17:28 { III Q O A Mini-Case: Tax Deduc- tions and Tax Credits Your investment client, Ted Burns, is a 55- year-old service manager for a car dealer- ship. Ted has asked you for advice on pre- paring his 2017 tax return. Since you do not regularly prepare tax returns, you have re- ferred Ted to a good accountant. However, you will work closely with the accountant on Ted's tax situation. Ted tells you that he re- ceived a lump-sum bonus of $15 000 from his employer at the end of 2017. In addition, Ted owns some Canada Savings Bonds on wwhich he earned, but did not receive, in- terest income of $2000 during the 2017 taxa- tion year. Ted has been divorced since 2012. The divorce agreement, which was also reached in 2012, requires him to make annu- al child and spousal support payments in the amounts of $6000 and $3000, respectively. 17:28 + Q O AA child, who is in her first year of college. Ted's children live with his ex-spouse. Ted rents a safety deposit box at his bank which costs him $120 per year. Ted also made a $5000 RRSP contribution in 2017. Part A Indicate whether each of the six items above would increase, decrease, or have no effect on Ted's net income. What would be the to- tal value of this increase or decrease? Part B Based on the information provided in the case and in the chapter reading, indicate whether or not Ted likely qualifies for each of the following six non-refundable tax cred- its: basic personal amount, spousal or com- mon-law partner amount, age amount, CPP contributions, El premiums, and the tuition amount? 17:28 Part B Based on the information provided in the case and in the chapter reading, indicate whether or not Ted likely qualifies for each of the following six non-refundable tax cred- its: basic personal amount, spousal or com- mon-law partner amount, age amount, CPP contributions, EI premiums, and the tuition amount? In addition, Ted provided you with a list of unclaimed eligible medical expenses for 2016 and 2017. Ted would like you to help him figure out how to determine which medical expenses he can claim on his 2017 tax return. NOTE: Ted can claim eligible medical expenses in any 12-month period ending in 2017 and not claimed for 2017. As shown in Exhibit 4.50, the amount of the claim is the amount paid in excess of 3 per- cent of net income or $2268, whichever is less. Ted had a net income of $75 000 in 2017. 17:28 cent of net income or $2268, whichever is less. Ted had a net income of $75 000 in 2017. Date Item Amount Feb- $1600 Laser eye surgery (one eye) ruary 2016 March 250 Dental services (cleaning & x-rays) 2016 July 1200 Dental services (fill- ings) 2016 Hearing aid 750 August 2016 175 January Prescription drugs 2017 March 1600 Laser eye surgery (one eye) 2017 April Out-of-country 1400 47 17:28 { Q A A July 1200 Dental services (fill- ings) 2016 Hearing aid 750 August 2016 175 January Prescription drugs 2017 March 1600 Laser eye surgery (one eye) 2017 1400 April 2017 Out-of-country medical services June 800 Chiropractic ser- vices 2017 450 October Prescription drugs 2017 17:28 { III Q O A Mini-Case: Tax Deduc- tions and Tax Credits Your investment client, Ted Burns, is a 55- year-old service manager for a car dealer- ship. Ted has asked you for advice on pre- paring his 2017 tax return. Since you do not regularly prepare tax returns, you have re- ferred Ted to a good accountant. However, you will work closely with the accountant on Ted's tax situation. Ted tells you that he re- ceived a lump-sum bonus of $15 000 from his employer at the end of 2017. In addition, Ted owns some Canada Savings Bonds on wwhich he earned, but did not receive, in- terest income of $2000 during the 2017 taxa- tion year. Ted has been divorced since 2012. The divorce agreement, which was also reached in 2012, requires him to make annu- al child and spousal support payments in the amounts of $6000 and $3000, respectively. 17:28 + Q O AA child, who is in her first year of college. Ted's children live with his ex-spouse. Ted rents a safety deposit box at his bank which costs him $120 per year. Ted also made a $5000 RRSP contribution in 2017. Part A Indicate whether each of the six items above would increase, decrease, or have no effect on Ted's net income. What would be the to- tal value of this increase or decrease? Part B Based on the information provided in the case and in the chapter reading, indicate whether or not Ted likely qualifies for each of the following six non-refundable tax cred- its: basic personal amount, spousal or com- mon-law partner amount, age amount, CPP contributions, El premiums, and the tuition amount? 17:28 Part B Based on the information provided in the case and in the chapter reading, indicate whether or not Ted likely qualifies for each of the following six non-refundable tax cred- its: basic personal amount, spousal or com- mon-law partner amount, age amount, CPP contributions, EI premiums, and the tuition amount? In addition, Ted provided you with a list of unclaimed eligible medical expenses for 2016 and 2017. Ted would like you to help him figure out how to determine which medical expenses he can claim on his 2017 tax return. NOTE: Ted can claim eligible medical expenses in any 12-month period ending in 2017 and not claimed for 2017. As shown in Exhibit 4.50, the amount of the claim is the amount paid in excess of 3 per- cent of net income or $2268, whichever is less. Ted had a net income of $75 000 in 2017. 17:28 cent of net income or $2268, whichever is less. Ted had a net income of $75 000 in 2017. Date Item Amount Feb- $1600 Laser eye surgery (one eye) ruary 2016 March 250 Dental services (cleaning & x-rays) 2016 July 1200 Dental services (fill- ings) 2016 Hearing aid 750 August 2016 175 January Prescription drugs 2017 March 1600 Laser eye surgery (one eye) 2017 April Out-of-country 1400 47 17:28 { Q A A July 1200 Dental services (fill- ings) 2016 Hearing aid 750 August 2016 175 January Prescription drugs 2017 March 1600 Laser eye surgery (one eye) 2017 1400 April 2017 Out-of-country medical services June 800 Chiropractic ser- vices 2017 450 October Prescription drugs 2017