 Here's our example Form 1040. We've been populated with LASERT tax software. 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. We've been looking at the Form 1040 and constructing an Excel worksheet that we can use to double check the data input with and better understand a formula format for the income tax forms. So we've been entering the information starting with the income statement, basically reflected on the first page, which is income and then the deductions. And then we get our taxable income, kind of like the bottom line of the income statement. And then on page number two, we're gonna have the tax calculation, other taxes, credits, and payment. So that's where we are in our formula down here. So the top half we've been looking at, which is gonna be the income line. And then we had the adjustments to income and that gives us our adjusted gross income. Then we have the greater of the itemized or standard deductions. And then we're not gonna dive into the qualified business income. That's if you had a business of Schedule C, we'll talk more about that later. And that gets us basically to our taxable income. So this one actually kind of makes intuitive sense just from an accounting standpoint, we're basically doing an income statement. Although the format of the income statement is quite complex because it's quite weird because it's quite manipulated from the tax code, not just including those deductions. You would expect to be there in a normal income tax system, which would be one or deductions which were used in order to generate the income. That's what you would expect to be kind of like the natural deductions. But we have all these other kind of weird standard deductions and above the line deductions for whatever other incentive or tax purposes that they wanted to put those in place for. But in any case, that's kind of normal. We can reconstruct that. The tax calculation as we saw is complex because it's gonna be based on the tax tables. So we'll actually pull that from the tax return oftentimes. And then the bottom half, you would think we're almost there once we get to the tax calculation, but no because there could be a significant amount of credits which we have to break out between refundable credits and non-refundable credits. And then we have other taxes that might be in place such as self-employment tax, for example, that we have to deal with. And we've got the payments and refundable credits that we have to deal with. So let's go back up and let's kind of make it a simplified scenario again. And then we're gonna basically make our sub schedules with relation to the other credits and other taxes to have these numbers pulling in from somewhere and then we'll build on to them in future presentations as we do our practice problems. Let's go back to just basically a basic scenario on the top half of the income statement to start with. So we've got income and so I'm gonna get rid of this adjustment to income here. So let's get rid of this one. I put that over here on the adjustments. I'm gonna remove that. I'm gonna put a little border on this. Let's put a border here and then I'm gonna remove that. So now we're at 100,000. Let's get rid of the schedule A stuff too. So I'm gonna go to the schedule A and we have that up here. So the taxes, I'm gonna remove these for now. Bring that back to zero. So nothing's on the schedule A if I pull that into the first page. Now we're taking the 12,950 which is the standard deduction. So if I go back on over 12,950 that gets us to the 87050. So if I go, we're at the 87050 and then the tax, I'm gonna depend on the software to calculate on page two would then be the 14774. Let's start there, 14774. And then we've got the other credits. So let's just add another tab. I'm gonna add another tab. Now it gets a little bit messy with the other credits because you might have multiple different forms. So if you're constructing your tabs in Excel, you might make like another tab for each form or you might just make a general tab that's gonna be comprising most of these other type kind of credits over here. Also note it gets complex with the credits because we have the non-refundable credits and the refundable credits and we might have credits, many credits that are refundable meaning they can take the tax liability below zero. So you're actually getting like a refund or a benefit program even though you didn't pay any tax. Many credits that have that component have a non-refundable and refundable component to them which makes the calculation more complex because then we gotta think about, well, okay, if that brings the tax down to zero, then it's not eating into the refundable component and different tax credits are structured a little bit differently. So that muddies up the water as well with our calculations. So let's just take a look at one over here. So a common credit would be the child tax credit. So let's just add that one. Now note, again, that's on schedule 8812. So let's just add that to do that. I'm gonna add a dependent. And so I'm gonna say let's add a dependent and just see what that looks like. So I'll put a Sam Anderson, Sam Anderson. And we'll say this is relation, I'm gonna say. So there it is, that should do it. So if I go back on over page one then, so now we're gonna have single. Now note that if we have a dependent that might move the filing status up to a head of household, but I'm not really focused on the filing status right now. I'm really just focused on the dependent status. Let's actually move that up. Let's just play with that. We'll say, okay, that means that we're gonna go from single possibly to head of household.