 Income tax 2022-2023. Itemized deductions, other itemized deductions. Let's do some wealth preservation with some tax preparation. 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. Most of this information comes from the Schedule 1 tax year 2022 instructions you can find at the IRS website irs.gov irs.gov looking at the income tax formula we're focused on the itemized deductions remembering that the first half of the income tax formula is in essence an income statement where we have income minus the equivalent of the expenses those being the deductions equals the equivalent of net income that being taxable income except everything's topsy-turby upside down for taxes we want taxable income in other words to be as low as possible as opposed to net income where we normally want it to be as high as possible in prior presentations we talked about what needs to be included in income we talked about the above the line deductions as opposed to the below the line deductions we're doing now otherwise called adjustments to income to get to that subtotal agi important subtotal because that's the one typically used when we have income phaseouts for certain deductions and credits now we're on the below the line deductions the greater of the standard or itemized focusing specifically on the itemized deductions looking at the first page of the 1040 those are on line 12 standard or itemized deductions we only take the itemized deductions typically if they're greater than the standard deduction of the 12,950 for single filers 25,900 for married filing joint we could have a weird exception of using the schedule a if there's a qualified disaster type of situation so remember if there's a qualified disaster you should be able to look that up on the irs website and you might have a situation where you still are using the schedule a but in essence possibly get the benefit even though you would be normally taken the standard deduction so be aware of that this is the schedule a these are the other itemized deductions as you can see there are a lot lower or there's a lot less activity than you might remember from like a long time ago where you might have more things that would be included in say other itemized deduction a science of deduction so now they're much more limited the example here being the gambling losses to the extent of the winnings remember that normally these other deductions are not the area that's going to kick people over to taking the itemized deductions unless it's one of those qualified disasters or something like that that took place so normally you wouldn't be taking something like gambling losses unless you are already itemizing the thing that kicks people over to being able to itemize typically being owning a home because then you have the mortgage interest and the property taxes and then if you can tack on gambling losses on top of that to the extent of gambling winnings then maybe you can get an added benefit so remember standard deduction you got to clear the threshold usually unless there's an exception for the qualified disaster 12,950 single 25,900 19,400 head of household here's the other other weird circumstances if over 65 that which isn't a weird circumstance but other standard deductions there and or if blind so other itemized deductions line 16 increase standard deduction reporting if you have a net qualified disaster so here's that net qualified disaster again loss form 4684 we talked about form 4684 in a prior presentation line 15 and you aren't itemizing your deductions you can claim an increased standard deduction using schedule a by doing the following so we looked at a software example of this in the past we might just recap it again in a future presentation number one list the amount from form 4684 line 15 on the dotted line next to line 16 as quote net qualified disaster loss end quote at attached form 4684 number two list your standard deduction amount on the dotted line next to line 16 as quote standard deduction claimed with qualified disaster loss and three combined the two amounts on line 16 and enter on form 1040 or 1040 SR line 12 so in essence you're going to use schedule a but you're going to you're going to add the standard deduction in so that it will help you to clear the standard deduction and so when you so when you pull it over to to the first page it will be increased by the standard deduction so we looked at an example of that last time we might look at it again in the software just to get an idea of it it's also a little funny it's a little weird but it works do not enter the sign said do not enter obviously just one more point on that if you have a qualified disaster in an area where you are at or you're doing tax returns at then you clearly want to get more information from the iris website and FEMA website on that particular disaster and drill down on it is a is it a qualified disaster and so on and then and then be ready for that kind of unique situation for that particular disaster because it'll usually have its own code that you can then populate within the tax software which hopefully should also have the code within there for the FEMA code and the disaster code and so on so do not enter an amount on any other line of schedule a for more information on how to determine your increased standard deduction you can see publication nine seven six if that applies net qualified disaster loss reporting if you have a net qualified disaster loss on form 4684 line 15 and you are itemizing your deductions list the