 Income tax 2021, 2022 tax software dividend income. Get ready to get refunds to the max diving into income tax 2021, 2022. Here we are in our LASERT tax software. You don't need the LASERT tax software or any software to follow along, but you might want to have access to the Form 1040, which you can find on the IRS website, irs.gov, irs.gov. The software helping us to run different scenarios, putting the data input in and jumping on over to the forms, including the Form 1040, to see the results. Our starting point's gonna be single file or Adam Smith living in Beverly Hills, 90210. Wages at the 100,000, starting point, round number. We've got the 12,550 at the standard deduction, giving us the taxable income, 87,450. I can mirror this in our Excel worksheet, 100,000. We got the standard deduction, 12,550. We've got the taxable income, 87,450. Relying then on the software to calculate the tax, which is gonna be a key component here, as we think about the different calculations for the dividends, the 15,15. I'm gonna put that back on over here, 15,15. That's gonna be our starting point. I'm gonna go back on over and say, okay, let's go to the first page. We're talking about dividends now. So typically from your financial institution, for most people, the standard thing you're gonna get is the 1099 div, which might not look exactly like this, but it'll typically have the same, it will have the same box as if it's a 1099 div. Usually we're looking at box 1A and 1B as the primary two that will be considering box 1A, basically being like the total dividends, and box 1B being of the dividends in box 1A, the ones that are gonna be at a favorable rate because they're gonna be qualified dividends. And that usually means they're kind of, they're US corporations or something like that generally. But so let's go back on over and say, okay, well, let's enter that into the system here and see what happens. I'm gonna put this into the dividends. So we're gonna say we've got some income, income line items for the dividends. And I'm just gonna call it corp one or is financial institution one, for example, ordinary dividends, let's just start it off at 1,000. And let's see what would happen if I don't say they're qualified. All 1,000 and none of them are qualified. Therefore, there would be something in box 1A, 1,000, nothing in 1B in that instance. So I'd go back on over and say, okay, what happens? I could double check this and say, now I've got the 1,000 here, we don't have a schedule B popping up because the threshold has not been hit in order to include the schedule B at this point, nothing in the qualified dividends and my income goes up by the 1,000 to 101. I can mirror that over here in my worksheet and I could say, okay, let's go to the schedule B and let's have our dividends and we had the 1,000. And here I could try to indicate whether they're qualified or not or maybe I don't on my worksheet because that's gonna be something that will change the tax calculation which I'll be dependent on the software for. So there's the 1,000 pulls over to page one, 101. We still got the 12,550. That gives us the taxable income at the 88,450. 88,450, bottom line ties out to the tax here. I'm gonna depend on the software to calculate now the 15,255, 1515, 255 is the tax. Now that calculation should basically be the same as if I had any other kind of income or ordinary income. In other words, I should get the same tax calculation if I took that 1,000 and put it up in the wages. Let's try it out. Let's say what would happen if I took this 1,000 out here and I just put it up top and said my wages were up by 11,000 and that's not right, 101,000. And then go back on over. I'm still at the 101,000 but just a different type of income. And we're gonna go down, we're at the 88,450 and the tax is still at the 15,255, the 15,255. Let's change that up again. Let's go back on over and say, okay, let's bring this back down to the 100,000 and then let's go back to our dividends, dividends and now let's put the 1,000 here but say they're all qualified now. All the dividends are qualified. So now that would mean that we would see this in box 1A and 1B and so I'm gonna go back on over. What's the difference? Well, if I go back to the forms and I go to page one now we see that we've got the 1,000 still here but also the whole amount is also in the 3A. That doesn't mean that we got 2,000 of dividends. That means of the dividends we got all of them are qualified. So that's gonna have a tax implication. Notice that there's no difference over here. I'm still at the 101 here. I've got the 12,550, no change there, the 88,450. So the bottom line here is the same, 88,450. I'm gonna put this 15,255 on the side but the tax calculation should be different. So if I go to my page two, 15,165. So 15,165. So how did that happen? What was the benefit that took place? It took place because when they applied the tax they used the different tables, a different whole different progressive tax system to apply it out and we saw the tables looking something like this. And that's kinda how I would explain it to the clients. Like if you were talking to someone about it you could kinda demonstrate it in that way and understand it in your mind basically and that way by running those two different scenarios and say what if I had different kind