Tax Tips: The Disability Amount: The Most Lucrative Tax Credit

Do you know what one of the most missed credits on the personal tax return is?  It’s the Disability Tax Amount, a substantial non-refundable tax credit valued at $7899 in the 2015 tax year; 8001 in 2016.  It can be claimed by someone who is markedly restricted in the activities of daily living on a permanent basis, or by their supporting individual.

Especially vulnerable for missing this claim are those with progressive diseases, such as Alzheimer’s or cancer. They may begin to qualify for it sometime after diagnosis but are then unaware of the credit or unable to apply for it because of diminished physical or cognitive ability. These individuals may need additional help or advice to claim this valuable credit. This is an important service qualified tax and retirement services specialists can offer.

In addition, survivors can still make the claim for deceased loved ones. There is also a supplemental credit for minor children in the amount of $4607, for a total credit of $12,506 on the 2015 tax return, which must be filed by midnight May 2. The supplement must be reduced by any child care claim over $2699.

In order to claim the Disability Tax Amount, you need to have a doctor or other qualified health care professional fill in form T2201, Disability Tax Credit Certificate. Claim this first on the return of the disabled adult; if not needed, it can then be transferred to a supporting individual, including the spouse.

Previous tax returns can be adjusted to claim the tax credit for each year that the Disability Tax Credit Certificate has been approved by CRA. That is, if you are making the claim in the 2015 tax year but the diagnosis was made in 2013, then you can also revisit the tax returns previously filed for the 2013 and 2014 tax years and benefit from the credit in those years as well. In fact, you can go back to ten years (for this year, to tax year 2006) to adjust returns if the permanent condition dates back that far.

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