Tax Credits for Medical Expenses
At tax time every bit of relief helps, which is why it is important to fully understand all of the potential tax savings available to you. Every tax situation is unique and people often miss out on tax credits or other benefits that go unclaimed. For this reason, it is often beneficial to hire a professional tax preparer to assist you with your tax filings.
One common tax credit that goes unclaimed is family medical expenses. Many Canadians do not know that they can claim medical expenses as a tax credit and so miss out on potentially substantial tax savings.
Which Expenses Qualify?
Most medical expenses qualify for the credit. Some common examples include:
- Prescription drug costs
- Cost of dental work
- Cost of eyewear, dentures, and orthotics
- Cost of services provided by (not exhaustive):
- Registered Massage Therapist (RMT)
- Out of country medical costs (e.g. getting surgery done in foreign country)
- Nursing home costs
- Attendant care costs (e.g. in-home care)
- Cost of extended health insurance and travel health insurance
The above list is not exhaustive and other types of expenses also qualify for the credit. Note that some expenses do NOT qualify, including:
- Cost of MSP premiums
- Over-the-counter medication or equipment
- Costs that have been reimbursed (e.g. medical expenses covered by an extended health policy)
How Do I Claim Medical Expenses on My Tax Return?
The cost of qualifying medical expenses is claimed as a tax credit on Schedule 1 of your personal income tax return. The Canada Revenue Agency allows taxpayers to pool the medical expenses of the family and report the combined amount on one return. This means that you can claim your spouse’s and dependent children’s medical expenses, as well as your own, when you file. A qualified tax advisor can determine which spouse should claim the credit in order to maximize the tax savings.
Receipts do not need to be submitted when you file your return, but they must be kept on file for the next 6 years should CRA request to see them.
Note: Medical expense receipts are one of the most common items requested by CRA. Do not be alarmed if you receive a letter from them requesting copies of all relevant receipts. Should you receive a letter from CRA asking you to support amounts claimed as medical expenses, your tax advisor can assist you in providing a timely and appropriate response.
Disability Tax Credit
Another often-missed tax saving is the Disability Tax Credit (DTC). If you, your spouse, or your child(ren) suffers from a severe and prolonged medical condition you may be eligible to claim the DTC, which provides more than $8,000 in federal tax credits. A qualified tax advisor will be able to help you determine whether or not you may qualify, and will provide assistance in compiling and submitting the necessary paperwork to the CRA once your medical practitioner has confirmed your eligibility.
We Are Here to Help
If you need assistance determining which medical expenses you can claim and how best to claim them, we are here to help. Please feel free to contact us today for a free initial consultation.