 Here we are in our example, Form 1040, using LASERT tax software to populate it. You don't need tax software to follow along, but if you have access to it, it's a great tool to run scenarios with. You can also get access to the Form 1040 related schedules and forms at the IRS website, irs.gov, irs.gov, our starting point, as per usual with our starting point, single filer, Mr. Anderson. We've got no dependence down below. We're starting out with that 100,000, just an even number on the W-2 income, and then we've got the standard deduction. Although I had another 1,000 in there, we took that 1,000 out. So then we just have the standard deduction at the 12,950, getting us down to the 87,050. I'm gonna mirror that over here on our tax worksheet. So 87,050, and then we'll let the tax software calculate the tax on page two at the 14774. So we'll pull that on over here, 14, 14774. So there's our starting point. Now the W-2 is basically the document that's most thought of when we think about the income tax preparation, one of the most prevalent types of documents, but it can also be one of the more confusing ones because it does have a lot of kind of data input fields within it. So let's just do some comparison with some different kind of mock W-2s. This is just in an Excel worksheet, and we're focusing in over here on basically the boxes of the W-2s because these first three boxes are basically kind of income lines and these second three boxes on, or the boxes on the right, are gonna be the taxes related to those kind of taxable income lines. This is gonna be important to understand for the data input, although we can kind of mindlessly and most software do the data input, we wanna understand what's going on with these kind of different boxes and what's happening with them so that we can understand what the software's doing, see if it makes a problem, be able to correct then the problem, and then we can also communicate with our clients about these different line items as well. So this first one we can see of course, box one, three and five are the same. This will often be the case if you're at a lower income site, W-2 threshold for example, and you do not have access to something like many benefits in the app of job, like a 401k, which is a common example, which might be a differentiating factor. So if you saw something like this, it would be a pretty straightforward kind of data input. Let's just kind of put that in here. We'd be putting into the data input, the data input field. Now we've got other informational kind of stuff that has to be put in with the W-2. As we have more tax software, the IRS wants more and more information, right? So now they're gonna want a little bit more data in terms of the employer identification number, their address and whatnot as we do the W-2 input. But I'm just gonna focus in on the data input for the amounts. So I've got 40,000 here. Now this amount, the second amount, we're gonna have to do the data input because that's not a flat tax. That's gonna be like a progressive tax based on the tax tables because that's our federal income tax. So therefore the software can't really help us out to populate that. I've gotta manually put that into place at the 4,000. So that's gonna be 4,000. However, the social security wages usually can be manually input. So notice I have to put this line which is actually social security wages, not the social security tax. Now oftentimes I didn't do the data input, the software's doing the data input because it's kind of assuming based on the rules that it's the same 40,000 because I didn't hit the cap for social security and they're correct. So that matches what's on my W-2. Notice all this other stuff because it's black, it's showing and not blue. This software is trying to show that hey, they did the calculation for us. Now why is it possible that the software can do the calculation because these other two taxes are basically more like flat taxes. There's systematic rules that are a lot easier to calculate. So the 40,000 for example, times the 0.062, that's how the software's come into that 2480 because the social security tax is basically a flat tax. So we shouldn't have to do the data input, we should just be able to double check it if we've got the right dollar amount. Then they have the 40,000 for Medicare wages. Notice we have different data input forms but it's trying to guess that that's gonna be 40,000 as well based on the data input on the first box. And if I take that 40,000 times 0.0145, 1.45%, that's how we're getting to the 580. So those two should be fairly easy to kind of check and verify. And if I look at my W-2 form over here, those numbers were populated and everything looks good. Now on the bottom of the form, we've got the state taxes. I'm not gonna deal with the state taxes for our federal income tax example. That will depend on if you're in a state that mirrors the federal income tax system, in which case it'll be much the same kind of process without the social security and Medicare, but basically just these first two boxes. And if you're in a tax that has a sales tax as their primary mode of taxation in the state, then you may not have any taxes for the income tax because they don't do that, they chose.