 Interest income tax software example. Let's do some wealth preservation with some tax preparation. Here we are in our exam support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. The Apple Form 1040 using LASERT 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 forms and schedules IRS website IRS.gov IRS.gov. Our starting point as usual is going to be the single file or Mr. Anderson. We don't have any dependence down here to kind of confuse the picture 100,000 W2 income. We've got the 12,950 at the standard deduction the 87,050 we can mirror that over here in our tax formula worksheet where I'm going to say the income is going to be 100,000 pulling over to the first line of the income. We've got the 12,950 standard deduction 87,050 that matching what's on the taxable income page to let the software do the tax calculation 14774 in this case 14774. That's where our major focus is, but we have the 15,000 that we're assuming for the withholdings as well. Okay, so let's let's add some interest here because that's what we're interested in at this point. So we're going to go down below the interest is going to be pulling in down here where we have the tax exempt interest online to a and the taxable interest online to be if we go over a threshold of 1,500, then we could attach the schedule be or must attach. I should say the schedule be in that case. So that's the general rule. If we're looking at the form for interest, we're usually looking at a schedule as an interest income 1099 int type of schedule. This might come actually from a financial institution. So you might not have like this whole thing might not look exactly the same, but they'll have, you know, it'll be say 1099 int on it somewhere generally. And it'll have the same box numbers. And if it's a taxable component, you're going to have box one because that's where they'll put the taxable amount. If it's non taxable, if it's something like tax exempt interest, possibly you're going to have this box eight down here. These are some of the more common type of calculations of interest. Now for most taxpayers, of course, we would expect the primary source of income if they're in their working years to be W2 income, for example. And then the interest income would be on those investments that they have usually investments that are outside of even a 401k plan or something. So we would expect that the interest income for most people is not going to be the most significant part of their income. If they're retired individuals and they have more money that is invested and earning interest than you would expect the interest might be larger. Obviously, when we think about interest, we're thinking that if someone has a large amount of interest income, you would expect that they have a significant amount of savings that are saved somewhere oftentimes would be generally the case. Alright, so we can jump to the data input possibly. I'm going to go to the 1099 interest and let's say that this comes from a financial institution. I'm just going to say bank one here and let's say that we had $500 in interest. Let's just start it up 500 by pull on over to the tax return and say what would happen? We still got our 100,000 W2 income, but now we've got the 5000. That's the taxable interest income. Notice there's no schedule B popping up over here because it's not over the threshold of 1500 to be on the schedule B. And so that of course increases our taxable income and so on. I can reflect that on our schedule over here on the income line. Now I might make another schedule called a schedule B, which I don't have yet. So I might say let's make another schedule and then I'm just going to call it a schedule B. Now in this case, I don't have a schedule. I'm not using the schedule B on the tax return, but I'm going to call it a schedule B interest and dividend. And then this is where I'll pull the interest and dividend over to page one, whether it's over the threshold or not to actually have a schedule B populated on the tax return. I'm going to select this whole thing, right-click the worksheet. I'm going to format the sales and just build this as we go. Currently I'm going to do this fairly fast because it isn't an Excel class, but I think it's useful to see how we construct this thing as we go. None here, I'm going to say no decimals and okay, scroll in a bit. This is going to be, I'm going to say this is interest and dividend. Boom. And so let's make the whole thing like bold too. I'm going to make this black and white home tab font group, making it black, making it white, bam. And then the first part I'm going to say this is interest. And I'm really just going to be focusing in on the taxable interest that's going to pull in to our tax calculation. I'll make this a little bit larger. And so I'm going to leave some space here for like a few institutions that could be input because I might have multiple financial institutions. I'm going to make that blue. So we'll go up top and say font, making it blue. If you don't have that blue, it's in the more colors standard. I'm using that blue. You don't have to use that blue by the way. Because I like it home tab font group border dropdown. And there's the borders. And so this is going to be bank one, put the 500. And I'm going to sum that down here for the total total interest and sum it up. And so we just put a little worksheet together so we can recalculate this. Let's check the spelling of it. Check the spelling. Why don't you? Because you can't spell worth nothing man. It's horrible. Look at that. What are you talking about? I spelled everything right. In any case, we're going to pull that to page one. Let's pull that on over to page one and double click on the income line. I'm going to go to the end of it. And now we're going to add this other schedule just pulling into this line one. And that's going to be the schedule B. And I'll say the total interest. Let's pull that in. I'll probably have to modify. Let's actually modify. I'm going to modify it and attach it to this. For that right now, I should modify that a little bit differently. That's going to be the total interest. And then I'm going to have dividends. Dividends. And let's make that black and white up top black and white. And then let's say that we have our space for the dividends we can have here. Boom. And let's make this bordered and blue. And then I'm going to say this is total dividends, total dividends, which will be the sum of this outer column. And then I'm going to say that I'm going to