 Income tax 2023-2024, standard deduction tax software example, get ready and some coffee because we're going to stop the tax man in his tracks with income tax preparation 2023-2024. First a word from our sponsor, actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us. But that's okay whatever, because our merchandise is better than their stupid stuff anyways. Like our trust me, I'm an accountant product line, it's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep complex and nuanced questions. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Here we are in our tax form 1040 example problem using LASERT tax software. You don't need tax software to follow along, but if you have access to tax software it's a great tool to run scenarios with. You can also get access to the forms, schedules, instructions at the IRS website, irs.gov, irs.gov, starting off with our taxpayer, Adam Taxman, just trying to avoid a dang tax man and he's living in 90210 Beverly Hills. We're going back to a single filer to start off with. We're focused in on the standard deduction, which is located on page one of the form 1040 line number 12. We looked at the standard deduction a bit when we thought about filing status because the standard deduction is one of the major components that will be adjusted with changes to filing status. So we'll do a similar kind of process here, but we'll add a couple other things we didn't do last time, such as if the individual is over a certain age to be able to get an increase in the deductions possibly and as well as being blind, for example, which could be items that can add a level of confusion to this general table here. So the general idea is the standard deduction would be taken if it's greater than the itemized deduction, which is quite more likely these days considering simplification of the tax code or an attempt to simplify it a few years ago increasing the standard deductions. The standard deduction amounts are listed on the left-hand side. So my married filing separate is the $13,850. You can double that to go to married, which kind of makes sense, $27,700, head of household where you typically need a dependent in the middle, but there's more complexity to that and one way you can see it is you can go to the plus to the 1040 SR and that's for tax return for seniors, similar kind of thing, but a little bit different layout of the form. If you go to page four, it gives you your standard deduction chart. So now you have these added adjustments that need to be taking place if the person has one or two of the check boxes checked off, which would indicate they're over the 65 or blind, which means you would only have two possibilities of single, but if married, now you have two people, both of which could check one or both boxes depending on what applies. So you've got the one through four different kind of scenarios of the changes to the standard deduction and then the qualifying surviving spouse. Now they have a marital status, but they're back to just having the two options because one spouse died and then you've got the head of household where you only have two options because there's one person, but there's different amounts because you're head of household instead of single and then married filing separately where now you have four people again, but they're filing separate returns. All right, so let's run some scenarios. We'll start off with the basic scenario, single and not blind or over 65. So we have then 100,000 round number on the W2 income. We've got then the standard deduction being pulled in at the 13,850, it being greater than the itemized deduction to get us to the taxable income 86,150. Let's mirror that over here on our Excel worksheet. So we've start back to the starting point W2 income pulling in from our schedule here 100,000 no adjustments to income standard deduction is being pulled from our table down below. And then we've got then the taxable income 86,150 that ties out to what's here on the bottom line. Let the software do the tax calculation 14266. So just type that in there 14266. We said that withholdings were 12,000. Therefore after a slight penalty that they calculated 2,309 is the tax owed 2,309 after the penalty. Okay, so let's let's then say that that let's add one of those factors and say that he's blind. Let's say unfortunately Adam is blind. So we're going to say boom. All right, let's go back on over and see what happens to the form. And so now we have a single file or a single file or still, but now we have this check box here for blind and what happens still 100,000 up top. But down below now we have a standard deduction of 15,700. How did that happen? Well you could go to the to the 1040 SR and look at that chart. There's the 15,700 right there. How can we put that in our little worksheet so I can see that when it comes up in Excel so I can kind of double check and say what happened there? All right, so if I was to check this I'd be like, okay, my standard deduction isn't fitting doesn't work and I can see why. And then I'm going to add my little table down here now I got