 Here we are in our example Form 1040 populated with LASERT tax software. You don't need tax software to follow along but 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 starting point as usual single filer we've got Mr. Anderson no dependence 100,000 on the W2 income 12,950 standard deduction gets us down to the bottom line taxable income 87,050 we're mirroring that on our formula in excel 100,000 we've got that's the wrong button 12,950 87,050 and then the software doing the calculation on page numero two 14774 15,000 withholding gets us to the bottom line 226 so there is our mirroring of that back on over now we want to think about the itemized deductions so note that remember when you're looking at the itemized deductions they're intimately related to the standard deduction because we need to clear the standard deduction before we're able to take the itemized deduction so in practice if we're talking to clients that are nowhere near being able to clear the standard deduction brilliant deduction and then we don't really have to worry about the categorizations on the itemized deductions and we want to keep in mind those categories and what they are anyways because when they ask us about it we want to be able to say yeah well that's an itemized deduction and you might not be able to take the itemized deductions because they're not going to be clearing the standard deduction we also want to keep in mind the major things that usually help people to clear the standard deduction that being a home purchase oftentimes a home purchase in a fairly high cost of living area where a high mortgage was taken out because it's the interest and the property taxes on the home that often are the big items pushing people over from taking the standard deduction to the itemized deductions you want to be careful also of recommending that people purchase a home simply to be able to itemize because it's more complex than that as we'll talk about when we get to like the home mortgage interest and the state taxes but that's often something that they might hear from like mortgage brokers and stuff so you want to have maybe a more nuanced perspective of that from the tax side of things because it will most likely come up now you can see the standard deductions on the left hand side where they have the 12,950 so you want to keep that number in mind if they're married you could double it so now you're at the 25,900 they would have to clear that number before it would be beneficial and then the 1900 is in the middle for the head of household note that if they're over 65 and or blind we have another set of rules which you can see on the form 1040 SR and they're on the last page of it and that means if they're single then then you're going to add one so now they're up to 14,7 if they were over 65 or blind and then if they're both it would be 16,450 married it would be up to 27,3 if one of the married people were over over 65 and so on you can see these different combinations and in our worksheet we've shown that down here these are our standard deductions they would have to clear and then if they were over if they were over 65 or blind we would add if they were single or head of household this amount and married this amount for each of those components so we could work that out and and see where the hurdle is and of course the tax software helps us to find that hurdle as well all right so let's let's see the schedule a itself is going to be right here and we could see the major components of the schedule a which are going to be the medical and dental expenses now let's just give a quick overview as we look at these the medical and dental is probably not going to be the main thing to push people over to itemizing because there's this 7.5 percent which is actually a floor so you have to clear that before the medical expenses start kicking in and then you you still have to get over the the standard deduction in order to itemize so if someone had a really big issue like they went to the hospital car accident or something then it's like then they might have severe medical expenses that may in and of itself bring them over into itemizing but most of the time that's not the thing that that that's the real big factor that pushes people over the taxes paid the major taxes we're often think about are the state taxes that are paid that are the income taxes oftentimes if you're in a state that has income tax or the sales tax but also the big one here is the property taxes which could be applicable on a home again because of a home that's quite expensive could have quite large property taxes that can boost you over to itemizing although they are currently capped as well which we'll talk about more later which limits some of the benefits from purchasing the home on high cost of living states oftentimes like California New York interest the major interest we think about here is the home mortgage interest that's the big one especially if you're purchasing homes in a high cost of living state you could have quite a high mortgage even for a fairly modest home and that could push the mortgage interest to be quite high the gifts to charity that's one that often comes up people think about gifts to charities a lot but if they don't itemize they're not going to get the gifts to charity then you got the casualty and theft which has been limited a lot the other itemized and the total itemized so let's just add something here to the interest this is the big one that often pushes people over and let's say they had home mortgage interest just so we can see the flip from itemized to standard so if I say they had more mortgage interest of let's say let's say 14 000 then it's likely that they're also going to have taxes property taxes that is related to the home so if I see home mortgage interest I got a 10 98 or something like that which we'll talk about later for home mortgage interest I would think well they must have property taxes if they didn't that would be weird so I'm going to say that they let's say 3000 on property taxes I'm just making these up right now we're going to go back to the forms so that means now we've been populating the property taxes the home mortgage interest that brings us up to 18 17 if I go to the first page of the form 10 40 that of course is higher higher than then the standard deduction and therefore we're taking the 18 18 17 at that point now if I mirror that over here on my schedule a in my worksheet I could say okay schedule a let's go back on over I'm gonna I can then put this mortgage interest in from the mortgage interest statement 14 000 I think I said it was and then we have interest for the property taxes which I think I said 3000 now I'm saying that this is a California return so that means I'm also going to have some other kind of taxes meaning I'm either going to have state income taxes or I'm going to have or I'm going to have sales tax so the software is currently calculating this tax right here for the for the sales tax so that's something that oftentimes you might be reliant on the on the software to help you out to calculate and every time you make a change you might have a change to like the tax calculation for the state taxes