 Here we are in our example, Form 1040, populated with LASERT tax software. You don't need tax software to follow along, but it's a great tool to run scenarios with. You can also get access to the Form 1040 related schedules and forms at the IRS website, irs.gov, irs.gov. The starting point we typically start at is going to be that single filer, Mr. Anderson, no dependents, 100,000 even, W2 income, and then we've got the 12,950 standard deduction getting us down to the 87,050 for the taxable income, mirroring that on our tax worksheet in a formula format, 100,000, 12,950 standard deduction, 87,050 depending on the software then to do the calculation, page 2, 14,774. So that's going to be here and then we imagine 15,000 that was withheld getting us to the 226. Now our major objective is looking at page one, the calculation of the income. Now thinking about and imagining we got a Form 1099, usually a form indicating that we might have to include something in an income, a 1099g, that's going to be indicating that we got a refund from the state. Now again, this is an unusual form to think about as income because it's like, well, wait a second, it's a refund of me overpaying, meaning, for example, if you thought about it on the federal side of things, if I overpaid my taxes for the federal income taxes in 2021 and got a refund, it's not like I'm going to include that in income in 2022. It was an overpayment that now they're compensating for. It's a refund. So why would I have to include a refund on the tax return on the state side of things? So a couple things just to kind of get the groundwork now that we're looking at a form is that one, the federal income tax is different from the state taxes. A lot of people confuse those two things. The federal income tax is designed, the federal government should be separate from the duties of the state government. You have a separation of duties there. The federal government's primary goal is to keep us safe, having a military. Military. Exactly. That's, that's designed to do that. That's the general objective, the primary objective of the federal government. The states then are supposed to be taking care of their state needs, including all, you know, the state obligations like the police and whatnot on the state level. So the federal government uses a federal income tax, which is of course, what we're focused in on here. The states, however, should have their own sovereignty to, to tax however they want. They don't have to mirror the fed government and, in fact, having different states tax in different ways is our testing ground. It allows us to see which tax systems are working out better and worse. We can actually look at them and say, okay, what is this actually doing? So, but then you have this kind of, kind of convolution between the federal and the state, meaning we're able to deduct some of the state taxes on the federal tax return sometimes. Now, I think this was, if we can design the tax from scratch again, then I wouldn't include this. I don't think this was a good idea to add, but it's one of those things that you can't really pull out or change once included because people have been making decisions based on that already. So that's what we have put in place. Now the state tax deductions then will only be applied if they have an itemized deduction. So remember down here that we've got the bigger of the itemized or the standard deductions. We'll talk about itemized deductions later, but let's just look at the schedule A for now to try to make sense of this income 1099G. If we go to the schedule A, let's imagine last year in 2021, this person, Mr. Anderson, had itemized deductions. If they got a benefit from them, they would be here under the taxes you paid. Now, the taxes you paid, it used to be that it was only the income tax that you kind of got a benefit from, which obviously is a subsidy to the kinds of states that have income taxes like California and New York, and obviously is a disincentive to states that choose to tax in another format like a sales tax or something. So then, of course, they had they changed that and said, okay, now we're going to give you a deduction, try to give you an itemized deduction, whether no matter what kind of tax that you on the state level determined to do, to try to kind of equalize the playing field. So now you've got the state taxes that might be deductible on the federal side of things. If you're in like California, that would typically be the state income tax. So when you figure out your taxes, you of course, in 2021, last year would be figuring out your federal taxes and also thinking about how much you paid in state taxes. If you're itemizing, you might be able to deduct on the federal tax side of things, the state taxes that you're paying basically on a cash-based type system when you paid them. Now, then you can imagine, of course, in 2022, just like on the federal income tax side on the state income tax side, you might have overpaid because it's a complicated tax system, it has a progressive tax structure. So it's not going to be perfect, you will have overpaid most likely. And therefore, they're going to give you a refund. That refund then is the thing. And that's where the question comes in. You might also get a 1099G then saying that you got the refund. And that's the question, well, do you have to include it in income in 2022 when you got the refund? And you might think, well, no, why should I have to do that? It's a refund. But you got a deduction. That's where the problem is. If you got a deduction for it, then you would think that if they refunded part of it, one of two things would happen. You would have to amend the tax return for 2021 to remove the part that you got a deduction for that was refunded to you. Or you can just say, okay, whatever you got refunded, I'm just going to include as income in the period I got refunded it. So that kind of makes sense, right? We're trying to correct for the fact that we might have over deducted in the prior year by including it in income in the current year. So that's the general scenario. So the bottom line then would be, well, if you got a 1099G, then you want to look at the prior year tax return. If this was a new client, for example, and you're not rolling over the software for the prior year, you have a copy of the prior year return, hopefully, and you can say, well, did they do an itemize? Is there a schedule A in the prior year? If there's not a schedule A, then it's not going to be included in income, right? Because there's no schedule A in the prior year. They didn't get a benefit. That's pretty straightforward. If there is a schedule A in the prior year, then it gets more messy because they may have gotten a benefit plus benefits from the payment. But there's exceptions, right? Because the question is, well, how much of a benefit did they get from that portion of the refund? And that's where it gets messy. And that's when the software comes in to be helpful. So for example, if you've got that form, you might then say, okay, let's jump on over to the schedule one. Here's the tax refunds. So if I just jump on over there...