Income Tax 2021 2022 filing status tax software, get ready to get refunds to the max diving in to income tax 2021 2022. Here we are in our Lacerte tax software, it’s okay if you don’t have access to the cert tax software or any tax audits where you might want to look up the PDF files of the actual forms,
which you could find on the IRS website irs.gov. IRS. gov in that case, the tax software helping us to do the data input Jumping over to the forms a little bit more quickly. So we’re looking at the filing statuses which are up top here you can see on the form 1040, single, married filing jointly married filing separately,
Head of Household qualified widow widow, we’re gonna start off with the single filing status with our mock client here, Adam Smith, the tax payer living in Beverly Hills 90210, we’re going to say that they have 100,000 of income as our baseline.
And we’re gonna say that then the standard deduction This is one of the major impacts that you will see, with the different filing statuses, that standard deduction that everyone gets will change based on the filing status,
which you can see on the left hand side, you kind of want to memorize these or have an idea of them, they will change from year to year with in inflation and so on 12,005 50 doubled when married 25,100. And then in the middle head of household 18 800 could also be infected affected by age as well as if someone’s blind or not.
So there’s the 12,005 50 pulling in for the standard deduction, you also want to think about that as the baseline as as to whether someone might be able to itemize or not, because they would need to be clear in that as we’ll talk later. And so that’s going to give us our taxable income 87 450, which we can check and like a worksheet, say income is going to go in let’s say this is w two income pulls over to line one,
we were not going to include anything for the adjustments to income at this point standard deduction being taken, pulling from our information down below bringing us to the taxable income 87 450, then we’re going to rely on the tax software to calculate the actual tax. So that’s going to be in accordance with the progressive tax system 1515 over here, so I’m going to put that in here when 5015, then the average tax is 17.2%.
And I won’t get into the payments down below. That’s where we’ll stop it here. So we could see that some of the impacts that would be involved with the standard with the standard deduction for the different filing statuses here, if I go to the tax summary, we can then see that we have the average rate 17 And the marginal rate at the 24. That’s those tables are going to be based in part on the status as well.
And in this case, we’re looking at basically the brackets that are assigned to filers that are single as opposed to joint which we can see are different 9009 15 to 10%, bracket to the 19 900. If I’m looking at the married filing joint, so let’s change it to married filing joint, let’s go back up to the 1040. Let’s
say Adam is going to get married. So we’re going to go back over here, Adam met Eve, Adam met Eve. And he said madam Adam, and then they got married. And so then we’re going to go back on over and say now what happens then we’re switching it over to married filing jointly, both living in Beverly Hills 90210 100,000.
Same up top, you might say well, if they get married, it’s possible they get you know, more income, because you got two people that are possibly making income these days. And that’s why the standard deduction goes up, but maybe not at the same time. So we’re gonna keep it at the baseline of the 100,000.
But the standard deduction goes up to the 25. Which makes sense, because in essence, you don’t want to disincentivize marriage and if you have two people that are have the same amount of income they get married, then you would think that you’d have twice the standard deduction,
which is now at the 25 100, which is pulled in from the table over here. If I was to mirror that on our worksheet, I’m just gonna say right that incomes the same standard deduction is now
at the 25 100 they would need itemized deductions greater that than that in order to benefit from the itemized deductions. And so then the taxable income 74 974 900 here that looks good, page two, calculating the tax 1005 93. Now, so this is going to be 8593.
Now this 8000 593 is a lot lower for multiple reasons. One is is that the standard deduction changed it so the taxable income is lower and two, because you got the tax brackets, which are going to be different as well for the married filing joint status.
So oftentimes, married filing joint could be beneficial because oftentimes, when people get married, you know, you might not have the two people having the same income stream, especially if they’re when they’re raising a family and so on. So you would think twice the deduction could be beneficial, but again, we got the indicates it could be it could be complex,
but if you have other credits involve like an earned income tax credit. For example, child tax credits, sometimes those things can make it a disincentive still, to get married oftentimes in the lower income level of things because of those refundable things. But in any case, we’ll talk possibly more about that later.
So that’s going to be the married, married filing joint. Now, of course, you could then say, once married, you could say, maybe I qualify for for married, filing separate. Oftentimes, you don’t get as much of a benefit for married filing separate,
but you could, you know, check that out. And sometimes it’s under some circumstances, that could be more beneficial. And some people just like to file married filing separate for just to manage the two things separately.
But again, oftentimes, it’s better to file married filing joint just from a total tax return component. So also, be careful if you’re in like, you want to know what if you’re in a community property state or not to make sure you got those rules set up. But in any case, we’ve got the married filing separate, so we moved it over to the married filing separate.
Now, we’re going to keep the same 100,000 Just for our baseline, we’re back down to the 12,550 for the standard deduction, which is pulled over from our table over here, which we can mirror in our formula, bringing this down, again, to the 12,005 50 number.
Remember, even though this this port is the same filing, filing, married, filing separate is not the same thing as filing single and you could have significant differences in terms of our Do you have access to refundable credits, like the Child Tax Credit, earned income tax credit, and so on and so forth.
That gets us to the 87 450 here. So the 87 450, if I go back on over is here, and then we can calculate the tax, the tax now at the 1515. Back to the 1515. Here, so we’re gonna put that in 15. Oh, 15. So 1501, five, okay, so it’s back to basically the single and the tables are being changed again, here to to the married filing separate.
So you might look at this and say, Well, look, they took it, they just took us back to as if we’re single. But remember, it’s not exactly the same thing as single when you when you file married filing separately. So just be aware of that.
