 Income tax 2021-2022, HSA deduction, moving expenses, deductible part of self-employment tax and self-employed SEP simple and qualified plans. Get ready to get refunds to the max diving into income tax 2021-2022. Income tax equation focused on the adjustments to income which you might hear called the above the line deductions, the schedule one deductions, deductions for AGI as opposed to the other deductions which are the standard deductions, itemized deductions, keeping the adjustments to income, the above the line deductions, distinct in our mind as a subtotal getting from income minus the adjustments to income to the adjusted gross income or AGI, the AGI being important because that's usually the number that we use when we think about phaseouts as income goes up to phase out the benefit of things like deductions and credits. Here's the first page of the form 1040. We're focused on line number 10, adjustments to income from schedule one line 26. This is schedule one part two and we've got our items here. As we populate these items, they're going to flow back up to the form 1040 here on the first page, line number 10, the adjustments to income. We're focusing in this time. We've got the moving expenses for members of the armed forces just as a general rule. Remember that that's one of these other ones that kind of changed. In prior, like two years ago or something like that, there used to be a more expansive rule for moving in general so that if people had to move for work in order to make the capacity to move easier, I believe was the rationale, then they had a possible deductibility for the moving. However, now it's severely restricted, so you're not going to see it far as much although you might still get questions about it from clients and you got to be able to say, hey, yeah, that's like two years ago thing that changed that made it much more restrictive, only applying in essence to the armed forces at this point in time, noting that anytime you're dealing with someone in the armed forces, you could have special kind of rules that you need to be aware of which seems reasonable of course in that particular profession. And so you just want to make sure that you're aware of them as you take on those client tells so that you can you can pick on or pick up what you need to. So deduct part of self-employment tax. So the self-employment tax has to do typically when when you're subject, it will have to do if you are subject to self-employment. The most common example being then the Schedule C type of income. If you get to deduct the if you get taxed on self-employment, which is kind of like the equivalent of the payroll taxes, then we're going to be able to deduct half of it. This whole thing gets a little bit complex. You're like, well, why would you do it in such a convoluted way? Well, they're trying to mirror what is happening on the business side of things. If you were like a corporation paying the payroll, they're trying to mirror that same kind of activity on the sole proprietor side of things. So they want to be charging the payroll tax equivalent of Social Security and Medicare. But then typically you get to deduct the employee part of Social Security and Medicare. And that's why they have half of it deductible as well. So we'll dive into that more when we get onto the Schedule C. But just remember the Schedule C business in general or businesses in general will increase the level of complexity and the type of taxations you will be doing a lot. And they might also require for many businesses, especially small businesses, help with like bookkeeping items as well. So you want to be aware and be able to say, what kind of business am I in? Where am I going to specialize? What kind of clients am I going to be picking up? Do I want to be picking up business clients and diving into that kind of stuff? Or do I want to say possibly recommend at least that component to other people to help out with the business stuff and put my focus on tax returns that possibly I can do on a more automated process that don't have that added level of complexity and focused on doing a lot of tax returns at possibly lower profit margins. We've got the self-employment, SEP, simple and qualified plans. These are going to be items that are like kind of like the IRA deduction. But if you're talking about self-employed, you're talking about once again individuals that have their own business. And if you're a small business, you might say have a sole proprietorship, for example, and you can't really do the 401k plan or it's going to be more costly to do that. So other plans that you could set up that could give you more benefit than say, for example, just a normal IRA would for putting money in and possibly helping out your employees for a small business could include these things like a SEP, a simple and a qualified plan. The planning for these type of things as well as the implementation of them and the deductions related to them and the limits for deductions and so on. Once again, get a lot more complicated as you pick up tax returns to deal with these business needs. You're going to have more planning needs, more bookkeeping needs and more kind of just components that are going to be involved on the tax return over and above just data input forms like W2s and 1099s. OK, so we have the health savings account, HSA deduction. You may be able to be able to take this deduction if contributions other than employer contributions, rollovers and qualified HSA funding distributions from an IRA were made to your HSA for 2021. So if this is going to be applicable to you, then you want to go to the IRS website and you can look at form 8889 and look at the instructions related to it found in the irs.gov, irs.gov. We have the moving expenses. You can deduct moving expenses if you are a member of the armed forces on active duty and due to a military order, you move because of a permanent change of station. So this is the one that they've severely limited subject to, of course, the military. Therefore, you're not going to see it all the time unless you have the military clientele. And even then it might not be as common, although this kind of move might be more common than and oftentimes the military and government entities in general might pay or reimburse for the move, in which case it might not even be applicable then. So it's far less applicable than the prior version of the law when you had a moving expense related to changing jobs. But you can use the tax topic 455 or C form 3903. You can find that on the IRS website and check out the instructions for more detail there. Deductible part of self-employment tax. If you were self-employed and owed self-employment tax, fill in schedule SE to figure the amount of your deduction. The schedule part of your self-employment tax is online 13 of schedule SE. So this is the one that's often a lot more confusing that you'll be putting into place if you have a schedule SE type of business. We'll take a look at it and explain it a bit more when we get into the software example and when we get into the schedule SE business in general, we'll start diving into all the different components that are added when you have a schedule SE type of business. Because just having that schedule SE type of business, you've got all these other factors that start to come out of the woodwork that are above and beyond normal data input for just like a basic type of return, which you can generally focus on forms to input. So remember that if you're working as a tax business, you want to think about where are you specializing? Do you want to take on these more complex things? If you do, you're probably going to start doing things like consulting, and you're probably going to do things like more complex research for returns, having to do things that are not driven just by the data input. And therefore, you'll be able to charge higher profit margins. However, you're going to only be able to do less returns. So or there's a lot of people that are kind of, you might say, I want to completely automate my system if you're some kind of person that's basically saying, I'm going to use the tax software. I'm going to use the data input forms. They're going to e-file everything. I'm going to have everything basically input as automated as possible in terms of the W-2s, the 1099, and reduce the data input down to as minimal as possible and not taking on the other kind of more complex tax returns that are going to require data input because they're too complex to just rely on the automatic entry. Then you got to keep those in mind when you're doing your business or where you want to work or where you want to work within a company firm as well. So self-employed, simple and qualified plans, if you are self-employed or a partner, you may be able to take this deduction C publication 560. So if you're self-employed with a schedule C, for example, then you're going to say, okay, if I'm self-employed, I want to be able to put money into a kind of retirement plan. If you had no capacity to get access to a retirement plan, your first thought would be an IRA, but an IRA has problems because you cannot maximize the contribution. You don't have the same kind of matching kind of things as if you had access to like a 401k through an employee. So the small business owner could say, well, I could put in a 401k plan into my business, but that's usually going to take a lot of work and a lot of admin work to be able to do that. And so oftentimes the in between would be, maybe I'll set up a SEP or a simple kind of plan, which is kind of like a 401k, like a cross between a 401k and an IRA that would be specially designed for small businesses. And what it does is it increases some of the benefits that you might be able to get, such as being able to possibly put more money into your retirement plans than you would under just simply a normal IRA and but not have to deal with a headache of a 401k plan, which has so many, so many admin kind of requirements and so forth that it's going to be more complex than it be worth.