 Income tax 2021-2022 tax software, penalty on early withdrawal of savings and alimony paid. Get ready to get refunds to the max, diving in the income tax 2021-2022. Lassert tax software, you don't need tax software to follow along, but you might want to have the form 1040, which you can find at the IRS website at irs.gov, irs.gov, our starting point here, single filer Adam Smith living in Beverly Hills 90210, 100,000 W2 income, 12,550 standard deduction that gives us the taxable income 87,450, matching that over here in our income tax equation or formula, 100,000, 12,550, 87,450, letting the tax software do the calculation for the federal income tax. According to the progressive income tax system, 15,015, 15,015 here. That's our starting point. So we're now going to take a look at the schedule one. Let's go back up to the page number one, and we're looking at the adjustments to income schedule one. So I'm going to open up some items here, go into the schedule one, and then we've got number two, adjustments to income. So first we got this penalty on early withdrawal of savings. Usually that's, you're not going to see that too often. And if you do see it, it's usually not that significant. And it's quite often, I mean, it'll be easy to kind of see. So you can use the tax software to help you to do the data input. So you might see a form, for example, like this, a 1099int reporting your interest income. You'll typically see something like in line one. Again, interest income for most people is not a huge number oftentimes. And then so you would think the penalty on it would be fairly small as well. So you'd have an early withdrawal penalty of the two of line two here. So let's go ahead and put that into place just in an example. So let's go back on over to our software and let's say that we go into the data. And let's say we had our interest income. So I'm going to enter interest income for like bank number one. And let's say we had interest income of 1000. And then we had that penalty. And a lot of softwares, it'll kind of tell you the line by line instruction. This software usually does, but here it doesn't give you the actual box number. Like, which is kind of nice sometimes if they give it, say it's box number two on the 1099int. But we still have it here. And let's just say it was 10. And then I can pull that over to the form 1040. Look at the adjustments that have been taken place on page number one. We increase the income by that 1000 for the taxable income. Schedule B is not showing up over here because it's not over the threshold to need that added schedule. And then we have the adjustment of the $10. That's the new thing that we're focused in on here going to schedule one to find it page number two. There's the $10 on line number 18. If I was to mirror that over in our income tax formula, we've got the income line that we can increase going to the income area. And saying that we had interest. Where did I put my interest income interest? Oh, I put it on schedule B, of course. Where's my schedule B? It's right there. It's right there. Can't you see? Don't your eyeballs work? My eyeball. Okay. Page one 101. There we have it. And then we have the adjustment, which was that penalty. That's the new thing. So we're going to go then to the adjustments to income adjustments to income. And we had all this other stuff down here. Let's add a little more room for our elbow room. We need a little bit more elbow room so my elbows can fit. Insert. And this is going to be early. What would we call it again? Let's just take a look at the name here. Penalty on early withdrawal of savings. Penalty on early withdrawal of savings. I couldn't have spelled withdrawal, right? Could I? Could I have spelled that right? Check it. I did. I did. I was doubting myself, but I did it right. So then we're going to sum this. So that's going to be 10. We said 10 there. Let's sum it up, bringing up our sum total down. Sum total. And so there's our 10. That's going to pull back on over to the first page. There it is. So that brings us to the AGI of the 10990. We've got the standard deduction of 12,550, bringing our taxable income to the 88,440. 88,440. Let's check that. Is that what the tax return says? 88,440. Page number two. Let the software do the calculation for the progressive tax system. 15,243 now. 15,243. 15,243. 15,243. Okay, let's go back on over. Let's do the other one that we were doing, the alimony. And so we're going to go down here and say we have the alimony paid number 19. So remember this is the mirror kind of the difference between the alimony paid and the alimony received. So you've got a divorce situation. You've got two spouses. You've got payments going from one spouse to the other, traditionally being categorized in two groups, either child support or going to alimony. It used to be that they treated those differently on the taxes, but after the cutoff date, it's going to be that they don't treat those as different for taxes. So that used to lead to differences in how much you would give under the category of child support and alimony. It's something you might argue over before that point in time. So hopefully it makes things a little bit easier to figure out what a good compromise would be between those things after that point. So that means that there's a timeframe, a cutoff. Before that timeframe, you have the old rules where it would be that if it was classified as child support, no one gets the deduction and no one has to record it as income. If it was calculated as alimony, then possibly the payer would get to have the deduction, which is what we're focused in on here and the recipient would then have to record it as income. That would mean that under the old rules that the negotiations would be such that the one that's paying the money would want to record it as alimony to get a tax benefit and the one receiving the money would want to record it as child support so that they don't have to record it as income. And again, I think after the agreement, if they take that complexity away, what will happen is hopefully it will just make it easier for people to come to a number, which could possibly be lower because you took out the tax, you know, you could just take out the rule and then come up to whatever number is fair under the new, you know, after the regulations have been removed, things are usually easier, you know, but in any case, if there's going to be a deduction, it's just like anything else, that the payer, if the IRS is saying the payer is going to get a tax benefit, then they have to give the social security number of the payee so that the IRS can verify that the payee, the recipient of income in that case is reporting it as income. So that's why they got the social security number. It's just like a 1099 situation or a W2 situation where the government pressures the employer or the business to tell the government how much they gave to somebody else that they can, the government can follow up and make sure that they get their money and income. So same kind of concept here. This is the IRS's thing. This is their thing. This is how they do it. This is their business. So let's say the recipient was 333. The recipient's first name was Eve Smith, recipient 33333. Social security number. Let's say let's put our trusty thousand dollars in and the date, let's make this before the cutoff. So we're going to just say it was 0606152017. And so we'll keep it there and say, okay. And then if I go back to the forms, we're going to say, okay, there's the 1000 has been showing up and we're telling the IRS that's who we paid. So we get the deduction. We can verify that we paid that. Don't go after me for that money. Go after the recipient, which doesn't seem like the nicest thing for the IRS forces. But any case, there's our social security number, his social security number. Go check them out and make sure they reported the income on their side. And then the original date that helps the IRS to determine possibly whether or not it's under the new or the old rules. Now we can add these up. That gets us up to the 10010. If we go on to the first page, then we've got the 1000 and the 100,000, then we've got our adjustment, which is the 10010, bringing us down to the AGI99990, $12,550 still on the standard deduction, getting us to the $87,440. Marrying that in our tax formula, we can go to the additional or adjustments to income. And now we've got alimony. I'm just going to put that here. Alimony paid. Is that how you spell alimony? The alamo. It's not the alamo. It's alimony. It's the alamo. It's like the alamo. Okay. So we're going to say spell check. That's what I'm trying to do. Alimony. Alimony. So that was $1,000. And we're going to go then, there it is, summing that up and bringing that to the first page of the 1040. So now we've got the income at the 10110. We're at the 9990, adjusted gross income, AGI standard deduction, $12,550, bringing us to the taxable income, $87,440, which is what we have over here. $87,440 page number two, calculating the tax at the $1,5003. Putting that on down, $1,5003. And so there we have that. So that's the general idea with those items.