Did you like how we did? Rate your experience!

Rated 4.5 out of 5 stars by our customers 561

Video instructions and help with filling out and completing Why Form 8453 S Deduction

Instructions and Help about Why Form 8453 S Deduction

A class this is our video lecture for chapter number 6 part 1 where are we going to be calculating deductions and losses and seeing what limitations they are in trying to claim them if you remember in past chapters we were talking about income and the general rule is that all income is going to be taxable unless specifically excluded or treated tax-free so the mirror image is that deductions our column expenses are not deductible unless specifically allowed by the law so maybe it's the worst of both worlds here it says everything is taxable income and here it says everything is not deductible unless it's specifically excluded that's the income or allowed as a deduction here you can see deductions can be classified maybe into three broad categories this first one here which is probably the best of the three for at least for tax purposes is called trade or business expenses under this section and it's a real broad topic generally any type of costs that's used up for a trade or business it's going to be a deduction the second group here under a different internal revenue code is called deductions for the production of income and this only applies to people individuals like you and me this could also apply to individuals yeah but also corporations so this one doesn't apply to corporations the main category here would be for rental operations rental property being a landlord and the costs you incur in running your rental units to rent operations will be deducted here under this section and then there's other sections in the turnover of the code allowing other specific deductions like itemized deductions that we'll see in this chapter but more so in a future chapter and then maybe we talked about one called alimony maybe from the person receiving it as income in a previous chapter but now if you are paying it you get to deduct it and that's allowed specifically under an Internal Revenue Code section as a so-called for AGI deduction so here is AGI so if you remember in our first project we had to prepare a 1040 form and at the bottom of that first page was the AG idea just the gross income number and to get to this number you were maybe able to subtract out some expenses these expenses here are called for AGI deductions to get to the AGI number and then on the backside of the 1040 form again we recopy the AGI at the top and then we subtract out some more deductions like we had learned back in chapter 2 I believe for exemptions and the standard deduction here in this step they were gonna learn some itemized but again we'll save most of the itemized topics for a future chapter but these because they're subtracted from the AGI number to eventually get the taxable income that we look up on the tax table or use the tax rate schedule these deductions are called from AGI deductions and of the two four from the four are better because you get to reduce AGI the AGI number these don't reduce AGI here the from deductions they reduce taxable income just like this up here reduces taxable income but reducing AGI is important because it may affect the amount of income maybe further up on the tax return that you have to report or maybe all factly deductions down here specifically of the itemized ones we'll discuss today in this video lecture yeah and it always is best that the AGI number will be smaller resulting in less income maybe up here being reported maybe increasing the amount of itemized deductions we can claim and deduct the so called for type here's some samples for type of deductions that trade or business type again under Section 162 I believe it was 162 or here is an unusual one they may not even show up on a tax return let's say that you get every umber sment money back from your employer here being paid to the employee and the employee had paid out business expenses so here's the expense so basically they cancel out each other and it's and the effect is like it's a deduction for AGI and here is the income again and here is the adduction cancelling out each other so AGI is not reflecting that income and not reflecting that deduction most business expenses claim by employees let's say that our on reimburse will be claimed as itemized deduction so it would have no effect on AGI here it reduced the AGI if this was included as income but most times you don't even report both because they cancel out each other loss of a sale of business property so the typical example here would be selling your delivery truck selling an office building and if you incur a loss we'll see probably in a future chapter that's called a section 1231 loss and you can claim that as a ordinary deduction for AGI if you have a rental operations again that's a section 12 to 12 production of income activity and the expenses you incur for that rental property are for AGI deductions there's no flow here this is just a list yes so you don't really have to follow this lines here movie expenses we'll probably see this in the itemized deduction chapter is a for AGI again we've talked about alimony whoever receives it has to report income and whoever has to pay it gets to claim a for AGI deduction if you deposit money with a bank or financial institution and you purchase a certificate of deposit you have to leave the money with that Bank for a certain period of time but if you take out the money the bank not the government may charge you a penalty well that penalty the bank charges can be claimed as a deduction and.

If you believe that this page should be taken down, please follow our DMCA take down process here.