Disability Awareness: Non-Refundable Tax Credits

Our Disability Awareness series concludes this week with a look at non-refundable tax credits that can be claimed on the tax return. These articles are excerpted from Jacks on Tax, by Evelyn Jacks.

Non-Refundable Tax Credits. The disabled individual must first claim certain credits on the tax return; then if not taxable, the amounts can be transferred to a supporting individual.

Disability Amount. If you become disabled, you can claim the disability amount on Line 316 of your return. You’ll need to get a medical professional to certify that you’re disabled and send the completed Form T2201 Disability Tax Credit Certificate to CRA to qualify for this credit. Unless you have a T2201 Form already on record with CRA, you’ll not be able to use NETFILE to file your return.

If you do not require the full disability amount to reduce your federal taxes to zero, you may transfer the unused portion of the credit to a supporting person. In the case of spouses, that transfer is made on Schedule 2 and on Line 326.

Taxpayers with “a severe and prolonged impairment in mental or physical functions” may claim it. Here is what that means:

• A prolonged impairment is one that has lasted or is expected to last for a continuous period of at least 12 months.
• A severe impairment in physical or mental functions must restrict the patient all or substantially all of the time, which is another way of saying 90% of the time or more.

Home and Attendant Care. There are some special rules in making this claim if home or attendant care is involved:

• You may not claim both the costs of nursing home care or full-time attendant care as a medical expense, together with the Disability Amount. One or the other can be claimed but not both.
• Those who pay someone to come into the home to provide care for the sick may claim expenditures up to $10,000 ($20,000 in the year of death) as medical expenses and still claim the Disability Amount.
• Individuals who qualify for the disability amount will also be considered to be infirm for the purposes of the Amount for Eligible Dependants, the Amount for Infirm Dependants, and the Caregiver Amount.

If possible, you should send in the completed T2201 form before filing your return to minimize the delays in sending refunds caused by review of the form. Once the form is accepted by CRA, you may file using NETFILE.

Note: Fees for the completion of the T2201 form are considered to be medical expenses.

LAST TIME: Other Income Sources

Excerpted from Jacks on Tax, by Evelyn Jacks. © All rights reserved.