We’re just looking at the standard deductions here, however, then let’s say they go back to single, possibly they separate get divorced, or we’re never married or something like that, then we’re going to go back to a single but maybe there’s a dependent. So the dependent would then qualify for the head of household. So we’d go back on over and say,
Okay, well, what if we’re back to single here, we’re going to say what if we’re single, but now we got to dependent, we’ll go to head of household, which would mean that we would need to add a dependent.
So now we’ve added a dependent and we’re at Head of Household now. So we’ve got bit living in Beverly Hills, 9021. And Sam Smith is the dependent. So now they’re single with a dependent, therefore a head of household is is what we could go up moving up from just the single status.
And so now we’re at the 100,000 again, but now we’re pulling in the standard deduction at the 18 800 instead of the 12,005 50. Which again, we can verify over here I could say okay, what if I said this is going to be equal to the head of household now bringing it on over to the head of household 18? Eight.
So there we have that. Now I can verify down here that the taxable income is the 81 200. So okay, does that match out 81 200. If I go to page two, then I can look at the actual tax that’s being calculated based on different tables now, based on different tables.
For the head of household tables, do I have them there they are head of household brackets, even though they’re going to get them from the tax table charts. But those are the tears for the progressive tax system 12 166. So now I’m at 12 166.
And so that’s a 15 average percent tax bracket, right? 15 average, if I go back to my tax summary worksheet, 15 is the effective average marginal rate highest rate at the 22%. So there we have that, let’s bring it back. Let’s bring it back to married now.
And then think about a situation where you have people that are older than then this age limit 65 I believe and or blind, which could have an impact as well. So I’m going to go back on over to the first one. And let’s go, let’s say dependent.
Let’s say let’s say let’s take the dependents off. We’re going to go back to married filing joint. So there we have it. So now we’re at the 100,000 the 25 one on the standard deduction based on this over here. So we’re going to stare at 25 125 one.
That brings us back to the income of the net are this taxable income 74 974 Nine looks good. And the tax then is that the 8593 So I’ll put that here eight 8593. And that’s the average rate now of the 1150. So if I go back on over and Sarah tax summary, we’ve got the 1150, average 12 at the marginal.
So now let’s say that that one of them is is older than the 65. So note, when you do that, then it might jump over to a 1040 s are at that point, or I think it’s still easier to look at the form 1040 to 1040. s are on page four, they’ve got these adjustments for the calculations in essence of the standard deduction.
So now you’ve got married filing jointly, and you’ve got the the one item here, that gives us the 26 450. So if I go back up to page one, then on the standard deduction, now it’s on page two on this form, we’ve got the 26 450. Or in other words, if you were to see that on the standard 1040 layout, we’ve got the 100,000.
Now it’s at the 26 450. Because it’s not the 25,100. But it’s been increased due to that one item that has been involved. So now if I go back on over here, and I was to calculate that here, I’d say okay, this is the 20. This is the the 25 one, plus, we’ve got the married filing joint one of them involved 1003 50. And so that’s where that’s gonna get us to the 26 450, the 26 450 taxable income 73 550, and then the actual tax on page two,
now add the 8431. So now we’re at 8431. So we have that, we could have two of them that that are over that the age limit. So if I go back on over with Americans, you can see it gets fairly complex, you can say,
Okay, what if I had two of them over the limit. So now again, you can take a look, it’s going to take you to the form 1040 S, our page for you can look at married filing jointly, now your two of these conditions have met 27 800. If I jump back to the 1040, then I’m going to say okay,
so there’s the 27 800 in my normal kind of layout, which is different than anything in the standard deductions, because you got the two people that qualify for that added amount, I can base I can do that in my worksheet here. I could say okay, now I’m going to say this is going to be equal to this, plus two of these conditions are met this times two, that’s how it gets to the 27 827.
Eight gives us the taxable income 72 200. So now we’ve got the taxable the taxable income 72 200 Page two tax calculated at 82698269. So 8269. So there we have that. And then let we can also say,
Well, what if the other condition is bet would be someone, one of them is blind, or both of them, right? We could go into here and say blind. Now if I go back to the forum forums and say, Okay, let’s go to the 1040.
S, our page for we’re looking at married filing jointly, three of these conditions are met bringing it to the 29 150 standard deduction, easier to see the 1040 go into the 1040, we’ve got the 29 150. If I was to recalculate that, on the tax return, I’d say okay, this is going to be equal to this 25 100 Plus, this times three of those items are met 29 150 taxable income 70,005 50.
So if I go back over 70,005 50, taxable income, calculated the tax and the software 1000 107. So now we’re at the tax of 8107. So you can see how those, those conditions are going to be, you know, have an impact.
And then of course, you could file married, you could file then, after two years after the death, the qualified widow with a worst status. So if we did that, lastly, and that would mean there was a death, not in 2021.
But possibly prior to that, you’d also need a dependent generally for that to be met. So then qualified widow widow were and so then then you generally would have a dependent let’s we got the 100,000. And now you’re at the 25,100
Even though you’re not married, but you’re basically picking up that married rate here. So we’d be back over here. I took I took away the age condition and the blind condition.
So we’re back to the standard standards. That’s the 74 900. So if I go back on over and say, okay, 74 900 here, page two tax calculated 85938593. So there we have that.
So those are going to be the some of the standard kind of conditions. I went through that fairly quickly. But just to give an idea of these different conditions and some of the major impacts that will be on the tax return, you know,
including the tables and the standard. There’s also a bunch of other factors that could be include influence, including phase outs of deductions, credits will talk more about those kinds of things in the future