Kristina and Milo have two children, ages 3 and 6. When they are making their annual budget, they determine they will have an "extra" $2,000 over the course of the year. They are considering three options. Kristina's employer allows her to make contributions to a flexible spending account. They are trying to decide if they should put the money in a health care FSA or a dependent care FSA. Or perhaps they should start an educational assistance plan for their children. Where should they put that extra money? a. Health care FSA b. Dependent care FSA c. Educational assistance plan

Albert established a qualified tuition program for each of his twins, Kim and Jim. He started each fund with $20,000 when the children were five years old. Albert made no further contributions to his children's plans. Thirteen years later, both children have graduated from high school. Kim's fund has accumulated to $45,000, and Jim's has accumulated to $42,000. Kim decides to attend a state university, which will cost $60,000 for four years (tuition, fees, room and board, and books). Jim decides to go to work instead of going to college. During the current year, $7,500 is used from Kim's plan to pay the cost of her first semester in college. Because Jim is not going to college now or in the future, Albert withdraws the $42,000 plan balance and gives it to Jim to start his new life after high school. Question Content Area a.  During the period since the plans were established, should Albert or the twins have been including the annual plan earnings in gross income?…

Aramis and Danielle Bisset, both in their mid-20s, have been married for 4 years and have two preschool-age children. Aramis has an accounting degree and is employed as a cost accountant at an annual salary of $64,000. They're now renting a duplex but wish to buy a home in the suburbs of their rapidly developing city. They've decided they can afford a $425,000 house and hope to find one with the features they desire in a good neighborhood. The insurance costs on such a home are expected to be $1,000 per year, taxes are expected to be $3,000 per year, and annual utility bills are estimated at $1,800 - an increase of $500 over those they pay in the duplex. The Bissets are considering financing their home with a fixed-rate, 30-year, 6 percent mortgage. The lender charges 2 points on mortgages with 20 percent down and 3 points if less than 20 percent is put down (the commercial bank that the Bissets will deal with requires a minimum of 10 percent down). Other closing costs are estimated at…

Rachel is 20 years old. She plans on retiring in 40 years when she will be 60 years old. Rachel believes she will live until she is 105. In order to live comfortably, she needs a substantial retirement income. She wants to receive a weekly income of $5,000 during retirement. The payments will be made at the beginning of each week during her retirement. Also, Rachel has pledged to make an annual donation to her favorite charity during her retirement. There will be a total of 45 payments. The payments will be made at the end of each year. The first annual payment will be for $20,000. Rachel wants the annual payments to increase by 3% per year. The payments will end when she dies. In addition, she would like to establish a scholarship at Toronto Metropolitan University. The first payment from scholarship would be $50,000. The first scholarship payment would be made 7 years after she retires. Thereafter scholarship payments will be made every year. She wants the payments to continue after…

Last year, Dani maximized her TFSA contribution limit by contributing $30,000 to her TFSA. This year, her contribution limit is $7,000. The $30,000 that Dani contributed last year has grown to $32,000. She contributed nothing this year but withdrew the entire amount of $32,000. Assuming next year's limit is also $7,000 how much can Dani contribute to her TFSA next year?

Sandra earns $21,000 in employment income in 2020 and her spouse Susan earns$18,000. They have two children: Mike, who is 5 years old, and Eric, who is 9 yearsold. They spent $2,500 on after school care from 3:30 - 5:30 each day, since theywork until 5:30, and they also sent Eric to a 2-week biking training camp for $1,000where he stayed overnight in cabins.Calculate the maximum child care expense deduction the family can take.

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After reading an estate planning article, Vaughn has decided to take action to reduce his gross estate by making annual gifts to his four children, eight grandchildren, and four great-grandchildren. Vaughn has discussed the gifting strategy with his wife, Rebecca and she has agreed to split each gift. If Vaughn gifts the maximum amount each year without incurring gift taxes, how much can he gift this year? Must a gift tax return be filed? Celeste and Raymond have bene married for 29 years. Last year, Raymond sold his business and his net worth now exceeds $30 million. Celeste and Raymond have twin daughter, Kelly and Shelly. Celeste and Raymond, neither of whom have given any gifts in the past, would like to give their daughters the maximum amount of cash possible without incurring any gift tax liability. How much can Celeste and Raymond give to Kelly and Shelly this year?

Jing is concerned about having to repay her Old Age Security (OAS) pension that she receives. This is very stressful as she is on a very limited budget. She knows that if her income is over the minimum threshold amount, that she must repay 15% of this different through her tax return due to the OAS clawback. The maximum monthly OAS pension in 2021 is $635.26. Jing’s net income is estimated at $75,000 for the year. Jing turned 65 years old on January 1, 2021 and has been living in Canada for 25 years. She knows that the amount she will receive is a partial monthly pension earned at the rate of 1/40th of the maximum monthly OAS pension for each year of residence in Canada after the age of 18.

Kelly is a diligent mother who has just finished supporting her two children, Susan, aged 23, and Randy, aged 25, through their university education. Both Susan and Randy have embarked on their careers and have moved out. Kelly wants to continue supporting them by providing financial assistance for their future endeavors, such as purchasing their first home or pursuing further education. She aims to give each of them an equal amount of money when they reach the age of 30. Currently, Kelly has $15,000 in savings, which she plans to allocate to Randy, as she will reach 30 first. She intends to provide Randy with $35,000. Kelly's investments generate a 6% return before tax, and her marginal tax rate is 35%. The inflation rate is estimated to be 3%.All savings are deposited at the end of the year.Required:(a) Calculate the annual savings Kelly needs to make to accumulate $35,000 to give to Randy when she turns 30.(b) Determine the fair amount Kelly should give to Susan when she reaches 30,…