Question

Mary is single with no dependants. During the year she had the following amounts deducted from...

Mary is single with no dependants. During the year she had the following amounts deducted from her salary:

CPP $2,898

EI 856

Federal Income Tax 15,000

Based on this information, Mary’s total federal tax credits for 2020 will be:

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Answer #1

A tax credit is an amount of money that taxpayers can subtract from taxes owed to their government. Unlike deductions and exemptions, which reduce the amount of taxable income, tax credits reduce the actual amount of tax owed. The value of a tax credit depends on the nature of the credit; certain types of tax credits are granted to individuals or businesses in specific locations, classifications, or industries.

The 2020 maximum annual federal employee contributions are: EI: $856.36. CPP: $2,898.00.

Hence Mary’s total federal tax credits for 2020 will be

CPP $2,898

EI 856

Federal Income tax 15000

Total 18754

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