this backwards. This should be a single single and head of household I believe and this should be the one that's married filing joint I believe. And so let's switch those. And now we can see that if that was our starting point then if they're single or head of household there's another 1,850 per each of those items over 65 or blind. If they're married filing joint it's another 1,500 per item. So I'm going to go up here and say okay that makes sense. I'll add this and say plus another 1,850 and that's what gets me up to that 15,007 and I can go back on over here and say that's 15,007. Now you could get to a more complicated or sophisticated Excel worksheet to do that manually to do that less manually I guess to automate that process but I kind of like the idea of doing that because that makes me recalculate a pretty significant number and do a little bit of a calculation and say okay I see what's happening here. It was this 13,850 plus they had that one blind situation that's why it's going up to 15,007 to give to my taxable income of 84,3 which is here and then on page 2 the tax is now calculated at 13,859. So now we're at 13,859 and 12,000 was still the same there so we get down to the amount of 1,883 and 24 of the penalty there's the 1,883. So now we could say well what if they're over the limit so what did it say over here it was if I go back to page 1 to get the date so I can make them older than that date 65 let's see we got 1959 was born before so let's put 1958 so we're going to say born in 1958 let's say 1958 okay now when I jump back on over to my software it jumps me from a form 1040 SR so this is in essence going to give you much the same calculations but a little bit different layout so you can look at both of these right I can say there's my 100,000 and then on page 2 we have the standard deduction 17,550 sometimes it's still easy even though we're going to be populated in the 1040 SR given the given the circumstances to look at the form 1040 still because it has the same layout you know that's why it's nice to have one form instead of five different forms that are all different but if you if you look at it here you can say okay there's the were you born before this one checked off and this one is checked off two items are checked off and that gets you to your 17,550 I can find that on my chart by going to the 1040 SR page 4 single filer 17,550 all right so that makes sense so let me go back to my 1040 and just if I mirrored that over here I would just say okay now this plus two of these items this plus this plus this two of those are now applied right and that gets me to that 17,550 which brings me to my my 82,450 so if I go back on over here and say there's where my 82,450 page number two is now at 13,452 so I'd say okay now we're at 13,452 taxes or the withholding 12,000 which gets me to the bottom line which now has a penalty of $5,1457 so $5,1457 okay so then let's go to head of household so let's go back on over and say let's bring this unblinded I have I have miraculously healed the blind here so and then we'll say that this is 1977 let's just say so they're not over 65 and let's add a dependent because that's usually what's necessary to make them a and let's say the dependence on 01 15 to 20 let's say social security and then son and then we're going to say that marital status is now head of household head of the household I wasn't I was head of the household when I was single too it's just that it was an easier household to manage back the back then I feel like anyways head of household Sam Sam tax man is now the son also trying to avoid the dang tax man and now the standard deductions up to the 20,800 so if I go back on over that would mean okay standard deduction is at the 20,800 boom to get us to the taxable income 79 200 page number two then has the tax 11131 so 11131 and then I can get into the credit of the 2000 credit so I have an other credit 2000 for the child tax credit so that pulls in boom and then we go okay and then so that means that the refund now 2008 69 2008 69 okay but what if he was blind what if he was blind then I go okay what if he was blind though then we can say boom and then if I go back on over to the first page standard deduction goes up from 22 to 22 650 which would basically be I can mirror this by saying this plus another 1850 22 650 bringing the taxable income to 77 350 77 350 you can also see that on my chart 1040 SR page four we're now talking about head of household so now 22 650 right if one of one box was checked off okay let's go back and say page two calculates the tax at 107 24 107 24 2000 still on the deduction so now we're at 3276 is that right 3276 I think so let's say that he was they were he was older than 65 and so we're going to say what was the date on that 19 let's say 1958 so we're going to say okay what if he was born in 1958 so then we're going to say now you've got two of these check boxes checked off and so now the standard deductions up to 24 five calculating that that's just going to be the 22 plus another one because both boxes are checked off 24 five bringing