Table of Contents
- 👨👩👧👦 Case Study: The Nicholson Family — Typical Canadian Family with University Kids
- 💻 Case Study: Entering Income & Deductions for Scott and Tracy Nicholson
- 🎓 Completing Tax Returns for Students: Melissa & David Nicholson
- 🧮 The Nicholson Family: Final Review of Tax Returns & Key Discussion Points
👨👩👧👦 Case Study: The Nicholson Family — Typical Canadian Family with University Kids
Understanding a typical family scenario is crucial for new tax preparers. Families with children in post-secondary education often qualify for multiple tax credits, deductions, and special considerations. This guide walks you through how to prepare a complete tax return for a family like the Nicholsons, including step-by-step instructions in Intuit ProFile, explained for absolute beginners.
🎯 Meet the Nicholson Family
Family Composition:
- Parents: Scott (self-employed, dividend income) and Tracy (HR professional)
- Children: Four children
- Melissa (adult, university student)
- David (adult, trades student)
- Twins (young children, 6 years old in this scenario)
Key Family Details:
- Scott is self-employed and receives dividends instead of a salary.
- Tracy lost her corporate job mid-year, received a severance package, and quickly found a new position.
- Family has recently become homeowners and may be eligible for first-time homebuyer benefits.
- Children are enrolled in post-secondary programs or require childcare and summer camp deductions.
💰 Income & Deductions Overview
Scott (Self-Employed, Dividend Income):
- Receives monthly dividends ($8,000/month)
- Makes a year-end tax installment ($20,000) instead of monthly
- ProFile Tip: Enter dividend income under the T5 slips section → the software will automatically calculate gross-up and dividend tax credit
Tracy (Employment & Severance):
- Employment income reported on T4 slips
- Severance included in T4 (plus any legal settlement received after year-end)
- Professional dues ($585.75) and certification fees are deductible
- ProFile Tip:
- Enter employment income on T4 slips section
- Enter deductions under “Professional Memberships & Dues” and “Employment Expenses” if applicable
🎓 Tuition and Education Credits
Melissa & David (Post-Secondary Students):
- Tuition paid: Melissa ($11,252), David (amount based on T2202)
- Eligible for tuition tax credits, which can be:
- Applied to student’s own tax return
- Transferred to parents if the student does not need full credit
- ProFile Tip:
- Use T2202 section → enter tuition paid for each student
- Software calculates allowable tuition credits automatically
- Check box for transfer to parents if needed
👶 Childcare and Other Family Expenses
Twins (Young Children):
- Childcare receipts: $5,580 each → total $11,160
- Summer camp costs: $1,018 each → total $2,036
- ProFile Tip:
- Enter under Childcare Expenses in the software
- Select the parent who earned income and will claim deduction
🏡 Homeownership Considerations
- Family recently purchased their first home
- Eligible for First-Time Home Buyers’ Tax Credit (HBTC)
- ProFile Tip:
- Enter purchase information under Home Buyers’ Amount
- Software calculates credit automatically
💡 Notes for New Tax Preparers
- Installments vs. regular tax payments:
- Scott made a year-end installment, which may generate a small interest adjustment. ProFile handles CRA interest calculation automatically if installment info is entered.
- Severance and legal settlements:
- Include in income in the year received
- If settlement crosses years, enter the date received to ensure proper reporting
- Tuition and education credits:
- Keep all T2202 slips for CRA verification
- Transfer unused credits to parents if students don’t owe enough tax
- Childcare & summer camp:
- Only the parent with earned income can claim childcare deduction
- Ensure receipts and amounts match CRA requirements
💻 How to Prepare in Intuit ProFile (Step-by-Step Beginner Guide)
- Enter Personal Information:
- Parent and children details, SIN, dates of birth
- Enter Income:
- Scott’s T5 slips → dividend income
- Tracy’s T4 slips → employment and severance
- Deductions & Credits:
- Professional dues and certification fees
- Tuition and education credits (T2202)
- Childcare and summer camp expenses
- First-Time Home Buyers’ Amount
- Apply Transfers:
- Tuition transfer to parents if applicable
- Finalize Tax Return:
- Review all CRA-required slips
- ProFile auto-calculates total income, deductions, and credits
- Check summary page for refund or balance owing
🌟 Key Takeaways
✅ Families with post-secondary children have multiple tax credits available
✅ First-time homebuyer credit is important to include
✅ Childcare expenses must be claimed by parent with earned income
✅ Tuition can be transferred to parents for maximum benefit
✅ ProFile automates calculations but accurate input is crucial
This case study of the Nicholson family is a perfect beginner-friendly reference for tax preparers handling typical Canadian families, showing how to maximize credits, properly report income, and navigate Intuit ProFile step by step.
