which we'll take a look at how to calculate in more detail by looking at the forum 4684 and then added the standard deduction to it, which is the standard deduction that you would generally get in this case for the single file or to get to the 2250. So I'm getting a benefit from this kind of component that's on the itemized deductions, even though I'm not basically itemizing. Notice that no other itemized deductions are pulling over, including like sales tax, for example, because I'm just getting that one itemized deduction. I'm not basically unlocking all the other itemized deductions that could be taken. I'm going to go back to the first page of the form 1040 and there we have the 2250. Now, if you were to mirror this in our software, it's a little bit complicated in like Excel. If I was trying to figure out what happened, I'd go, okay, schedule A, you might even have a separate schedule A. And I'm going to say that this is going to be, let's just put this into place where it's going to be under other itemized deductions. So I'll go back on over here and say, okay, let's make some room. I need some room here for my elbows. I need my elbow room. My elbows are cramped. Other itemized deductions. And so I'm going to make that a header. I'll make it black and white by going to the home tab will make that black and white. And then I'm going to call this a federally declared federally declared disaster disaster. We'll keep it at that. And then I'm going to say this one is going to be, I'll make it another color like a dark blue maybe to say that that's going to be within the other itemized deductions. But I'm going to have to do some sub calculations for this one. This is a bit tricky of a one. So I'm going to leave some blue items here. Let's leave some blue that I can enter some data and I might do the actual calculations to figure out what the what the loss is somewhere else. So I'm just going to put the total amount here, which was, what did I say it was? It was 10,000 we said it was. And then if I look at the calculation of it, notice we only got the 9,500. If I go to the form 4684, why is that? Well, I got the 10,000 this this form by the way called casualty and theft losses for 4684. But we're saying here that it's going to be if the casualty or theft loss is attributable to a federally declared disaster, we check that off and we put the number here. So that's what we did the type of property personal property. This is where it's located date acquired various. That's what happens when I put a negative into the software. Then the cost or basis we said was 10,000. And we didn't get any insurance or anything. It's got no value afterwards. So there's the 10,000. But then we subtracted out this $500. That's just part of the calculation for whatever reason. So we're going to say, all right, there's going to be a negative 500 that's going to come out here. And then I'll say this is going to be this is the total fed federally declared declared declared disaster. That can't be spelled right. Is that spelled right? Let's do the spell checker. That's what that's what that's what it's for. No need to spell with your head. Who does that kind of thing? That's weird. Disaster. Okay, so then I'm going to sum that up. I'm going to try to keep that in this column on the left notice. I put that in the white area because it's not going to be a data input. That's part of the calculation. I can use the software to do all underline it. I'll sum it up in here. Sum it up in here. So so there it is. Now notice, you might say, Well, what if I didn't have anything here? It's going to give us a negative number. Then that's not what we want. That's no good. That negative number. So what I'll do here is we got to do an if then formula. Let's do an if thing. I'm going to say if brackets, if the logic test would be all of this, which if the sum, let's say the sum of this stuff brackets is greater than zero. Then, which is a comma, I want you to take the sum of that stuff, just add it up. But comma, if it's not greater than zero, that is, then put a zero there. There's the logic test. Close it up, please. There's the zero. If I put the 10,000 here testing my logic test, that's not 10,000. That's 100,000. There's the 9,500 logic test doing the logical thing. So that then I'm going to I'm going to add that then to other deductions. So let's put let's put some more stuff down here because I could have other other deductions. Let's insert some more. And I'm just going to make this some more blue that I can put like gambling lot winnings and losses or losses and stuff like that later. So we'll talk about that in a second. And then I'll sum this up. This will be total, total other itemized deductions, total total. Now I got caps like total, total other itemized deductions. And we'll sum that up on the right here, summing it up, sum it up. And then we'll sum up on the outside, sum that up on the outside. So there we got the nine five and that should pull over to page one. But we it just takes the nine five. And in this area, we got that special situation. It's special right now that it has a schedule a with a disaster thing. So we got to do something funny. If that were to happen, we'd have to say, you know, let's let's we'd have to increase this by basically the standard deduction. So I'm taking, I'm taking like the standard deduction plus for whatever reason I get the casualty, the casualty loss, which is, which is this. I'm going to pick up this nine five right there. So now I basically get the standard deduction plus the casualty loss. There's the 2250. If I go on over to my forms, then there's the 2250 getting us to the 77950. And I can say, okay, there's the 77950. Let the tax return to calculate the tax on page numero dose to that is 12203 12903. I'm totally bilingual. 12903. There we have it. So there's just an idea of that. Now obviously you might say, well, what if I had other deductions over here? Like what if I had on the schedule a let's add the good old mortgage interest. Let's say that was like 12,000 on the mortgage interest. And then on the taxes, I got I got property taxes too. So then I've got property taxes of let's say another another 7000. So now I'm over the cap of itemizing without that added loss. So now I'm I'm on to the stand the normal schedule a here where we have the normal schedule a even though we still have this component on the bottom. Because you could see that we're not just using that bottom component now. We're now using the fact that that we were getting the other benefits of the other deductions up top as well. Okay, so now let's think about the gambling losses because that's the other big one that people often that comes up oftentimes. Let's go back on. Let's clear this thing out. Clear it out. Clear it out. And let's think about the gamblers here. You can't forget about the gamblers. They want to they want they want to do stuff too. So I'm going to say let's get rid of this. I could go into more detail on obviously if you got insurance related to it then that would reduce you know if you got reimbursed on it. Keep that in mind that that would affect the amount that you would get to deduct and so on. So but we'll keep it there. Let's go back to the forms were back to then our starting point. So