 Income tax 2022-2023. Certain business expenses of reservists, performing artists and fee-based government officials, tax software example problems. Let's do some wealth preservation with some tax preparation. Support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. 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 examples with our starting scenario the single filer Mr. Anderson no dependence we've got the 100,000 W2 income the 12,950 standard deduction getting us down to the 87,050 bottom line we're mirroring that over on our Excel worksheet formula the tax formula the 100 the 12,950 the 87,050 second page of the W2 the software calculating the tax 14774 withholding 15,000 gets us down to that 226 which we're mirroring over here our major focus however is on the first half of the calculation to get down to this basically taxable income we're going to go to schedule one now and we're going to go to page two of schedule one page two of schedule one we're focused here on certain business expenses of reservists performing artists and fee based government officials now you'll note we're attaching the form 2106 is where we typically go here remember the general outline being that a deduction kind of makes sense from an income tax statement or format an income tax system if it's something that needed to be consumed in order to generate revenue so we tax people on the net income in essence as opposed to gross income we could see that most clearly on say a schedule c type of business where we have in essence an income statement income minus expenses expenses being in essence deductions getting down to the net income we don't see that as clearly on say a W2 type of form because the idea being that the employer is the one that's taking care of the expenses and therefore it's they're trying to make it really easy of that way right they're trying to force the employer to to take care of the expenses and so on and and then we don't have all these deductions and whatnot in that situation it used to be that if you itemized then if you had some deductions that you were taking in order to generate your revenue even though you are W2 employee that you might be able to take some of those deductions if you were had the capacity to itemize which seemed a little bit unfair because that would only benefit people that are have enough money that they're actually itemizing and whatnot so it seems so they kind of reduced that a lot so you might still hear people saying or asking about that kind of scenario and they've kind of removed that which kind of makes sense to me given the fact that most people are going to be taking the standard the standard deduction and so that's the general idea so that's what might come up often time they've limited the amount of W2 employees to be able to take the the business deductions and and that's might make it easier or possibly be more beneficial to the lower income side of things because they're going to be taking the standard deduction anyways but in any case that means they still left some room by pushing this over to the schedule one part two for particular situations what is your situation the situation such as the reservists performing artists and fee based government officials so you might not have anyone you know those are fairly rare to run into those particular situations but if you do that's where you go it's more likely you'll run into a situation where people are still asking about prior rules and whatnot and you got to kind of explain the change so let's just add a couple of these i'm going to jump on over to the business expenses to the reservists so i'm going to say okay i'm on 2106 a military reservists net unreimbursed travel expenses so i'm going to say unreimbursed travel expenses and i'll say let's put all of them here and then let's say there was travel travel while away and let's go boom and then if i pull that over now we should have the form 2106 2106 which is calculating the expenses and the vehicle expense we'll talk more about this worksheet for vehicles and miles and stuff when we apply it to calculation of like the mileage method and whatnot with the schedule c versus actual but just to get an idea here the total expenses of the 1000 and then that's pulling on over to the schedule one so the schedule one on page two i should say now has the 1000 here and that will sum up down below and that's going to pull into this 1040 now not on the schedule a but the above the line deduction which means that even if you are not itemizing you're not a wealthy individual mostly wealthy individuals or people more affluent will be itemizing that means if you qualify here you can still get it because the above the line deduction bringing the adjusted gross income down to the 99 000 which also has an impact on the the the phase outs of like deductions and credits so that's actually beneficial too if you have a lowering here as opposed to just a lowering of the taxable income through an itemized deduction because of the benefit of usually with the phase outs of other types of things standard deduction gets the tax down to the 86 50 so let's i'm not going to do it in excel because it's fairly straightforward and and so i just want to do it in here so let's do another one let's say we jump on over over and let's say we have a performing artist so i've never dealt with a performing artist situation for but we're going to say they're a qualified performing artist all right cool i'm an artist i occupation of different to qualified performing artist so again you have the similar situation where you've got the you know the schedule 2106 pulling into the schedule one and page two which pulls in to the form 1040 and then the other the other item is the free business uh the fee business so i'm going to go here and say okay and then we would check uh this one out qualified performing artist versus uh handicap or a fee based government official which would be a three which would be the entry number which again and this is just in the cert tax software which would populate the 2106 once again and then pull it pull it into this schedule one page two which then ultimately pulls into the form 1040 so the point being there it's much more restrictive than it was before and you'd have to have people that are going to qualify for those particular uh areas in order to be in order to be uh benefiting from that particular deduction or adjustment to gross income