💻 Case Study: Entering Income & Deductions for Scott and Tracy Nicholson
When preparing a tax return for a typical family with post-secondary children, understanding how to enter income and deductions correctly is essential. This guide walks through the Nicholson family scenario, showing beginner-friendly steps in Intuit ProFile and explaining key considerations for each type of income and deduction.
🧾 Overview of the Nicholson Family
Scott and Tracy Nicholson are a typical family with:
- Two adult children in university (Melissa and David)
- Two younger twins requiring child care
- Scott is self-employed and receives dividends from his own corporation
- Tracy is an HR professional with a job change during the year, including a severance payment
Total family income includes salaries, dividends, and severance payments, along with eligible deductions for legal fees, professional dues, and child care expenses.
📥 Entering Scott’s Income
1. Dividend Income (T5 Slip)
- Scott receives dividends from his owner-managed corporation
- In ProFile: Go to T5 slip section, enter the dividend amount
- Dividends are reported on the T1 slip line for dividends
- Enter tax installment payments on the last page of T1 if applicable (e.g., $20,000)
💡 Pro Tip: ProFile automatically tracks dividend income for non-eligible and eligible dividends, calculating the gross-up and dividend tax credit.
📥 Entering Tracy’s Income
1. Employment Income (T4 Slips)
- Tracy worked for two employers in the year
- Enter each T4 slip individually in ProFile:
- Employer name, period, total income
- Tax deducted at source
- Severance payments reported by the employer
2. Severance Payments
- Received $8,500.20 in 2022
- Important: Do not manually enter extra severance—the employer reports it on T4
- Payments received in the next year are reported in that year’s T4
3. Employment-Related Legal Fees
- Tracy paid $550 to a lawyer for severance-related collection
- Enter in Other Employment Expenses → Line 22900
- No T2200 form needed since it’s a legal fee, not standard employment expenses
💡 SEO Note: These legal fees are fully deductible against employment income and are common for severance-related cases.
4. Professional Dues
- Tracy’s annual professional and union dues: $1,014.30
- In ProFile: Enter under Other Deductions → Annual Union/Professional Dues → line 21200
- Required to maintain her HR certification and employment
👶 Child Care Expenses
- Twins (Aaron and Ariel) attended child care and a summer lacrosse camp
- Step 1: Enter child care center expenses ($5,580 each) in Child Care Expenses section
- Step 2: Enter summer camp expenses ($1,018 each)
- Important Rule: Only $200 per week for camp is deductible
- Two-week camp → $400 deductible total
- ProFile calculates maximum allowable deduction based on weeks attended
💡 Pro Tip: ProFile uses the star system to track weeks for special programs like overnight camps or boarding school; these expenses may not be fully deductible.
✅ Summary of Key Points
- Scott’s dividends and installments are straightforward; enter T5 and installments in ProFile
- Tracy’s employment income is entered from T4s; do not manually adjust severance
- Employment-related legal fees and professional dues are deductible without T2200
- Child care expenses must respect CRA limits; summer camps have a per-week maximum
- Always check dates of birth for dependents—important for credits and child care claims
💻 ProFile Step-by-Step Recap
- Enter personal information for Scott, Tracy, and dependents
- Input all T4 and T5 slips accurately
- Enter other deductions: legal fees, professional dues
- Enter child care expenses, including weeks attended for camp or special programs
- Review summary page for line totals: employment income, dividends, deductions, and child care
- Save and verify all data before moving to tuition credits for Melissa and David
💡 Beginner Tip: ProFile color codes linked numbers. Blue fields come from worksheets—always double-check entries, especially for deductions and child care.
This guide provides a complete beginner-friendly roadmap to enter income and deductions for a typical family with children in university, ensuring accuracy in Intuit ProFile while following CRA rules.
🎓 Completing Tax Returns for Students: Melissa & David Nicholson
Filing taxes for post-secondary students can seem tricky at first, but it’s a common scenario for tax preparers. This guide walks you through entering tuition, claiming credits, and filing student returns in Intuit ProFile, even if the students have little or no income.
