 And you can let the software do the calculations and then double check the calculations with the formula, which allows you to kind of go back and forth and try to understand what is happening and then plug it into the software and see what is happening. So this is a formula that will actually create a whole worksheet in Excel, a worksheet that we can use to learn. But it's also a great worksheet that I used in practice so that I double check my numbers. I still use it when I double check tax returns, meaning if you're doing the data input into tax software, for example, because there's no double entry accounting system, you might want to have a worksheet that's also in a formula format and do the data input into that as well so that you have, and maybe even if you have a firm have two different people do the data input, one into the software, one into the tax into the formula in Excel. And that way, if those two things reconcile, then you can say, okay, I feel pretty comfortable about that. Or you can look at you can look at the differences and it'll try to it'll start to drill down on on why they're different. And you'll get into these phaseouts and stuff like that as to what the differences are, which you can then understand a little bit better. And you want to understand things better because the software might be able to do the calculations, but you as the tax preparer still have to explain it to people, right? So even if even if you can do the data input without understanding, which I wouldn't really recommend because then you can't tell if something is wrong. But even if you were able to do that, it's going to come up that the the client's going to say, well, why, why is that the case or something like that? And you can't just say, well, because the software, that's what the software did, right? I mean, you could, but that doesn't sound doesn't give a whole has ring with a whole lot of confidence when you're the client. So what our approach that we will take is we'll try to look at break down this income tax formula and then concentrate on each line of it because because each line of this formula has a lot of things included within it. So for example, income question, what's included in income? What isn't included in income? So that's a whole section in and of itself. But when we visualize the formula, that's the question we're asking. If someone saying, I, I receive, I found $100 on the ground. Do I have to? What is that? Well, that's a, that's a question about the income line and what will that do? Now in a broad sense, this formula, you can think of it as basically a funny income statement. So we'll go over it multiple times, but we have an income tax. So we have an income statement and you would think it would just be income. Minus expenses would get you down here to taxable income. So this is basically the income statement format that would get you to taxable income. That that would be the general idea. You think you'd be basically done there. Then you just multiply it times the tax rate, but it actually gets a lot confusing even after you get to the taxable income. Why? Because we don't have a flat tax. We've got a progressive tax. So the tax rates confusing. And then we don't just have an income statement. We have deductions, which are kind of like expenses. And then we also have credits that we deal with, which is a whole nother thing, right? A whole nother kind of animal, which is now below the tax calculation. And then we also have to deal with the payments because the government wants their money as the time passes. Therefore we have to deal with the payments and how the payments were made, where they withheld from W2 forms, 1099 forms, did they make estimated tax payments? It's a little bit more complicated than that because you have income. The income statement is not just minus expenses. The expenses are in the form of adjustments to income or above the line deductions. That gets you to the adjusted gross income. And then you can take the greater of either the standard deduction or the atomized deduction. So these are kind of like the expenses, right? Would get you to that income. And then you have the credits and whatnot. So this formula can look a little bit confusing at first, but after we break it down section by section, then I think we'll be able to visualize basically this formula in general. And then we'll work with it in Excel. Once you can visualize it in a formula, you can predict what's going to happen in the software and then use the software to create the forms to see if what you think should happen did happen. So here's the form 1040. Now you can get the forms on the IRS website, irs.gov, irs.gov. And you could just look up form 1040. All the forms are there. The instructions are there. So you have all of that. If you have the software, then you can generate forms with the data input on the software as well. Whichever way you want to work with as we go through the practice problems, that would be fine. Notice that with the forms, there's a whole lot more detail. So you're probably not visualizing the form unless you have some weird photographic memory. If you talk to most tax peoples, they're not just visualizing the form oftentimes when they're trying to calculate a scenario, right? They're probably visualizing more of a formula in their mind and approximating what the form is doing. So again, we'll touch in on that as we go through the practice problems. But looking at the forms is, of course, important because then you can, once you have the formula idea, you can go into the more detailed forms and then start looking at them line by line and seeing what is actually happening, going back from your Excel sheet to the tax return to get a better grasp of what's happening in the more detailed format. And then we have software. Now the software, there's two major softwares. There's software types, I would say. There's software that is for tax professionals and softwares that is for individuals. So the software for tax professionals will typically be a little bit different in the data input. The data input will not be in an interview format, but just in a quick, you have quick fields that you can go to to do the data input a little bit faster. With the individual software, then that type of style of software will typically have like an interview process. So when you do the data input, it's going to ask you questions to try to understand what is happening in a similar way as though you might be in an office with a tax preparer asking you questions to try to get the information necessary to pick up the return. Whereas with the professional software, the assumption is that the professional is doing that and therefore you want to make the software as easy to do the data input as possible. You don't want to have to redo the interview to do the data input. I just want to do the data input, right? I don't want to go through like a half hour interview step by step, screen by screen, you know, when I'm trying to do the data input. So the professional software is really good for practice problems because it's really easy to go back and forth from the data input to the forms and see and see the results. But both both softwares, I would highly recommend using a software, at least whenever doing tax preparation, because you want the internal control. I'm going to use LASERT primarily here because that's the software I've used most. It was bought by QuickBooks, I mean, not by Quick, but into it, the owner of QuickBooks a while back, a long time back, I guess now, but it's a good software. But there's other softwares that you can use as well. The concept will be similar, but just note that you can kind of categorize your softwares in these two major types of software. If you don't have LASERT, you might be able to try a free trial, which we might touch on a little bit more in a later video, and that would be a great tool to be able to practice with. Or you can try other softwares as well, which should have a similar functionality so we can practice. The data input screens will not be exactly the same, but you can use them. And when we do the practice problems, if you don't have any software, you can just simply download the forms from the internal revenue website with the PDF forms and follow along with the tax forms on your end that way, which can be a useful tool as well. So we'll touch in a little bit more on the different softwares in future presentations, I believe.