the taxable income to 75 575 page number two is now at the 10317 I'm just going to type that in 10 317 and we still have the 2000 deduction there I believe bringing us let's just jump down to the bottom 3683 give me the bottom line 3683 that's the line at the bottom okay let's go to married folk married folk let's bring them back up to married maryable age where people might want to marry him unless he's rich and then you could get married at any time we're going to say this is going to be uh 2000 let's say 1978 and then we're going to say that uh did I have the I had the dependence that well let's remove the dependent this time that'll make it easier delete the dependent and then we're going to go back on over here and say that he's married filing joint and back to the forums so now we've got Adam and Jane Taxman married filing joint so if we scroll down 100 000 we'll just keep it at the 100 000 keeping it even and then the standard deduction is at 27 7 so now we're going to go okay standard deduction is back to married 20 or just married we back we're not back to married the first time so that's 72 3 so 72 3 if we go to the second tab we're at the 8239 so we're going to say that's the tax calculation 8239 we don't have any child so let's get rid of Sam Sam's not here no more and then so we're at the bottom line 3761 bottom line 3761 okay so now we have the combos that can happen here because now there's two people that could be checking boxes off so let's say all right let's do this one at a time we'll go what if Adam is blind Adam is blind but Jane is not so now we have Adam's blind so now we've got the 29 200 so how would we calculate that over here to be the 27 7 plus another now run married filing joint 1500 to get us to the 29 200 is that right 29 200 it's also found on the s r form page four married filing joint 29 200 right so now I can say okay so that means that taxable income 70 800 and so boom that looks correct page number two 8059 all right 8059 12000 bottom line 3941 3941 my coffee is done let's go back to the first tab and do another one let's say now that they're both blind uh so they met that's how they met I don't know I'm not gonna have so what does that do so now these two are checked off so now the standard deduction is 30 2007 how do we get there well we go here and say now I'm gonna add two of these another one so 3007 693693 page number two seven eight seven nine so seven eight seven nine 12 000 bottom line is the 3941 and uh k posso seven seven eight seven nine 12 000 seven eight seven nine total tax oh I hard coded this in here somehow this should be this minus this plus this sorry about that I made a mistake somewhere uh four ones two one four one two one okay so that's why you might want to lock those cells too so people don't mess up your worksheet like yourself mess it up the worksheet all right let's do another one let's say they're old they're old now so let's say uh they're 65 is not old okay whatever whatever you know what I mean the 1958 let's go to 1958 so born one of them born let's say 1958 and then boom and so now we've got three of them checked off so that's hopefully not totally likely maybe but but uh 3220 so I'm just gonna say now I'm gonna add another one of the 1005 to get us to the 3220 so that's the 678 678 page number two tax at the 7699 the 7699 bottom line 4301 4301 and then finally of course we could do the same for both of them why why is he married to such a young lady that's weird something's happening here we're gonna we're gonna increase she loves him that's why okay let's go back on over and say this is gonna be now we have four of them she loves that old blind guy okay so then I'm gonna double click on this and say this is gonna be plus another 1500 that gets us to the 33700 so now we're at the 6636 63 page number two is at the 7519 so 7519 and bottom line 4481 and the 4481 okay I won't go into the married filing separately because we're going kind of long here but the you know the married filing separately similar idea and same with a qualified surviving spouse remembering that if someone you can look at the tables to check those things out but the married filing separately is similar to the to like the single in terms that you're going to go back to those standard deduction and then add add the amounts from there I won't get into that here and then the qualifying surviving spouse remember that that only applies and possibly in the year after the death meaning if two people are married and then the person dies say in 2023 then they wouldn't possibly revert back to surviving spouse or single or head of household in 2023 they'd still be married but in the following year possibly if they have a qualifying dependent then they might be able to hold on to the to the qualifying status of qualifying surviving spouse instead of bouncing back to single or head of household in which case you get the benefits of of basically being on the marital side of of of things and that will have an impact on the standard deduction in a fairly predictable way at this point I hope so uh that is that