 Most of this information can be found on the Schedule A Taxure 2022 instructions at the IRS website, irs.gov, irs.gov, when looking at the income tax formula, we're focused on the itemized deductions, remembering that the first half of the formula is in essence an income statement. Although a strange one, where we have income, the equivalent of expenses being the deductions, the equivalent of net income being the taxable income. Our objective flipped on its head, we want taxable income, in other words, as low as possible, as opposed to normally when we want net income as high as possible. If we go through the equation, we've got the income line, we've got what you might call the above the line deductions, the adjustments to income to get to that subtotal, the subtotal being that important subtotal of AGI, because that's the thing used to calculate phaseouts for income levels for deductions and credits. And then we have what you can call the below the line deductions, which is the greater of the standard or itemized deductions. We only take the itemized deductions if they're greater than the standard deduction, and we're focusing in on the components of the itemized deduction at this time. This is the first page of the 1040. If we look at line 12, we got the standard deduction or itemized deduction. This is the itemized deduction schedule A. We're focused here on taxes. Remember that whenever you see itemized deductions, the first thing that usually comes to your mind is do they own a home? Because if they do, those are the big ones. Those are the home mortgage interest and the property taxes. And then you can get into the weeds once you've cleared the threshold to be itemizing to pick up everything you can beyond that point. Remember that the standard deduction thresholds are $12,950 for single. It's double to $25,900 for married filing joint. $19,400 for head of household. If the client or yourself are nowhere near those numbers to be able to itemize, it should be a more basic return. Always return to basic of life. Then, because you're just going to be taking the standard deduction, that said, we're talking about taxes now. Now note, the first thing you might ask is, well, if we're talking about taxes, how can they be deductible if we're trying to calculate the federal income tax? And the answer is because there's a separation between state and local taxes and the federal taxes. There should be a separation of duties between what the federal government does and what the state government does. The federal government primarily being responsible for keeping us safe, having the military and so on. And the state and local governments being responsible for taking care of what's happening on the state and local levels. The state and local governments should be sovereign to some degree to do their own form of taxation. However, they want to tax income tax or sales tax or whatever they want to do. And so then the question is, are the state and local taxes then deductible for the federal income tax level? And the answer is, well, some of them are and some of them are not. Should they be taxable or deductible on the federal level? Should you be able to deduct state and local taxes on the federal level? That's kind of another question. My response would be that if you were starting this from scratch, I would not say that you would want to deduct state and local taxes on the federal income tax because it gets the federal government too much influence, I think, on the state and local governments and it tends to subsidize certain types of taxations and certain states. That said, however, now that we've already got the taxes in place and people are dependent upon them and have made long-term plans upon them, it's difficult to adjust it even if it wouldn't have been a good idea in the first place to put them in, you know, in the first place. And we saw this debate happen a few years ago when they put some caps on the state and local taxes, which we'll take a look at as we go through some of the state and local tax stuff. But that's the general layout. So now the question is, okay, they're separate. You've got the state taxes. You've got the federal income taxes. Which taxes then are deductible for federal income tax purposes? So taxes you pay, taxes you can't deduct. So first, we'll talk about the ones you cannot deduct. The federal income tax, of course, you cannot deduct because that would be a circle reference. We're calculating the federal income tax and most excise taxes. And then you've got the Social Security, Medicare, federal unemployment or FUTA. Those are the payroll taxes. You can't deduct the payroll tax for federal income tax and railroad retirement RRTA. Then you've got the customs and duties. You can't deduct federal, estate and gift taxes. The death taxes, a different kind of federal tax. So if you died and you're quite wealthy, then or over a certain threshold at least, then the IRS comes in, you know, picture corpse and you can't deduct that as well. However, C-line 16 later, if you had income in respect to a decedent. Certain state and local taxes, including tax on gasoline and car inspection. Those aren't typically deductible. Those are types of taxes that are trying to be tied to how much you use a public good. So the gas tax is supposed to tax people more who use the roads, which is a public good and so on and so forth. You might be able to deduct gasoline, for example, if you had a business, a Schedule C, but you can't just deduct the gas tax on Schedule A, which is what we're talking about here. So fees, assessments for sidewalks or other improvements to your property, tax you paid for someone else, and license fees, for example, marriage license, drivers and pet licenses. You can't deduct your pet license or anything. Foreign personal and real property taxes. So line five, the deduction for state and local taxes is generally limited to $10,000, $5,000 if married, filing separately. This is the law that was passed a few years ago, and it caused a lot of kind of debate. Note that when you're deducting the state taxes, the other thing that's kind of interesting is you've got this difference between the high cost of living states and the low cost of living states. And if you're able to deduct the taxes, it tends to subsidize the high cost of living states like California and New York, typically the ones that have a lot of taxes and income taxes related to it. So when they capped that, it was kind of an interesting thing because more wealthy individuals that live in higher income states are going to be hurt more by that, which is why in the first place, it probably shouldn't have been in there in the first place where you have these taxes because it kind of subsidizes certain types of behavior and whatnot in terms of taxes. But it is what it is. It is what it is. It is what it is. So it's capped at the $10,000 now, so you've got to be aware of that. State and local taxes subject to this limit are the taxes that you include on lines five A, five B, and five C.