🧾 Why File Tax Returns for Students?
Even if a student has no income, filing a tax return is important:
- To claim tuition credits
- To carry forward unused tuition for future years
- To transfer credits to parents, maximizing family tax savings
💡 Note: Filing student returns ensures proper tracking of carry-forward credits, preventing double counting or lost credits in future years.
📥 Step 1: Setting Up Student Tax Returns in ProFile
- Open the Dependent Worksheet in ProFile
- Right-click on the student’s name → select “Create Tax Return”
- ProFile generates a separate tax return for each student, linked to the family for credit transfers
- Review personal information: name, date of birth, address, SIN
💡 Pro Tip: Always double-check birthdates—essential for tuition credit eligibility and child-related benefits.
📚 Step 2: Entering Tuition (T2202 Slip)
- Each student receives a T2202 slip from their post-secondary institution
- Enter the tuition amount and months attended in ProFile under Schedule 11 → Tuition & Education Credits
- Example: Melissa attended 4 full months of the Bachelor of Commerce program → enter $5,108
💡 Important:
- Do not enter tuition receipts from parents; only use the official T2202
- Tuition receipts may include accommodation, textbooks, or fees that are not eligible for the tax credit
💰 Step 3: Student Income
- Melissa earned $24,872 in summer income → enter T4 slips in her tax return
- David had no income → no T4 needed, but tuition credit is still claimable
💡 SEO Tip: Filing even for zero-income students ensures proper carry-forward and transfer of credits, which can reduce parental taxes.
🔄 Step 4: Transferring Tuition Credits to Parents
- Students can transfer up to $5,000 of unused tuition to a parent or grandparent
- Enter transfer in ProFile: Student Tax Return → Schedule 11 → Transfer to Parent
- David transfers $5,000 of his $8,055 tuition credit to Tracy
- Remaining $3,055 becomes carry-forward for David’s future use
📌 Parent’s Return:
- Tracy’s tax return will automatically show the $5,000 tuition transfer
- Ensure student signs the T2202 slip confirming the transfer
💡 Pro Tip: Even if tuition is below the $5,000 transfer limit, filing the student return is beneficial for tracking carry-forward credits.
🖥️ Step 5: Final Checks in ProFile
- Verify all T2202 slips match official amounts
- Ensure all student income and deductions are entered correctly
- Confirm that tuition transfers and carry-forwards are properly recorded
- Signatures:
- Students must sign their own returns and tuition transfer slips
- Melissa used her tuition herself → no signature needed on transfer
- David’s transfer to Tracy requires his signature
✅ ProFile Tip: The software links the student’s return to the parent’s return, simplifying credit transfers and family tax planning.
📌 Key Takeaways for Tax Preparers
- Always use T2202 slips, not tuition receipts from parents
- File returns for all post-secondary students, even with zero income
- Track tuition carry-forwards carefully
- Use ProFile’s dependent linkage for smooth credit transfers
- Ensure proper signatures on student returns and transfer forms
💡 Expert Tip: Filing student returns is more than a formality—it maximizes credits for the family and prevents issues with CRA audits or carry-forward miscalculations.
This guide is your ultimate reference for preparing returns for students in university or college, helping new tax preparers handle tuition credits and family tax strategies with confidence.
🧮 The Nicholson Family: Final Review of Tax Returns & Key Discussion Points
In this case study, we’ll pull together everything for Tracy, Scott, Melissa, and David Nicholson — a typical Canadian family with employment income, tuition claims, childcare costs, and homeownership.
By the end of this guide, you’ll understand how to:
✅ Review completed returns in Intuit ProFile
✅ Spot common issues that affect family deductions
✅ Advise clients about strategic changes for future tax years
👩💼 Tracy Nicholson’s Tax Return: Key Items to Review
Tracy’s return includes a mix of employment income, severance, and professional deductions. Let’s break it down:
💵 Employment & Severance Income
- All of Tracy’s T4 slips are entered under line 10100 in ProFile.
- Severance pay was correctly included on her T4 by the employer — no need for manual entry.
🧾 Employment Deductions
- Legal fees of $550 paid to obtain severance are deductible.
- In ProFile, go to:
T1 → Employment → Other Employment Expenses → Legal Fees (line 22900) - No T2200 is required for this type of deduction.
- In ProFile, go to:
💼 Union & Professional Dues
- Enter professional and union dues shown on the T4 under line 21200.
