Planning Your Tax Strategy Jamie Lee Jackson, age 26, is in her last semester of college and is waiting for graduation day, just around the corner It is the time of year again when Jamie Lee must file her annual income taxes Last year, she received an increase in salary from the bakery, which brought her gross monthly earnings to $2,550 and also opened up a TFSA, to which she contributed $300 Her savings accounts earn 2 percent interest per year, and she also had received an unexpected $1,500 gift from her great aunt Jamie was also lucky enough last year to win a scholarship of $2,000, most of which was deposited into her regular savings account after paying off her credit card balance Current Financial Situation Assets Chequing account $2,250 Savings account $6,900 (interest earned last year $125) Emergency fund savings account $3,900 (interest earned last year $75) TFSA balance $350 ($300 contribution made last year) Car $3,000 Liabilities Student loan $10,800 Credit card balance $0 Income Gross monthly salary $2,550 Monthly Expenses Rent obligation $275 Utilities obligation $135 Food $130 Gas maintenance $110 Credit card payment $0 Savings Regular savings monthly deposit $175 Rainy day savings monthly deposit $25 Entertainment Cake decorating class $40 Movies with friends $60 Questions Jamie Lee is trying to decide between Federal Tax Schedule 1 and T1 General to file her federal income tax return Choose the most appropriate form(s) for Jamie to use and describe your reasoning for making this choice ( 4 marks ) What impact on Jamie Lees income would the gift of $1,500 from her great aunt have on her adjusted gross income Would there be an impact on the adjusted gross income with her $2,000 scholarship Explain your answer ( 6 marks ) Using the federal tax form(s) from question 1 as a guide , calculate Jamie Lees taxable income ( 6 marks ) In Jamie Lees situation, what is her marginal tax rate How would a marginal tax rate compare to an average tax rate ( 4 marks )

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Planning Your Tax Strategy Jamie Lee Jackson, age 26, is in her last semester of college and is waiting for graduation day, just around the

Planning Your Tax Strategy

Jamie Lee Jackson, age 26, is in her last semester of college and is waiting for graduation day, just around the corner! It is the time of year again when Jamie Lee must file her annual income taxes. Last year, she received an increase in salary from the bakery, which brought her gross monthly earnings to $2,550 and also opened up a TFSA, to which she contributed $300. Her savings accounts earn 2 percent interest per year, and she also had received an unexpected $1,500 gift from her great aunt. Jamie was also lucky enough last year to win a scholarship of $2,000, most of which was deposited into her regular savings account after paying off her credit card balance.

Current Financial Situation

Assets:
Chequing account: $2,250
Savings account: $6,900 (interest earned last year: $125)
Emergency fund savings account: $3,900 (interest earned last year: $75)
TFSA balance: $350 ($300 contribution made last year)
Car: $3,000

Liabilities:

Student loan: $10,800
Credit card balance: $0

Income:

Gross monthly salary: $2,550

Monthly Expenses:

Rent obligation: $275
Utilities obligation: $135
Food: $130
Gas/maintenance: $110
Credit card payment: $0

Savings:

Regular savings monthly deposit: $175
Rainy-day savings monthly deposit: $25

Entertainment:

Cake decorating class: $40
Movies with friends: $60

Questions

Jamie Lee is trying to decide between Federal Tax Schedule 1 and T1 General to file her federal income tax return. Choose the most appropriate form(s) for Jamie to use and describe your reasoning for making this choice. (4 marks)
What impact on Jamie Lees income would the gift of $1,500 from her great aunt have on her adjusted gross income? Would there be an impact on the adjusted gross income with her $2,000 scholarship? Explain your answer. (6 marks)
Using the federal tax form(s) from question 1 as a guide, calculate Jamie Lees taxable income. (6 marks)
In Jamie Lees situation, what is her marginal tax rate? How would a marginal tax rate compare to an average tax rate? (4 marks)