of income and you could see the tax would be calculated differently because that's where the change is taking place even though the taxable income is the same because now you're applying something other than just one progressive tax system. You got the separate tax system for the benefit of the dividends. Now if I go back on over you could imagine different variants of that. So if I go back on over here and I said okay what if I had total dividends of this and then of that amount 300 were qualified that would mean that you would have box one A with the 1,301B and then I could go back on over and say okay there's the 100,000. We've got the 1,000 dividends of the 1,300 were qualified that are gonna be at a favorable rate. We still have the 101 so the taxable income down below hasn't changed the 88,450, 88,450 same as we had in our worksheet but now the tax calculations are gonna differ again and it's at the 15,228, 15,228. So again you got a difference in the calculation due to the qualified dividends and the different rates with them. Now if you go back on over you could have multiple corporations of course multiple 1099 divs so this would be corp two or financial institution two and let's say this one was 2,000 and let's say they're all qualified. If I go back on over you're gonna go okay now we've got two and so there we have it here and we also have the schedule B that has now popped up because we have a significant amount of dollar amount so if I go back on over I could say okay now this is the same schedule we reported the interest if it was over a certain dollar amount so interest and dividends kind of like your investment income you could think about it as the 1,000 and the 2,000 adding up to the 3,000 that's pulling over to page one that is right here and then the qualified portion on the left hand side so now you've got your 3,000 being added the 103 the 103 you can imagine doing this in our worksheet over here where we had the schedule B the 1,000 and the 2,000 and you could then make a breakout if you're qualified or non-qualified if you wanted to add more detail that adds it to 3,000 adds it into our top line and the income line item we still have the 12,550 standard deduction taxable income 90,450 90,450 is right here page two calculating the tax the 15,528 so we got the 15,528 so we can imagine that situation and then we could have the other kind of items that you could see on this form so for example if there's something in the total capital gain distribution let's just take a look at that for example that's in 2A so if I go back on over this isn't really a dividend but you might see it on the dividend form that's why you might take it into consideration here let's clear everything out and just record that so we can see it in and of itself let's say this was a capital gain distribution of 1,000 for example you're gonna say okay I see where to put that in on the tax software this is where the tax software can be helpful you can also see it down here which gives you the line by line instructions to a total capital gain distribution and then you could go do some hunting on where they put it you're gonna say they didn't put it in the dividends it didn't go into the dividend income because it's not dividend income instead it went into the capital gain or loss and they put it on the schedule D so if I was to open up the schedule D if it was large enough to be applicable to the schedule D then we've got the 1,000 down here on the capital gain distributions so when I'm trying to check that off on like my worksheet if I have a long complicated return then I'm also gonna be wanting I'm gonna have to wanna be able to sort that out in my mind so I'd add another schedule for the schedule D and I'd add that in and I could have other stock sales and whatnot which would be on typically the schedule D and flow it on over to the first page of the 1040 so note your data input should the software will help you with the data input but then you wanna kind of double check because the software isn't there's no double entry accounting system making sure that you don't make an error by inputting just data input the wrong number so that's why it's helpful to do it double check it in like a software example and also then you can see what's really happening when you do some of this data input which you might not have so clear in your mind you got a similar scenario with a lot of these other ones the 1250 gain that comes up from time to time which would be on 2B you could see here so you could take your software and say all right there's the unrecap 1250 gain and then you can hopefully the software can help you out and you can kind of back into the rationale as to what is happening through the instructions on the form 1099 div and the tax software and so on and again you can have some other of these items here that you could have the withholding that could be involved obviously that would be on the on the bottom of the tax return and so on so that's gonna be the general idea with the the dividends it's usually a straightforward data input but you could have some questions in terms of how to explain it and what's the impact in terms of taxes and so on which can get kind of tricky and you could kind of back into some of those answers oftentimes with the help of the software and the instructions