5 Medical Tax Credits That Can Save You Money
Have you filed your tax return yet? Instead of the April 30 filing deadline, this year Canadians will have one extra month – until June 1 – to submit their income tax return to the CRA.
The most underused tax credits are the ones for medical expenses and disabilities.
Non-refundable tax credits reduce your tax bill (as opposed to a tax deduction which lowers your income) but they won’t result in your getting a tax refund. These tax credits are meant to help reduce your tax burden by allowing some relief for medical and disability costs.
Related: Preparing for Tax Season
Here are five medical tax credits to be aware of.
1. Medical Expense Tax Credit
This is a non-refundable tax credit for “qualifying medical expenses” that exceed a certain threshold – 3% of net income or $2,352 – whichever is less. You can claim all the medical expenses for you and your spouse, as well as those for anyone who depends on you for support, such as children, grandchildren and parents (and they don’t even have to live with you).
A couple will normally get a higher credit by combining the medical expenses of both spouses on one tax return – the one with the lowest net income, unless the income is so low that there would be no tax to offset the credit.
What can you claim as a medical expense? You can claim medical expenses which have not been reimbursed by a health insurance plan including most, non-cosmetic dental expenses. In fact, the list is extensive. Some less obvious expenses are air conditioners, trained animals and reconstructive medically necessary plastic surgery. For a full list see the CRA’s medical expense page.
You can claim eligible expenses paid in any 12-month period ending in the current tax year.
2. Refundable Medical Expense Supplement
The Medical Expense Tax Credit is a non-refundable tax credit. The CRA also has a refundable tax credit available for working Canadians who have high medical expenses and meet the (low) income requirement. If you don’t have income tax to pay, you’ll get a refund.
3. Disability Tax Credit (DTC)
If you have a physical or mental disability – or perhaps one of your parents is afflicted – you may be able to cut your income tax bill with the valuable non-refundable disability tax credit. It can be worth between $1,500 and $2,700 of combined federal and provincial tax relief, depending on the province you live in.
It’s designed to offset the extra living costs related to having a disability.
What you need to qualify for the DTC:
- The person with the disability, or a legal representative fills out Part A of Form 2201.
- A medical professional must fill out Part B and certify that you have a severe and prolonged impairment – meaning a condition that has lasted a year at the very least.
- Once it’s complete, mail it to your nearest tax centre.
- The CRA has to approve this form. Once you get the green light, you can claim the disability amount or transfer the credit to your spouse or common-law partner.
This is a list of the medical conditions that qualify for DTC.
If you are eligible to claim for previous years you can refile your taxes and get the credit retroactively (up to ten years). Once approved you don’t have to send in a new application each year.
Any unused portion of the tax credit can be transferred to a spouse or other supporting family member.
If you, or your parent live in an assisted living facility such as a retirement home or nursing home, you can claim the nursing care and attendant costs as a medical expense.
4. Canada Caregiver Tax Credit
If you look after a disabled family member and they depend on you for support, chances are you pay for many necessities – medication, specialized devices, rehab, transportation – out of your own pocket. Take advantage of the Caregiver Tax Credit to get some of that money back.
What amount can you claim? The amount you can claim depends on your relationship to the person, your circumstances, the person’s net income, and whether other credits are being claimed for that person.
The person receiving your care doesn’t have to live with you. What matters is that you’re financially supporting his or her basic needs.
After you’ve filed your tax return, the CRA might ask you for a signed statement from your doctor with details about your relative’s impairment but not if they have already been approved for the DTC.
5. Home Accessibility Tax Credit
If you are 65 or older, or hold a valid disability tax certificate, renovations to your home to make it safer or more accessible may qualify for a tax credit of up to $10,000. Eligible renovations include walk-in tubs, grab bars and widening doorways for wheelchairs, but not household appliances or housekeeping.
Look here to see what qualifies for the tax credit.
Unfortunately, if you take out a loan to cover the renovation, you can’t claim any interest charged on the loan. However, you can double-dip this credit – you can claim the amount as a medical expense and a home-accessibility renovation.
The bottom line
Medical expenses may be one of the most under-utilized tax credits. The list of eligible expenses you can claim is extensive. If you have a significant medical expense that isn’t listed, it may still qualify for the credit.
Be sure to keep all your receipts – you never know when you’ll have to produce them.
For more information check the CRA website