Personal Tax Returns: Don't Forget About Your Medical Tax Credit.

In Squamish and the rest of the Sea-to-Sky corridor, most people are enjoying the great outdoors. This often results in many physio, massage therapy and other treatments to keep our bodies performing at their best. Don’t forget to claim your medical expenses on your personal tax returns!

Overview: you can claim a medical tax credit related to medical expenses paid out-of-pocket for yourself, your spouse/common-law partner, and your children that are under the age of 18.

Amount: the credit is the total of all the qualifying expenses, less 3% of your net income for tax purposes*. This is then multiplied by 20% to determine your credit (15% federal and 5% provincial). As an example, if your net income is $50,000, only once your total medical expenses are over $1,500 will your expenses make a difference to your return, and then only at a credit rate of 20%. So keep track of your receipts, but unless you have any big expenses that will total more than 3% of your net income for tax purposes, save yourself some time and don’t worry about them.

* Once your net income for tax purposes is greater than $75,600, the CRA will deduct $2,268 from your total medical expenses instead of 3% of your net income (3% of $75,600= $2,268).

Qualifying Medical expenses: See the CRA guidance for a detailed list.

5 top tips/issues:

1. You can only claim expenses paid out-of-pocket. If your insurance covers that cost, you cannot claim it. However, sometimes your insurance only covers a portion of the cost. Keep track of what you paid personally. In addition, if you pay personally for the premiums of the private health service plan, these premiums are eligible.

2. Sometimes it’s hard to keep track of each individual invoice you get from all the different practitioners. You can always contact your medical provider’s office and ask for a year summary. Just make sure that the receipt shows the name of the person to whom the expense was paid.

3. You cannot claim over-the-counter medication, supplements or vitamins you purchased, even if they were prescribed by your doctor or naturopath.

4. The credit can be claimed by either spouse. You should compare claiming it under both individuals to see whom it benefits more.

5. You can claim medical expenses for any 12 month period that ends in the taxation year. Thus, if you had a large dentist bill March 31, 2016 and then a large optometrist bill February 15, 2017, you can choose to report your expenses from March 31, 2017 to March 30, 2017. This may be beneficial if otherwise the 2017 expenses did not get you over the 3% net income for tax purposes threshold.

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Note, information has been summarized for ease of understanding. There are always exceptions to tax rules. Contact Zachara Accounting if you want assistance in preparing your return.