hy i recently sent a question do you guys solve that question on T1
Explanation: 1. ** Net Income for Tax Purposes (NITP):* a. Employment income: $68,000 (Salary) + $13,500 (Commission) =$81,500 b. Add: Benefit for personal use of employer's car. This is 2% of car cost per month for the period of use. Therefore, 2% * 11$32,000=$7,040 c. Subtract: Registered Pension Plan (RPP) contribution =$2,800 d. Subtract: Professional Association Dues =$250 e. Add: Net income from the business. Business income is calculated as follows: * Start with the accounting net income of $53,500. * Add back the non-deductible landscaping costs of $8,600 divided by 10 years =$860 (this is the annual amount). * Subtract: Capital Cost Allowance (CCA) on Class 8 assets sold, which is calculated as $12,000 (original cost) - $8,600 (sale price) =$3,400 * Add: CCA on the new Class 8 assets purchased, which is calculated as $13,400 ( cost) 20% (Class 8 rate) =$2,680 * Subtract: the meals and entertainment expense, which is only 50% deductible = $6,00050%=$3,000 Step 2/2 he business income for tax purposes is 00+$860$3,400+$2,680$3,000= So, the business income for tax purposes is $53,500+$860$3,400+$2,680$3,000= $50,640 f. Subtract: home office expenses. We have to calculate them first. As the office takes up 15% of the home, we apply this percentage to all home expenses, which gives $9,77515%=$1,466.25 So, Ms. Compton's net income for tax purposes is $81,500+$7,040$2,800$250+$50,640 $1,466.25=$134,663.75 2. **Taxable Income (TI):** To compute taxable income, we subtract allowable non-business deductions from the net income for tax purposes. a. Subtract: Charitable donations. In 2020, the first $200 get a 15% federal tax credit and the remainder gets a 29% federal tax credit, but these are tax credits not deductions. They will be used later to calculate the tax payable. Explanation: b. Subtract: Disability amount for John, which was $8,576 in 2021 and likely slightly higher in 2020 due to inflation adjustment. will use $8,576 here for simplicity. c. Subtract: Tuition amount transferred from Allison, which was $2,850. So, Ms. Compton's taxable income is $134,663.75$8,576$2,850=$123,237.75 3. ** Minimum Federal Tax Payable:** Now we can calculate Ms. Compton's 'deral tax payable. For this, we need the (0))2 Now we can calculate Ms. Compton's federal tax payable. For this, we need the 202 O federal tax brackets: * 15% on the first $49,020 * 20.5% on the next $49,020 * 26% on the next $53,939 * 29% on the next $64,533 * 33% on any amount over $216,511 We use these brackets on her taxable income of $123,237.75, which gives: a. Federal tax on first $49,020=$49,020 * 15%=$7,353 b. Federal tax on next $49,020=$49,020 * 20.5%=$10,049.10 c. Remaining amount of $123,237.75 - $49,020$49,020=$25,197.75 is taxed at 26%, which gives $6,551.415 Final answer Was this answer helpful? Post a question Your toughest questions, solved step-by-step. So, the preliminary federal tax payable is $7,353+ $10,049.10+$6,551.415=$23,953.515 We now apply tax credits: d. Subtract: Charitable donation tax credit = [$20015%+($1,250$200)29%]=$30+ $304.50=$334.50 e. Subtract: Disability tax credit for John =$8,576 * 15%=$1,286,40 f. Subtract: Tuition tax credit from Allison = $2,85015%=$427.50 So, Ms. Compton's minimum federal tax payable is $23,953.515$334.50$1,286.40$427.50= $21,905.115. Was this answer helpful? Post a question Your toughest questions, solved step-by-step. days left to ask 18 more questions Explanation: 1. ** Net Income for Tax Purposes (NITP):* a. Employment income: $68,000 (Salary) + $13,500 (Commission) =$81,500 b. Add: Benefit for personal use of employer's car. This is 2% of car cost per month for the period of use. Therefore, 2% * 11$32,000=$7,040 c. Subtract: Registered Pension Plan (RPP) contribution =$2,800 d. Subtract: Professional Association Dues =$250 e. Add: Net income from the business. Business income is calculated as follows: * Start with the accounting net income of $53,500. * Add back the non-deductible landscaping costs of $8,600 divided by 10 years =$860 (this is the annual amount). * Subtract: Capital Cost Allowance (CCA) on Class 8 assets sold, which is calculated as $12,000 (original cost) - $8,600 (sale price) =$3,400 * Add: CCA on the new Class 8 assets purchased, which is calculated as $13,400 ( cost) 20% (Class 8 rate) =$2,680 * Subtract: the meals and entertainment expense, which is only 50% deductible = $6,00050%=$3,000 Step 2/2 he business income for tax purposes is 00+$860$3,400+$2,680$3,000= So, the business income for tax purposes is $53,500+$860$3,400+$2,680$3,000= $50,640 f. Subtract: home office expenses. We have to calculate them first. As the office takes up 15% of the home, we apply this percentage to all home expenses, which gives $9,77515%=$1,466.25 So, Ms. Compton's net income for tax purposes is $81,500+$7,040$2,800$250+$50,640 $1,466.25=$134,663.75 2. **Taxable Income (TI):** To compute taxable income, we subtract allowable non-business deductions from the net income for tax purposes. a. Subtract: Charitable donations. In 2020, the first $200 get a 15% federal tax credit and the remainder gets a 29% federal tax credit, but these are tax credits not deductions. They will be used later to calculate the tax payable. Explanation: b. Subtract: Disability amount for John, which was $8,576 in 2021 and likely slightly higher in 2020 due to inflation adjustment. will use $8,576 here for simplicity. c. Subtract: Tuition amount transferred from Allison, which was $2,850. So, Ms. Compton's taxable income is $134,663.75$8,576$2,850=$123,237.75 3. ** Minimum Federal Tax Payable:** Now we can calculate Ms. Compton's 'deral tax payable. For this, we need the (0))2 Now we can calculate Ms. Compton's federal tax payable. For this, we need the 202 O federal tax brackets: * 15% on the first $49,020 * 20.5% on the next $49,020 * 26% on the next $53,939 * 29% on the next $64,533 * 33% on any amount over $216,511 We use these brackets on her taxable income of $123,237.75, which gives: a. Federal tax on first $49,020=$49,020 * 15%=$7,353 b. Federal tax on next $49,020=$49,020 * 20.5%=$10,049.10 c. Remaining amount of $123,237.75 - $49,020$49,020=$25,197.75 is taxed at 26%, which gives $6,551.415 Final answer Was this answer helpful? Post a question Your toughest questions, solved step-by-step. So, the preliminary federal tax payable is $7,353+ $10,049.10+$6,551.415=$23,953.515 We now apply tax credits: d. Subtract: Charitable donation tax credit = [$20015%+($1,250$200)29%]=$30+ $304.50=$334.50 e. Subtract: Disability tax credit for John =$8,576 * 15%=$1,286,40 f. Subtract: Tuition tax credit from Allison = $2,85015%=$427.50 So, Ms. Compton's minimum federal tax payable is $23,953.515$334.50$1,286.40$427.50= $21,905.115. Was this answer helpful? Post a question Your toughest questions, solved step-by-step. days left to ask 18 more questions
