Question

Mr. Charlie Brown has spent his entire career with the Peanuts Manufacturing Company. He is located in Sarnia, Ontario and started with the company as a production line manager. He has since moved up the ranks of the company, and most recently has been supervising the entire production department. In early 2020, Charlie was offered an opportunity to oversee the construction of a new manufacturing operation in Jacksonville, Florida, USA. If Mr. Brown takes the position, he would move to the United States on May 1, 2020 and when the facility is completed, Mr. Brown would remain as the senior vice president in charge of all of the Florida operations. Mr. Brown and his wife have 2 school age children who are enrolled at the local elementary school in grades 3 and 5. The Browns own a home in Sarnia and are involved in their community. They belong to their local church and a local recreational club where their children take swimming lessons and the family enjoys socializing. The Brown Family is considering the offer to move and is looking for advice on how their Canadian residency for tax purposes would be affected by this potential move. Mr. Brown has been told by the American payroll department that his tax rate will be lower if he is taxed in the United States. Mr. Brown would leave on May 1st, but the Browns are considering having Mrs. Brown and the children stay in Sarnia to finish out the school year which finishes at the end of June.

Required: Create a short (one page) memo explaining the tax policy to your client. Keep in mind that he will have limited understanding of income taxation, so you need to analyze the issue at a high level and then clearly describe the options available to Mr. Brown so that he can make an informed decision about his move and the tax consequences.

Answer 1

MEMORANDUM

To,

Mr.Charlie Brown

From,

Department of Revenue

State agency of Florida, USA

Date: May 2020

Subject: Basics of Taxation in Florida

We will be glad to discuss with you about the basics of taxation in florida. For the year 2020 Federal tax rates and brackets are mentioning below.

1.Tax brackets and Rates

Rates	Taxable Income over
10%	0
12%	$ 19,750
22%	$80,250
24%	$171,050
32%	$326,600
35%	$414,700
37%	$622,050

2.Standerted Dedcution for married individual - $24,800

3.Earned Income tax credit parameters

Income at Maximum credit	$14,800
Maximum Credit	$5,920
Phaseout begins	$25,220
Phaseout ends	$53,330

4.Child Tax Credit Per child -$2,000

5.Alternative Minimum tax-$113,400

6.Long term Investment:-

Rate	Taxable over income
15%	$80,000
20%	$496,600

7.Business income dedcutions- 20% deduction against upto$ 326,600

8.State Tax rate in Florid is 7% ( 6% florida + 1 % duval county)

Thanks and regards

Department of revenue, Florida

USA