Assignment task:
Determine minimum Net Income for Tax Purposes, Taxable Income, Federal Taxes Payable and Net Federal Taxes Owing for the 2022 taxation year for Goose. Ignore any GST or PST considerations. For any amounts provided but excluded from your calculations explain why they have been excluded.
Personal Tax Information for Goose Mitchell
My net business income for 2022 was $59,000. I made $6,700 of instalment payments for 2022. Carole had gross employment income of $98,000 and net employment income of $90,000. Rooster attended an after school program that cost us $12,000 in 2022. He also attended a 2 week camp in the summer that cost $1,800. Carole broke her leg when she fell in January and was bed ridden for 4 weeks. I developed pneumonia in November and was hospitalized for 3 weeks. I received total cash dividends of $10,500 ($6,000 in eligible dividends and $4,500 of US dividends). The US dividends were net of $500 of withholding taxes.
We moved into a larger house in December 2022 after we sold our townhome for $540,000. I purchased the townhome in 2013 for $478,000 so I made a nice profit on it. The townhouse was solely in my name, so I must report the profit. In 2018 Carole declared a cottage her principal residence for the years 2015 to 2017 so she could eliminate the $8,200 gain she made.
Pete: I have some bad news. Goose is separating from his wife Carole. This is going to be so hard on Rooster, their 10 year old son. They have agreed for Carole to stay in the house with Rooster. Goose has found a 2 bedroom apartment near the house and he will have custody of Rooster on weekends. Carole gave Goose $5,000 to help with the damage deposit and other expenses related to moving to the apartment. She has also agreed to pay the monthly rent of $1,200 and transfer another $1,500 per month directly to Goose. They wrote an agreement out themselves with these terms. However, they will have lawyers prepare a full divorce agreement that deals with their assets as well as any payments. Goose is wondering whether he will have to pay taxes on any of these payments.
Plan to do a full analysis of these payments using the spousal support criteria to determine if the payments are taxable.
Determine minimum Net Income for Tax Purposes, Taxable Income, Federal Taxes Payable and Net Federal Taxes Owing for the 2022 taxation year for Goose. Ignore any GST or PST considerations. For any amounts provided but excluded from your calculations explain why they have been excluded.