have a line that says total interest and dividends. And this will be the total of the outer column. Interest and dividends. So that line one on the form 1040 should pick both those up. So I'm going to delete this last bit. And I'm going to say I want to pick up that bottom line, the bottom line of all that boom schedule the 500 from there. So there we go. So bottom line is back. It's up to the 1005 12 950 standard deduction 87 550 looks movie B to the end page two and 14 884 on the tax now. So 14 14 884. Okay. And then we had a tax exempt income over here back to page one on the interest just to make a little bit more complication of things just to complicate things a bit. And we'll say that would be in like box eight. We have that tax exempt kind of thing. If I go back on over, I'm going to say let's say that was from another financial institution. I'm just going to say bank two. It's got municipal bonds. We'll say and let's say that they were tax exempt interest. Let's say that was 200 or whatever. So then if I pull that on over, I'm going to say 200 tax exempt. So now we've got the tax exempt interest at the 200 and the taxable interest at the 500. And the 200 is not changing any of my calculation because it's reported. I'm showing the IRS. I'm saying, Hey, this is what's on the W2. I'm telling you it's there, but it's not including because it's exempt. I said it was exempt. So we're still at the 87 550. Even though we put that there, 87 550 page two is at the 14884 just as it was before. So now let's go back on over and say, let's bring it over the threshold of 1500. So schedule B will populate over here. So let's go back on over and let's make another one. Let's say this is bank three and we'll say that we had another 1000. So, so let's say, let's say 1200. That should take me over the threshold well over the threshold. So I'm going to say forms. So now we still have the 200 exempt 1700 like we would expect, but we also see the sub schedule now populating. Populating a gigantic cause in which is the schedule B. So remember when you think interest income, you think schedule B, but the actual schedule B will only be necessary. If your interest income is significant material enough for the IRS to say we want you to include a separate schedule listing out the institutions that actually paid you in a more detailed way. That amount is going to be 1500. So, so here's that. So we've got the bank and the interest that adds up to the 1700, which of course pulls in to the first page of the 1040. So now we're at the 1007. If I go back to my data input over here and was to mirror that I could add another schedule for like bank bank to for the exempt portion. I just want to make sure it's outside. Maybe I put that out here somewhere like 200, you know, out here 200 or something, you know, and I might have tax exempt dividends. So I might or non qualified, non qualified dividends and stuff that I might want to break out. So maybe I say this is exempt just for data. Just so I could see the exempt portion. And then I could say bank three. Three was for what did I say 1200. And so the total exempt is over here. I'll sum it up. Sum it up. Little darling. Sorry about that. So any case that adds up to the 1007 pulling over. So now we're at the 1007 minus 12,050, 88950, 88950 is what is down 88750. I'm at 88950 K. The heck Paso 1000 and then 101 1017 1017 1017 12950 12950 88750. That's right. 88750. What are you talking about? And then the tax calculated on page two. That's 15148 15. That's not 15. Yeah, 15148 15148. Boom. So there is that. So that's the general idea. Usually the interest is fairly straightforward, but you can have those kind of weird situations sometimes with the bond and the amortization of the bond premium and that kind of stuff. So just remember the general rule on on if you got a 1099 and you're saying, okay. The 1099 says I have this taxable component, but part of that is is like something that I shouldn't have to include because it's a bond premium or nominees or something like that. Then what you want to do is say I got to report this on my taxes as it shows on the 1099 or the iris is going to almost certainly give me flack about it. You know, try to try to give me a notice on it or something. So I've got to show them why I changed it. So this one I'm going to say bank for or whatever. We're going to say let's say that we've we've got we've got we've got a thousand from this bank, but I'm not taxed on part of it because I'm going to I'm going to distribute it or I'm not taxed on all of it. Let's say so then underneath it I might add something which would say give me some rationale, which might say, well, this is a nominee distribution. And then I could show the negative 1000 here that would say, okay, so the iris can at least see, okay, now I see that it was on there and then you took it off with this some kind of rationale. So you would think that at least just like the computer in the iris side of things isn't just going to say, oh, well you didn't put something on there that matches the 1099 because the computer will at least see it matched up. And then you had some other thing the rationale which was which is showing why that that 1099 was in essence wrong or why you adjusted the 1099 format. So we put it on the last line here. We said there's the 1000 and then we changed the 1000. So now in box two, it's in essence not included. And again, you might say, well, why didn't I just not include either of these lines because you come to the same subtotal down below because you're trying to tell the IRS. Look, I know you got a 1099 for a thousand dollars, but I'm that shouldn't be me. That's someone else that it's going to be distributed to you because it's whatever reason or whatever or there's a premium bond premium amortization or it's a nominee distribution or something. And therefore you have that adjustment. Again, unusual situations to have that in place. But the concept is important being that obviously these forms that we're receiving W2s 1099s 1098s. These are forms that the IRS has to. And if there's something that needs to be adjusted, something that's wrong, we've got to communicate that to the IRS. Not only to the human beings, but to the software that they're using to kind of audit and double check what we put to the format that that they're getting the forms they're receiving. In such a way that hopefully things are as clear as possible so that we can get things done. So those are the general, that's the general idea.