Pattie Lovett-Reid: Tips on how to claim medical expenses on your taxes
The May 1 tax deadline is fast-approaching – and according to tax software company TurboTax, understanding how to claim medical expenses is one of the most-asked questions of their tax experts.
It can be complex and appear overwhelming. In a perfect world, you wouldn’t have this sort of expense at all; however, if you do, here are a few considerations:
The three per cent rule: The claimable amount is based on income, and because the medical expenses credit is designed to assist Canadians who have significant expenses over the course of a year, only a portion of medical expenses translate to a deduction. From total medical expenses, the lesser of either $2,268 or three per cent of net income will be subtracted from the total expense (similar to a deductible for insurance policies) and only the portion of the expense greater than the $3 per cent/$2,268 will qualify as a deduction.
The 12-month rule: Unlike most other expenses, medical expenses don’t have to follow a calendar year. Canadians are able to pick a consecutive 12 month period. As long as the end of the 12 months falls within the reported tax year, Canadians are free to choose the best time frame for their situation.
Don’t overlook these lesser-known medical expenses: Home renovations for disabled taxpayers, tutor fees for children with learning disabilities, travel costs when travelling over 40 km (one-way) to seek medical treatment, and for more than 80 km (one-way), meals, and accommodation can be expensed.
Family pooling of medical expenses: Don’t forget that families with children under 18 can pool their medical expenses, then claim them all on the tax return of the lower earning spouse to maximize their refund.