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Creating a Budget

Creating a Budget. Mr. Machula. Creating a budget. Gross Monthly Income Income Tax EI and CPP Deductions Total Monthly Expenses Preliminary Monthly Balance Unexpected Expenses. Gross Monthly Income. Annual Salary divided by 12. $74,880/12= $6240 Gross Monthly Income is $6240.

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Creating a Budget

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  1. Creating a Budget Mr. Machula

  2. Creating a budget • Gross Monthly Income • Income Tax • EI and CPP Deductions • Total Monthly Expenses • Preliminary Monthly Balance • Unexpected Expenses

  3. Gross Monthly Income • Annual Salary divided by 12. $74,880/12= $6240 • Gross Monthly Income is $6240

  4. Federal Tax Deductions • 15% on the first $43,561 of taxable income, + • 22% on the next $43,562 of taxable income (on the portion of taxable income over $43,561 up to $87,123), + • 26% on the next $47,931 of taxable income (on the portion of taxable income over $87,123 up to $135,054), + • 29% of taxable income over $135,054.

  5. Federal Tax Deductions • . 15% on the first $43,561 of taxable income 43,561 x 0.15= $6535 in tax $74,880 subtract $43,561= $31319 • 22% on the next $43,562 of taxable income (on the portion of taxable income over $43,561 up to $87,123), 31319 x 0.22= $6890.18 in tax $37,026+24,428= $61,454.82 13,425 in tax

  6. Provincial Tax Deductions • 10.8% on the first $31,000 of taxable income, + • 12.75% on the next $36,000, + • 17.4% on the amount over $67,000 Because the annual salary is $74,880; $31,ooo x 0.108 = $3348.00 $36,000 x 0.1275 = $4590.00 $7,880 x 0.174 = $1371.12 Total Prov Tax = $9309.12

  7. Total Tax • Federal Tax plus Provincial Tax= Total Tax $13,425+$9309.12= $22734.12 • $22,734.12 divided by 12= $1894.51 $1894.51 per month in Taxes

  8. EI Contributions • $195.50 per month up to $891.12 (Maximum for year) Based on a gross salary of 74,880, use the maximum of $891.12. $891.12/12= 74.26 per month

  9. CPP Contributions • Maximum Pensionable Earnings= $51,100 • Basic Exemption is $3,500. • Maximum Contributory Earnings $47,600 • Employee Contribution Rate is 4.95% • Maximum Contribution is $2356.20 • 74,880- 3500= $71,380 x 0.0495= $3533.31 • Because $3533.31 is greater than $2356.20, we use $2356.20 • $2356.20/12= 196.35 per month in contributions.

  10. Totals • Gross Monthly Income = $ 6240.00 • Income Tax (Fed+Prov) = $ 1894.51 • EI and CPP Contributions = $ 270.61 • Net Monthly Income A-(B+C)= D = $4074.88 Total Monthly Expenses = $1500 Monthly Balance (Net Income subtract Monthly Expenses) $4074.88- $2510 = $2574.88 Unexpectant Expenses - $200.00 Final Monthly Balance = 2374.88

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