This assignment requires you write a case describing an individual tax situation, and manually complete a T1 General 2019 and all relevant provincial and federal tax schedules, reconcile your work, and write a summary letter to the individual. All necessary forms and information are available online at https://www.canada.ca/en/services/taxes/income-tax.html
1. Write a client case study. The written case description should cover all relevant information so that if I completed an income tax return based solely on the written information describing the case, I would be able to do it completely and correctly. This is likely to be approximately one full page in length to provide the necessary information. As you complete the forms, you will find additional information is required, and you should add it to your case. You do not need to explain tax rules or where the information is entered on the tax return – simply provide the information.
Writing the case study shows that you understand verbal information as it relates to the income tax filing process, and can interpret forms and necessary detailed information.
Your case must include the following variables:
· All personal information required to complete the T1 General. The individual must be single with no children and born after 1970.
· Employment income (A) with payroll deductions CPP (B), EI (C), income tax (D), and pension adjustment (E).
· Interest income (F).
· Eligible dividend income received (G).
· Rental Income (H, I, J ). Assume expenses are all repairs and maintenance.
· Capital gain (K, L) - include a full description of the transaction leading to a capital gain. Choose a TSX listed share that you purchased in 2009.
· Cash donation to a Canadian registered charity (M).
· RRSP contribution (O, P).
· Eligible medical expenses (Q).
2. Fully complete all the relevant tax forms and schedules. Read the General Income Tax and Benefit Guide 2019 for each line number you use, and apply the information you find. Do additional research using CRA guides and forms where necessary. Make the CRA website your primary source of information. https://www.canada.ca/en/services/taxes/income-tax.html
Completing the tax forms shows that you are able to relate the verbal information to the forms, and apply all relevant rules to the situation by researching the information as necessary.
You must research applicable rules for all items you include in your case. Use the General Income Tax and Benefit Guide 2019 for every line number you use. Review the relevant guides and forms for each item you include.
Ignore the Climate Action Incentive (T1 page 8 line 45110)
3. Check your work using the Detailed Tax Calculator on www.taxtips.ca to calculate taxes owing. Note: Taxtips detailed tax calculator is not tax preparation software, and will require you to be knowledgeable about the items you input. For example, Taxtips calls for “capital gains” and automatically applies the 50% inclusion rate. The T1 General asks for “taxable capital gains” which you calculate on schedule 3. Similarly, Taxtips calls for “dividends” (eligible or other than eligible) and automatically grosses up to the taxable amount. The T1 general asks for “taxable dividends”, i.e. the grossed up amount, which you calculate. Also, some line items do not appear in Taxtips, and you must work around these items by including them in categories where they will have the same impact.
Reconcile your manual answers with the Taxtips result. It should match perfectly right down to the refund/balance payable amount. If they do not agree, study them and find the source of your error. Start by looking at total income. Then taxable income. Federal tax credits. Federal tax, etc. As you find discrepancies, correct your errors until the cases are reconciled.
Reconciling your work shows that you are able to logically find an error by comparing two forms, and use your knowledge of the income tax process to determine the error and correct it.
4. Write a professional summary letter to the client. You must use a business letter format including addresses, date, salutation, introduction, body, summary and closing with signature. For assistance, here is a link: https://www.nmu.edu/writingcenter/parts-business-letter
This letter does not have to be long (usually less than one page). Be brief, but summarize the tax situation for the year in a way that is relevant to the client. Include the following information: