Illness In the Family? The Tax System Provides Relief

This is a good time of the year to discuss family health – with your tax advisor! 

If significant medical issues have arisen, there is financial relief available in many cases through the tax system.  Tax and financial advisors who really know their clients, will be ready to have these sometimes difficult discussions, to advocate financially for families with medical challenges.  There are two key provisions to begin with:

DON’T  MISS MEDICAL EXPENSES.  Millions of taxpayer miss claiming medical expenses every year for their spouse and other dependants.  This generally involves keeping receipts for expenditures that are not reimbursed by a medical plan.  Note that the cost of premiums paid to a private medical plan, like Blue Cross, are claimable too, so check your T4 slip.  Newly claimable this year, are the costs of service animals which help to manage severe diabetes and the design of personalized therapy programs for the disabled.

In addition, the cost of a patient and a dependant may be claimed for receiving medical care not available to a patient in the home community.  You must travel at least 40 kilometres outside your home area to claim travel costs; 80 kilometers to also claim meals and lodging. Keep a distance log and claim either your actual gas receipts a cents per kilometer method.  Use 48.5 cents per kilometre in Manitoba; that compares to 57.5 cents for taxpayers in Ontario; and 45.5 cents in Alberta.  Meals and lodging claims are based on receipts. 

THE DISABILITY AMOUNT: A MOST LUCRATIVE TAX CREDIT.  The Disability Tax Amount is claimed by someone who is markedly disabled on a permanent basis, or their supporting individual.  Especially at risk for missing this claim are those with progressive diseases, like Alzheimer’s or cancer, who may begin to qualify for this non-refundable tax credit sometime after diagnosis.  In addition, survivors can still make the claim for deceased loved ones.  There is also a supplemental credit for minor children.

You need to have a doctor or other qualified healthcare professional fill in form T2201, Disability Tax Credit Certificate. In many cases the information provided by the healthcare professional may indicate several years of impairment.  Previous tax returns can be adjusted for the tax credit for each year that the Disability Tax Credit Certificate has been approved by CRA, in those cases.  

It’s Your Money.  Your Life.  Advisors can greatly enhance their value proposition by helping families supporting the sick and the disabled to tap into tax credit claims this tax season.  Clients can do their part by making it their business to keep expenditure receipts and not be shy about discussing changing health issues.  Those extra tax refund dollars could go a long way to fund unreimbursed costs or respite breaks.

Evelyn Jacks is President of Knowledge Bureau, a national educational institute focused on continuing professional development courses for advisors. See www.knowledgebureau.com for an invitation to the Knowledge Bureau Report, or register for professional online courses to shore up your knowledge on tax, retirement, business, succession and bookkeeping services.