HomeworkProblem 4-2,4-3, 4-4

# HomeworkProblem 4-2,4-3, 4-4 - Solution to Problem 4-2...

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Solution to Problem 4-2 Calculate the Federal Taxes Payable by Mr. William Norris under the various scenarios provided for the taxpayer. Mr. Norris’s employment income is \$51,000 this year and the employer has withheld CPP and EI. Case A : Mr. Norris is married to Susan, who earned \$8,800 this year. Susan’s 73 year old mother lives with them. She has NIFTP of \$16,000 for the year. Solution: Federal Tax: \$6,146 + 22%(\$51,000-\$40,970) \$8,353 Tax Credits: Basic Personal Amount \$10,382 Spousal (\$10,382 – \$8,800) 1,582 CPP 2,163 EI 747 Canada Employment 1,051 Caregiver: (\$4,223 – [\$16,000-\$14,422]) 2,645 Total Credits \$18,570 x 15% = ( 2,786 ) Federal Tax Payable \$5,567 Mr. Norris would claim the caregiver tax credit for his mother-in- law since his wife would have no Tax Payable.

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Case B : Mr. Norris’s wife has employment income of \$4,410 and his 10 year old daughter had no income. The family’s medical expenses follow: Mr. Norris \$1,200 Mrs. Norris 1,600 Daughter 350 Total \$3,150. Solution: Federal Tax: \$6,146 + 22%(\$51,000-\$40,970) \$8,353 Tax Credits: Basic Personal Amount \$10,382 Spousal: (\$10,382– \$4,410) 5,972 Child 5,972 CPP 2,163 EI 747 Canada Employment 1,051 Medical Expenses: (\$3,150 – lesser of [3% X \$51,000] or \$2,024) 1,620 Total Credits \$24,036 X 15% ( 3,605 ) Federal Tax Payable \$4,748
Case C : Mr. Norris’s wife has employment income of \$4,500. The son attends university for 8 months. His tuition was \$4,000, his books cost \$900 and he will transfer unused credits to his father. The son earned income of \$2,200 during the summer. Solution:

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## HomeworkProblem 4-2,4-3, 4-4 - Solution to Problem 4-2...

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