Question

Manuel Liriano is 40 years old, married and has 2 children aged 2 and 8 years old. He is employed at MOT Consulting and has an annual salary of $157,000. He has asked you whether he will have a tax payable or tax refund for 2019 (ignore provincial taxes). Other information he shared with you is as follows: • His employer paid for the $300/month underground parking spot at the company’s head office • His employer gave him a $3,000 flat-screen tv as an award for his 10-year work anniversary. • His employer gave him a $25 t-shirt for him to wear on the annual Terry Fox Run • His employer paid $2,200 in premiums for him towards his membership in the company-sponsored group disability plan • He earned $6,500 in interest on his investments • Manuel made an RRSP contribution of $12,000 and paid professional dues of $1,800. • Manuel and his spouse did not incur any childcare expenses during the year. • He is required by his employer to use his own automobile in the course of his employment. His total automobile costs for the year, including lease costs, gas, repairs and maintenance, are $14,000. He drove his car 24,000 kilometres during the year. 10,000 kilometres of this amount was for employment purposes. • His spouse was infirm and had employment income in 2019 of $4,000 from her part-time job. • His employer made the required CPP and EI withholdings from his semi-monthly pay cheques throughout the year. • Manuel was enrolled as a part-time student at Seneca College and took two courses during the year at a cost of $3,600. • Manuel made charitable donations of $6,000 in 2019. • Manuel incurred medical expenses of $5,600 for his family for the 12 month period ending on September 30, 2019. This was the 12 month-period ending in 2019 for which he incurred the highest amount of medical expenses. For the 2019 calendar year his medical expenses for his family totaled ($5,200). • His employer deducted federal income tax of $25,750. REQUIRED: Complete the relevant lines of the following tax forms to determine Manuel’s:

a. Employment Income.
b. Total Income.
c. Net Income.
d. Taxable Income.
e. Non-refundable tax credits.
f. Federal tax liability.
g. Federal tax payable or refund.

Answer 1

Manuel Liriano will likely have a tax refund for the year 2019.

Step-by-step explanation:

Manuel's tax situation can be analyzed by considering various components of his income and deductions. Starting with his employment income, which includes his annual salary, we need to account for any additional benefits and deductions.

The employer-paid underground parking spot, the flat-screen TV, and the t-shirt are considered taxable benefits. However, the RRSP contribution, professional dues, and eligible employment expenses, such as automobile costs for employment purposes, can be deducted.

His spouse's employment income, CPP, and EI withholdings should also be factored in. Manuel's investment income, RRSP contribution, and education expenses at Seneca College contribute to his overall financial picture.

Charitable donations and medical expenses are potential deductions, while federal income tax deducted by his employer should be considered.

By completing the relevant lines on the tax forms, accounting for income, deductions, and credits, Manuel's total income, net income, taxable income, and federal tax liability can be determined.

The comparison of his total tax liability with the amount of tax already withheld will reveal whether he is eligible for a tax refund or has a remaining tax payable.

In this case, given the various deductions and credits, it's likely that Manuel will receive a tax refund for the year 2019.