Stefan is single and is living in Toronto. He is 66 years old and has worked...

     

Transcribed Image Text:

Stefan is single and is living in Toronto. He is 66 years old and has worked with the same employer for over 35 years. Stefan is the store manager at a very successful bookstore, Magenta Inc. ("Magenta"), located in Toronto. In 2020, he earned an annual salary of $84,000 ($7,000 per month). Every year for each store manager, Magenta pays $650 for private health care plans, and $700 a year in life insurance premiums. Per Stefan's 2020 T4, $25,000 of income taxes were withheld from his pay, as well as CPP/EI in the amount of $3,100. Stefan has built a great reputation working for the company, that when Magenta wanted to open up a new store in Ottawa, they asked Stefan whether he would be willing to move there to run the new store. Magenta offered Stefan a $12,000 bonus for him to move locations in addition to his regular salary noted above. Stefan was renting a place in Toronto and he found a place to live in Ottawa right away, which he was very happy about. Stefan's moving expenses included the following: Moving company Gas (450 km) Toronto-lease cancellation Ottawa-Cost of utility connections House hunting costs Legal fees on purchase of Ottawa home $3,500 $95 $250 $400 $300 $1,200 Stefan began working at the Ottawa location on December 1, 2020. Magenta did not provide Stefan with a moving allowance. Stefan has always been really good at saving money and earned a decent amount of investment income in his non-registered account in 2020: Capital dividends Interest income $1,200 $5,500 During the year, Stefan held a five-year $60,000 bond, purchased at par, outside of his non-registered investment account. The interest rate on the bond is 4%, and interest is paid semi-annually on June 30th and December 31st. He sold the bond on July 31, 2020 for $65,954. Stefan also received $7,000 of OAS in 2020. Required: It is now March 1, 2021 and Stefan has come to you, CPA, with help with his 2020 taxes: (a) Calculate Stefan's minimum net income for tax purposes for 2020. Indicate items that you are not including as zero items in the relevant part of your calculation. (b) What tax credits (other than the basic tax credit) is Stefan entitled to? Compute the amounts of each of these tax credits. (c) Stefan also paid $2,500 in out-of-pocket eligible medical expenses. What is his medical expense tax credit for 2020? Show all calculations. Stefan is single and is living in Toronto. He is 66 years old and has worked with the same employer for over 35 years. Stefan is the store manager at a very successful bookstore, Magenta Inc. ("Magenta"), located in Toronto. In 2020, he earned an annual salary of $84,000 ($7,000 per month). Every year for each store manager, Magenta pays $650 for private health care plans, and $700 a year in life insurance premiums. Per Stefan's 2020 T4, $25,000 of income taxes were withheld from his pay, as well as CPP/EI in the amount of $3,100. Stefan has built a great reputation working for the company, that when Magenta wanted to open up a new store in Ottawa, they asked Stefan whether he would be willing to move there to run the new store. Magenta offered Stefan a $12,000 bonus for him to move locations in addition to his regular salary noted above. Stefan was renting a place in Toronto and he found a place to live in Ottawa right away, which he was very happy about. Stefan's moving expenses included the following: Moving company Gas (450 km) Toronto-lease cancellation Ottawa-Cost of utility connections House hunting costs Legal fees on purchase of Ottawa home $3,500 $95 $250 $400 $300 $1,200 Stefan began working at the Ottawa location on December 1, 2020. Magenta did not provide Stefan with a moving allowance. Stefan has always been really good at saving money and earned a decent amount of investment income in his non-registered account in 2020: Capital dividends Interest income $1,200 $5,500 During the year, Stefan held a five-year $60,000 bond, purchased at par, outside of his non-registered investment account. The interest rate on the bond is 4%, and interest is paid semi-annually on June 30th and December 31st. He sold the bond on July 31, 2020 for $65,954. Stefan also received $7,000 of OAS in 2020. Required: It is now March 1, 2021 and Stefan has come to you, CPA, with help with his 2020 taxes: (a) Calculate Stefan's minimum net income for tax purposes for 2020. Indicate items that you are not including as zero items in the relevant part of your calculation. (b) What tax credits (other than the basic tax credit) is Stefan entitled to? Compute the amounts of each of these tax credits. (c) Stefan also paid $2,500 in out-of-pocket eligible medical expenses. What is his medical expense tax credit for 2020? Show all calculations.

Answer rating: 100% (QA)

a To calculate Stefans minimum net income for tax purposes for 2020 we need to consider his employme... View the full answer