During the current year, KB has the following costs: Utility Costs for Home $2,500 Maintenance and...

During the current year, KB has the following costs:

Utility Costs for Home $2,500

Maintenance and Repairs for Home 3,100

Property Taxes for Home 5,400

House Insurance 1,300

Interest on Mortgage 4,600

Home Telephone Monthly Charge 600

Separate Line to Home-Work-Space Monthly Charge 480

Employment Related Long Distance Charges 560

Home Internet Service Fees 720

KB estimates that he/she uses 18 percent of his residence and 30 percent of his home internet service for employment/business related purposes. Maximum CCA on 100 percent of the house would be $12,000. Determine the maximum deduction that would be available to Mr. Beasley assuming:

A. He is an employee with $72,000 in income (no commissions).

B. He is an employee with $72,000 in commission income.

Solutions

Expert Solution

	A

	*Particulars*	*Employee with NO commission income*
	Income	72000
	Add / Less:-
	Deduct % age of below costs from income
-	Utility Costs *250018%**	450
-	Maintenance and Repairs for Home *310018%**	558
-	Property Taxes for Home *540018%**	972
-	House Insurance *130018%**	234
-	Interest on Mortgage *460018%**	828
-	Home Telephone Monthly Charge *60018%**	108
-	Separate Line to Home-Work-Space Monthly Charge *48018%**	86.4
-	Home Internet Service Fees *72030%**	216
-	CCA For home *1200018%**	2160
-	Employment Related Long Distance Charges *560100%**	560
	(because these are separately mentioned for employment)
	*Total Deductions*	6172.4

	Net income	65827.6

	B
	If employee has commission income he does not gets any deduction infact, he has to pay on 22% of tax on his entire commission income

ekkarill92 answered 3 months ago

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