there we are at our starting point and now we've got gambling losses. Let's say now remember you can only take the gambling losses if you had gambling winnings. So let's imagine we got the schedule a here and we had then the other gambling winnings. This is what we saw in the past. We got gambling winnings here and we're going to go into that and say gambling winnings WW2G reported possibly from the casino or something. Casino and we've got winnings. And so let's say we've got you know 1000. Let's say let's say 10,000 of winnings. We did good. We did good 10,000 of winnings. And so if I go back on over then there's there's the winnings that we have that then flows through to the first page of the 1040. So now we've got our winnings. Well if I had winnings I might be saying I spent like the whole year at the card table winning that $10,000 spending like 60 hours a week. You know this what about all my losses that took well then then we'd have the losses but they can only be deducted up to the amount of the winnings and we'd have to clear the itemized deductions in order to be them for them to be beneficial. So if I go then into the law to the schedule a we're going to start at schedule a schedule a and we're going down to the other items so we're going to say gambling losses now. Notice in this software when it has an override when it's basically saying I would we would prefer you to put it somewhere else it puts a little over there so I could put the losses there. But I'm going to say yeah maybe I should search for where where they want to put it if I go if I go back on over to the gambling information. We've got this other little item when I put the casino also note when I have this information I would have to put the EIN number. We talked about that in the prior presentation. However, what I want to focus in on this time is the losses which I could put up top versus losses miscellaneous and then I jump over that's a little bit that screen that kind of pops back and forth right there sometimes kind of confusing to me. I would think you would scroll down to it. But in any case that's the way the software is in a couple different types of things. So I'm going to put the losses and let's say the losses were 20,000 right we had way more losses than winning. That's not 200 not that bad. We're not that bad at the card table, but we'll put the 20 there. Then if I go back on over to the forums, then I'm going to go down to the schedule a and the schedule a it kept it of course at the 10,000 so we can't have more losses than the winnings. So now you can see that the winnings are taken on the schedule one all of the winnings being reported. And then the losses are on schedule a being capped at the point in time or at the amount of the winnings and we're currently not getting the losses because the losses are below the threshold for us to basically be over able to itemize. Now if we have substantial losses over that amount and or if we had other things that would open up the capacity to take on more more stuff for itemizing such as a home which has the mortgage interest and the property taxes and that would open up possibly the capacity to take more the gambling losses. But let's just increase the gambling losses just for the fun of it and say we're going to go back on over and let's go back up top and say the winnings were 15,000 and the losses were 20,000. So now we could say okay schedule one has now the 15,000 on the winnings which pulls over to the first page of the 1040 15,000 and then we got the schedule a now taking the losses of the 15 because it's greater than or the total of them being greater than the standard deduction. So let's put that into our Excel worksheet over here and see if we can mirror that. We could say okay the disaster loss thing that's not happening anymore. So I'm going to say that's gone. But notice I took that away and it doesn't mess up anything and I go back to the first page and everything is back to what it should be so I think everything is working properly with regards to that. I'm going to go back to the schedule a and say that we have gambling losses gambling losses so let's go let's also put the income over here on schedule one where I had gambling winnings which I said was 15,000. So we could do a little formula over here we can go back to schedule a and we might say that the gambling losses for example are we said 20,000 and it would be limited to the amount that we put on the income side so maybe then I do another calculation here and I'm going to insert, insert, and then I'm going to make this white because it's going to be a calculation in and of itself. This is getting complex. This is getting complex. It's not that bad. Don't worry. It's not that bad. So this is going to be then equal to this is going to be equal to well let's do an if then function we need an if then because it needs to be capped at at whatever the winnings were so it's going to be equals if so I'm going to say if this number and I'm going to say is less than if it's less than this number over here which was in the income line the 15. Notice I can still see it up top here, even though even though I'm on a different page. So I could put the comma up top just to verify that before I jump back on over here. So so then when I jump back on over notice, then it added another it added another argument. So I got to be kind of careful when I'm jumping back and forth. So let's see what it says it says this one up top. If that is less than this this item below, then I'm going to say comma then I want you to take this number. So then if it's not comma less than then I want you to take the capped number, which is on the additional income the 15,000 again you can kind of see the argument up top, and then I'm going to put brackets to close it up and enter. So that means that if it was like 7000 let's test out the logic, then it would take the 7000 if it was 20,000 it's going to cap it at the 15 the income level. Now then if I go to the total itemized deductions I'm going to have to adjust this a little bit it's going to be equal to this number up top plus the sum of this stuff down below. And so there, there we have it. So that's going to be the 15 in this case, and that 15 pulls over to the first page of the form 1040. So now we're taking the 15,000. We also have the state taxes that have now been opened up. So if I go back on over, we have the sales tax of the 879 that opened up. So let's go back up. That is spelled wrong gamble gambling, gambling. Oh, God, all right. I'll fix that in a second. Hold on a sec. 879. 879. So then if we sum that up, we're down here at the 15879 15879. Let's run the spell check. Spelling is for computers, man. Spelling is just for computers. Human beings don't do that kind of stuff. Deductible. That's computer work. So then we got the 15879 pulling that over to the first page. There's the 15879 that gives us the 99 121. So if I go back on over to page one. We've got now I also had the the income so we got the 15, the 15871 99 121 99 121 letting the software do the calculation on the tax page two is now going to be at the 17811. So 17811. So that's just an idea, you know, of those some of the more common kind of other deduction questions that you might have with regards to them.