- These are pre-filled automatically if entered via the T4 slip.
🏡 Home Buyers’ Amount
Tracy and Scott purchased their first home, making them eligible for the Home Buyers’ Amount (line 31270).
- The maximum combined claim is $10,000.
- Either spouse can claim it fully or they can split it.
- In ProFile: Double-click the Home Buyers’ Amount line → enter claimant(s) and percentage split.
💡 Note: The claim can be divided any way the couple chooses, as long as the total does not exceed $10,000.
👨💼 Scott Nicholson’s Tax Return: Common Challenge
Scott’s return includes dividend income from his incorporated business, but no T4 or salary income. This creates a problem for claiming childcare expenses.
👶 Childcare Expense Deduction (T778)
The lower-income spouse must claim childcare expenses, but only if they have earned income (employment or self-employment).
- In ProFile, enter all childcare costs in Form T778.
- The program automatically assigns the claim to the lower-income spouse (Scott).
However, because dividends are not considered “earned income”, Scott cannot claim these expenses.
📌 Result:
- The $11,960 in childcare expenses cannot be deducted this year.
- The software correctly prevents it from transferring to Tracy because she is the higher-income spouse.
💬 What to Advise the Client
Scott should consider adjusting how he’s paid through his corporation:
- Pay himself a reasonable salary next year (e.g., $15,000–$20,000).
- This creates “earned income” that allows him to deduct childcare expenses.
💡 Tax Strategy Tip: Dividends may save tax at the corporate level, but they reduce access to certain deductions and benefits. A mix of salary + dividends often works best for family tax optimization.
👩🎓 Melissa & 👨🎓 David Nicholson: Tuition Credits
Melissa
- Had employment income and claimed her own tuition credit of $5,108.
- Parents cannot transfer this amount because she used it against her income.
David
- Had no income, so his tuition credit was transferred to his mother, Tracy.
- Transferred $5,000 of tuition; the remaining $3,055 is carried forward.
💡 ProFile Steps:
- In David’s return → Schedule 11 → Transfer to Parent
- In Tracy’s return → Verify under Federal Non-Refundable Credits section that transfer was received.
💰 CPP & EI Overpayment Refund
Tracy worked two jobs in the same year, leading to an overpayment of CPP and EI.
In ProFile, double-click line 44800 to review:
- CPP overpayment: $1,102
- EI overpayment: $360.97
The software automatically calculates and adds this to her refund.
💡 Note: This happens often when a taxpayer changes jobs mid-year — ProFile automatically detects and claims these overpayments.
🧠 Key Takeaways for Tax Preparers
| Topic | Key Lesson |
|---|---|
| Severance | Always rely on the T4 slip; employers handle reporting. |
| Legal Fees | Deductible under line 22900 – no T2200 needed. |
| Home Buyers’ Amount | Up to $10,000 combined – can be split any way. |
| Tuition Transfers | Only unused tuition can be transferred. |
| Childcare Deductions | Must have earned income to claim. Dividends don’t count. |
| CPP/EI Overpayment | ProFile detects and applies credit automatically. |
💬 Discussion Points with the Clients
When reviewing returns with Tracy and Scott, discuss:
- ✅ Why childcare couldn’t be claimed (earned income rule).
- ✅ How Scott can restructure pay to access the deduction next year.
- ✅ Why tuition couldn’t be transferred from Melissa.
- ✅ Confirmation that the home buyers’ credit has been properly claimed.
- ✅ The CPP/EI overpayment refund.
🧾 Final ProFile Checks
Before filing:
- Ensure all T slips are entered (T4, T5, T2202, etc.).
- Verify family linkage for tuition transfers.
- Review line-by-line summary for each family member.
- Use ProFile’s “Review” tab to catch any warnings or unlinked slips.
💡 Expert Tip: Always print or PDF the summary pages for all family members to confirm that credits, transfers, and deductions are linked correctly before submission.
🌟 Conclusion
Even in a “typical family” case, small details like income type, credit transfers, and claiming rules can significantly affect refunds.
For new tax preparers, this case teaches two golden lessons:
- Follow CRA’s earned income and transfer rules strictly — software will not override these.
- Think ahead for next year’s planning — help clients adjust income structures to maximize deductions.
Mastering these practical insights in Intuit ProFile prepares you for handling real-world clients with confidence.
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