Question
ou are a CPA working in the tax group of amedium-sized accounting firm, Smith & Ross LLP. Thismorning, the partner of the tax group approached
ou are a CPA working in the tax group of amedium-sized accounting firm, Smith & Ross LLP. Thismorning, the partner of the tax group approached you regarding newclients, Camille and Tyler Carter . Camille is a 50-year-old pharmacologist living in Calgary , AB .Tyler, aged 55, is a partner at a large law firm in Calgary. Tyler and Camille have two children who are currently attending elementary school in Calgary. Tyler and Camille are starting to look forward to retirement and would like professional advice in effectively planning for their retirement. The partner would like you to calculate Camille and Tyler's Registered Retirement Savings Plan (RRSP) contribution room for the current year, 2020 , since this information will assist in the Carters' retirement planning. The tax partner provides you with the Carters' client file, which includes the ' tax returns from 2019 , as well as notes prepared by thepartner's administrative assistant after his first meeting with the couple. The file and notes contain the following information. Camille was previously married. According to her divorce agreement, she must make monthly payments for the maintenance of her former spouse of $400. Camille indicated that she has always made all required spousal support payments. A copy of Camille's T4 slip for 2019 shows gross salary of $62,000. From this amount, the employer withheld the following amounts. Income tax: $15,800 CPP: maximum for the year (see the Tax Ratesheet) EI: maximum for the year (see the Tax Ratesheet) Registered Pension Plan (RPP): $1,500 Pension Adjustment: $3,800 Other relevant information from 's tax return for 2019 is shown below. Actual amount of eligible dividends:$4,500 Interest income: $3,700 Unused RRSP deduction room at the end of 2019 :$4,700 A copy of Tyler's statement of partnership income from the previous year shows that his income earned as an active partner was $325,000. Tyler 's law firm does not provide pension plans for its partners. Tyler owns a rental property and reported a net rental loss of $4,100 on his 2019 tax return. Tyler owns some farm land in Alberta. There is an oil well located on this land, and Tyler receives some resource royalty income each year. In 2019, Tyler earned royalty income of$6500. Other relevant information from 2019 's taxreturn: Actual amount of ineligible dividends:$12,300 Interest income: $8,600 Unused RRSP deduction room at the end of :$200. The following day, the tax partner informs you that the have indicated that they have made the following contributions to various RRSP accounts during . On March 20, Tyler made a $14,000 contribution to his RRSP account at TD Bank. On July 3, Tyler made a $4,500 contribution to a spousal RRSP account for at Royal Bank. On November 12, Tyler made a $1,500 contribution to an RRSP account in his own name at TD Bank. On September 3, Tyler made a $6,500 contribution to an RRSP account in her own name at Scotiabank. Requirement 1. Complete the partner's request and calculate the RRSP contribution room for both Camille and tyler in 2020 . The contribution room for is$____________________ The contribution room for is$____________________ Requirement 2. It is now December 5, 2020, and the Carters would like to know how much more they can contribute to their RRSP accounts and when the deadline is for making contributions to RRSPs for 2020. In addition, Camille plans on buying a new car in a few months. Camille would like to withdraw $4,000 from the spousal RRSP account in her name for the down payment on the vehicle purchase. Explain the tax impact, ifany, of this withdrawal. Unused RRSP deduction room at the end of for is $_____________________ Unused RRSP deduction room at the end of for is $_______________________ The deadline for both and to make contributions to RRSPs for is __________________
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started