Dig hard for those valuable tax receipts and reap the rewards!
I'm sure many of you are looking around your house right now for all those "little receipts" which you carefully tucked away in a "safe place" during the year. These "little receipts" can mean big tax savings at the end of the day. Little Sara's ballet lessons, Johnny's basketball lessons, the donation to the SPCA, oh yes, and the bill from the dentist
Given the fact that we are facing the reality of an aging and increasing medical costs, I'll base this discussion on how you can use medical expenses to reduce your taxes and at least get some of that hard earned money back in your pocket.
Start with the costs which you incur for prescription drugs. You may be paying all costs out of your pocket or a portion if you have an insurance plan. If you have a health plan which reimburses these costs 100%, you cannot claim them personally. Don't fret if you can't find all your receipts. Most pharmacies can provide you with a printout of your total drug costs for the year.
The list of qualifying medical expenses is lengthy. Some of the more common ones include fees paid for eye exams, prescription eyewear and laser surgery, hearing aids, medical equipment , incremental costs for gluten-free food products (your medical practitioner must certify that this diet is required due to celiac disease), insulin, renovating costs in your home for a person with severe and prolonged mobility impairment (restrictions apply), premiums paid to a private health insurance provider and in Nova Scotia, the Seniors' Phamacare program. The list goes on.
Some of the lesser known expenses that may be claimed arise when medical service is not available within 40 kilometres of where you live. You may be eligible to claim travel expenses incurred in order to get the treatment necessary. Where travel exceeds 80 kilometres, you may be able to claim meals and accommodations in addition to travel expenses. You may also claim expenses for someone to accompany you if a medical practitioner certifies in writing that you are unable to travel without assistance. CRA allows you to calculate this expense based on a detailed method (all receipts should be kept) or on a simplified method where flat rates are provided by CRA. Regardless of which method is used, you will need receipts to back up your accommodation costs.
Medical expenses may be claimed for any 12 month period ending in 2008 and not claimed in 2007. The expenses are not limited to those paid in Canada only. For a deceased person, this period is can be extended. You may claim expenses incurred for yourself, your spouse or common-law partner, and your/your spouse's children born in 1991 or later and who depend on you for support. There is a minimum threshold to reach before medical expenses start reducing your tax payable. This is equal to the lesser of $ 1,962 or 3% of your net income. This should be taken into account when deciding who should claim the credit. There is also a refundable tax credit for working individuals with low incomes and high medical expenses.
So, start searching for those receipts and get in the habit of keeping them in a safe place during the year - a place where you will remember to look when tax time is upon us again. Treat someone special with the money that you save, including yourself.