Below are various pieces of information for an individual taxpayer. Based on that information, determine the following
Question:
Below are various pieces of information for an individual taxpayer. Based on that information, determine the following amounts for the year:
a. Total income
b. Net income
c. Taxable income
d. Tax owing or tax refund Be sure to show all supporting details and calculations. Be sure to include all applicable personal federal tax credits Taxpayer’s information:
A divorced individual taxpayer had the following income and expense items during the year: Salary income $145,000 CPP deductions from salary (full 5.25% rate) 2,898 EI premiums deducted from salary (1.58% rate) 856 Income tax deductions from salary 23,925 Union dues deducted from salary 500 Interest income (from bank CDs) 1,100 Dividend income - eligible 800 Dividend income - noneligible 600 Spousal support payments made to ex-spouse 7,200 Child support payments made to ex-spouse 4,800 Charitable donations paid to registered charities 1,000 Political donations paid to provincial party 1,200 Instalment payments made during the year 50,000 During the year taxpayer's employer paid the following: Laptop for employee's use at work and at home - $2,300 cost Financial counselling services - $350 value The individual has a small farming operation on the side. During the year the farm had the following income and expenses: Farming income $28,000 Farming expenses 41,000 The following assets were sold by the taxpayer during the year:
Furniture - cost $800; sales price $400 Jewelry - cost $300; sales price $100 Art paintings - cost $2,400; sales price $3,500 Rental income property, land: cost $50,000; sales price $70,000 Rental income property, building: cost $300,000; UCC $200,000; sales price $450,000 There is net capital loss carryforward from prior years of $28,000
The following information relates to the individual's registered retirement savings plan (RSPP): Unused RRSP contribution room as of end of prior year $46,000 RRSP contribution made in December of current year 11,000 Prior year employment income 140,000 Prior year farming income 5,500 Assume that the individual is subject to federal tax based on the following tax brackets: (Ignore provincial taxes) $0 to $40,000 15% more than $40,000 up to $120,000 25% more than $120,000 40%.
