 Here we are in our example Form 1040 populated using 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 forms and schedules at the IRS website, irs.gov, irs.gov, starting point. We're going to start with the single filer and then move on to married and then think about how we might have a married situation where both are participating or owners of the business. So single filer Mr. Anderson, we don't have any W2 income, but rather Schedule C income flowing through to the 1040 line eight. Note that that's coming from the Schedule C. Let's jump to the Schedule C to see that this is our business income, profit or loss from business. This is in essence an income statement 120,000 income minus the 20,000 of the expenses business deductions gets us to that net income in essence of 100,000 that rolls into the Schedule one other income and adjustments on line three that totals up at the bottom of Schedule one flows into the 1040 as we saw with the 100,000 here on line eight. We also know that there's going to be self employment tax, which is a key component with our current topic of thinking about a business owned by spouses, a married couple. So let's look at that the Schedule C totals up down below at the 100,000 that then is going to be used to calculate the self employment tax not this one. Here it is. And so that's going to be taken the 100,000 calculate the self employment tax, which is in essence the employee employee or portion, like equivalent to payroll taxes, social security and Medicare, that's at the 14,129, which is flowing into the 1040 page two, not just the income tax, but now this social security and Medicare the self employment tax in other words. So then we know that we're going to have half of that tax is going to be deductible on page one of the form 1040. So if I go back to the 1040 on page one, we get to deduct half of that 7,065 we can see that as well on the Schedule SE taking half of that amount, rolling that through to the Schedule one page to adjustments to income. There's the 7065 totally enough at the bottom, pulling that into the 1040. So there it is here to get to the adjusted gross income of the 9 to 935. Then we've got the standard deduction, which is the 12,950 for a single filer. It will be doubled when we move to a married filer. And then we've got the qualified business income will jump into that later, but I'm going to rely on the software it's calculating at the 15,994 for now. And then that's going to get to the taxable income of the 63,988. If I go to page two, we've got the tax calculated, as well as the self employment tax, so total tax 23,821. I'm going to assume we paid 30,000 on estimated payments. And that gets us to the refund of 6179 in our starting point. Now we could mirror that over here in our worksheet as well. I'm not sure how much I'm going to jump back on over here to the worksheet because I want to focus in on our differences in the software software because we looked at the worksheet in a prior presentation. So let's let's take everything the same now. But now let's say we move up to married filing jointly. So now we have Mr. Anderson and Mrs. Anderson and no dependence. We still have the 100,000 flowing in the same. We still have the 7065 the same. The only difference here being is that we've got this big difference of the standard deduction jumped up from 12,950 to 25,900 because we've got the married couple. And then on page two, the tax calculation federal income tax has changed because of the rates and the filing status. But that we still have this number for the self employment tax, which is the same. Now, you might say, Well, what does it matter then? If I if I allocate the Schedule C income to one spouse or the other, because they are now joint as one entity. So you can see clearly on the Schedule C, we're allocating it to Mr. Anderson, not Mrs. Anderson, but what's the difference? Who cares? One of the major differences is going to be the self employment tax. The self employment tax may not differ if it was owned by a different spouse, but it's going to be paying into the social security of the individual, even though they're married. So as a married couple, if you're trying to maximize the amount of benefits you're going to get in retirement, it would you want to think about how can you pay into social security? So you get the most paid out of social security in retirement, right? So that's so there's a misallocation here if it was owned by both spouses. So now that you got the question, okay, well, what if it was owned by both spouses, then what are are my options? Well, one is that you can have a partnership return because in essence, it's a partnership then, but then you would have to file another return, which would basically be a flow through entity, and then the K ones would be used to populate on the tax return, you'd have two K ones from the flow through entities, which would help you to properly allocate the self employment tax through the flow through entity. So that's one option that could be used. Another option is you might be able to have community income. So here's just a quick recap on that if you and your spouse only own unincorporated business as community property under the community property laws of a state foreign country or US possession, you can treat the business either as sole proprietorship or a partnership. So state with community property. That includes Arizona, California, Idaho, Louisiana, Nevada, New Mexico tax, Texas, Washington and Wisconsin.