amount from form 4684 line 15 on the dotted line next to line 16 as quote net qualified disaster loss and include with your other miscellaneous deductions online 16 also be sure to attach form 4684 other itemized deductions list the type and amount of each expense from the following list next to line 16 and enter the total of these expenses so the form by itself just says other itemized deductions so you'd have to list what it is you're talking about when you include this if you are filing a paper return and you can't fit all your expenses on the dotted lines next to line 16 attaches statement instead showing the type and amount of each expense caution only the expenses listed next can be deducted online 16 for more information about each of these expenses see publication 529 so if any one of these items you want to drill down on more publication 529 iris website gambling losses gambling losses include but aren't limited to the cost of winning bingo lottery raffle tickets but only to the extent of gambling winnings reported on schedule one form 1040 line 8b so gambling losses are an interesting situation most of the time you know you have clients that might not be gambling like all the time right so you might have a situation where you have to include gambling in income but sometimes you have people that do gamble all the time and they are quite aware of the of the rules oftentimes for the losses and they might be tracking the information for the losses you might have other clients that won something just randomly they went to to vegas they won a big prize and then they got they got a w2g i believe and they had to record it in income so then once you had to record gambling winnings in income the question is well i spent a lot of money over there too just throwing money into into the horse track or wherever you are at don't i get to deduct the gambling losses now if it was a schedule see business if it was a business then then you would think you'd be able to deduct the losses but gambling isn't typically considered a business that's a tough argument to make and so therefore the losses generally limited by pulling them over to the schedule a and then saying you cannot have more losses than income which means they're severely limited to people especially that do not do not itemize so because the standard deduction you're not clearing the standard deduction also if people aren't gambling all the time they might not save the all the all the receipts and whatnot to give the supporting documentation of the losses which is something that you would want to do in the event that there was an audit on the losses that would claims you want to be able to claim or show the losses now if you're dealing with someone that gambles all the time all the time start a casino then you would want to possibly tell them if you're itemizing and you're going to have significant winnings and losses then you're going to want to make sure that you can track the losses so that we can properly deduct the losses and get any benefit we can can on that casualty and theft losses of income producing property from form 4684 line 32 and 32B on form 4797 line 18A so we talked about that a little bit already so we got the federal estate tax on income in respect to the decedent so an estate tax on the income so it's going to be more of an unusual situation when someone dies normally if they are a wealthy individual they might be subject to a death tax or a state tax type of situation which is different than an income tax situation so there could be some you know unusual circumstances where you don't want to be like double taxed on the estate tax the death tax which is basically a tax on the assets as opposed to the income tax which is the tax on when you earn the assets on the earnings so a deduction for so obviously again that tax would probably apply to people that are going to be you know that situation would only you would think come up on a more well-off individual situation and even then only only rarely you know right so a deduction for amortizable bond premiums for example a deduction allowed for a bond premium carryover or a deduction for amortizable bond premium on bonds acquired before october 23rd 1986 now when people deal with bonds oftentimes normal investors might not be buying actual bonds but you might have access or investment in bonds when you're buying bond mutual funds oftentimes for individual investors and even then those mutual funds might be under an umbrella of some type of retirement plan like an IRA or a 401k plan so so in that case you'd be less likely to kind of run into this situation for a lot of investors unless you're investing in you know directly into bonds in particular situations within bonds directly so an ordinary loss attributable to a contingent payment debt instrument or inflation index debt instrument for example a treasury inflation protected security so again that's a fairly specific type of investment oftentimes again a lot of individual investors when they're investing for retirement might be doing so and investing in things like bonds and securities but possibly doing so through mutual funds targeted mutual funds usually those mutual funds being under the umbrella of an IRA or a 401k which means you might not be as likely to run into that kind of situation so we might take a look at at least a couple of these on the tax software like the gambling one and we'll look at that form four six eight four possibly again for the qualified disaster losses