Claiming the Medical Tax Credit
Posted by Gail | Filed under Taxes
Lots of people don’t understand how to claim the medical tax credit on their returns. Not surprising since much of the information that’s available is written in Taxeeze. Since most people don’t speak Taxeeze, they’re left scratching their heads. Let’s see if I can simplify this for you.
First, the claim for medical expenses is a tax credit, not a deduction. See this blog for the difference.
The 3% to which the credit refers is the income threshold used to calculate the tax credit. What that means is that you take your total medical expenses (you should group them all together and make one claim for you, your spouse and the kids) and you subtract 3% (or $2024 for 2010, whichever is lower) of your net income before you can begin making a claim.
Since the claim is based on income, the lower income spouse should make the claim, providing they’ve paid enough tax to claim the full amount. So do both calculations and then decide. And remember, you can carry forward some of the expenses from 2010 to 2011 if that works out better for you. How?
Expenses you’ve paid in any 12-month period ending in the tax year for which you’re claiming can be used. So you could use expenses from Jan 2010 to Dec 2010 or claim only some of the expenses in 2010 and the rest in 2011 (from say, September 2010 to June 2011) or depending on what’s more advantageous.
Don’t overlooked premiums you’ve paid for health insurance, including medical and dental premiums, even if it’s through your employer. As long as you paid you can claim. And don’t forget about eyeglasses. While they may be a fashion statement, they’re also a medical deduction, as long as they’ve been prescribed.
You can only claim the amount of medical expenses you actually paid and were not reimbursed for. If you paid a co-insurance amount or a deductible amount, you can claim them on your taxes.
To see a full list of which medical expenses are eligible, go to the Tax Man’s site. Since medical claims differ by province, pay particular attention to which medical practitioners are eligible by province or territory.
If you had to travel at least 40 kilometres one way for your treatment, you can claim that too. You have to log your distance and claim the per kilometre amount available in your province. Go to googlemaps.com and enter “your postal code to the facility’s postal code” for the distance you’ve been driving. Take a print of this for your records, in case you need proof. Then get a letter from the facility showing the days you attended.
If you have to travel 80 kilometres or more one way, the claim can also include meals and accommodation. And if the patient is certified as unable to travel without an attendant, an additional claim for the travel costs can be made for a travelling companion.
March 7, 2011 at 7:45 am
Thank you, Gail.
I travel out of town to see my optometrist and haven’t been sure how to claim my travel expenses.
Now I know.
March 7, 2011 at 8:50 am
Thanks Gail – I wasn’t sure about claiming medical premiums as the taxeeze indicated medical premiums to private insurers. I wasn’t exactly clear if that included medical premiums paid through my employer.
Now I know too
March 7, 2011 at 9:08 am
Thanks Gail! This is very timely as my hubby started having dialysis treatment an hour and a half away from our home in January, and everyone’s been telling me to save everything to claim it, but I didn’t know how. Now if only someone could guide me through the maze of claiming the disability tax credit – I’m pretty sure he now qualifies! Of course, this is all for the 2011 tax year now, so we’re doing the outlay now and won’t see any benefits until next year, but at least we can see the light at the end of the tunnel, and I’m pretty sure it’s not the train this time!
March 7, 2011 at 9:18 am
SANDY, go and read this: http://gailvazoxlade.com/blog/archives/401
March 7, 2011 at 10:13 am
This is great. My spouce and I both pay medical premiums but not enough to be able to claim them. I have never been able to understand 100% why. This clears things up quite a bit.
Sort of an off topic question… Can you only claim your trips if your employer pays you a travel benefit as a part of your wage?
March 7, 2011 at 10:54 am
Sandy-I’ve completed the disability tax credit forms for my patients and from my reading, anyone on dialysis should qualify easily. Talk to your nephrologist or GP and submit the application. Gail’s blog gives great details and links to the forms.
On another note, best of luck with your husband’s treatment-I’ve had family members and have worked with people on dialysis and it can be a tough situation, especially when you have to travel long distanes to get the treatment. Sending warm thoughts and hugs to you and yours.
Thanks Gail for clarifying this medical benefit-I have some math to do, but I didn’t know where to begin before!
March 7, 2011 at 11:01 am
Timely — we finally took our (mind boggling) taxes to a bookkeeper recommended by our lawyer and found out we should have been claiming the Medical Taxable Benefit (health insurance) paid by his employer — so we’re going to claim for the last ten years.
The time period is interesting — I thought you could claim for any 12 month period — didn’t realize the 12 months had to end in the year you were paying taxes for — this year the taxes are for 2010 and the claims had to end in 2010. Why can’t the instructions be at least somewhat clear to the average person?
Also the bookkeeper advised I might be able to claim disability since I haven’t been able to work for years but have no clear diagnosis and the doctors had retired, disappeared, etc. So I think it would be extremely difficult, no?
March 7, 2011 at 11:20 am
Gail wrote:
“Don’t overlooked premiums you’ve paid for health insurance, including medical and dental premiums, even if it’s through your employer.”
If my employer pays for these as a benefit, I can claim the amount? (Those are usually not a taxable benefit.) Feels like double-dipping. Is there a interpretation bulletin explaining this?
I am with dlm about the time window. I thought (did not check rcently) that you could ‘pick’ a 12-month window of your choice (maiking sure that at least 1 month was part of the tax year.
March 7, 2011 at 11:49 am
We just finished filing our taxes last week. We did claim the medical expenses we had kept records on but unfortunately I didn’t know that we could claim the premiums paid for medical benefits. Interesting and good to know for next year as the premiums for a family plan are substantial!
March 7, 2011 at 11:53 am
@SANDY…the disability tax credit can be backdated if it is determined that your husband qualified in previous years…you must get the form completed by your doctor and then in writing request that your tax returns be reassessed i.e. if your husband began his dialysis in 2007 then ask for a reassessment for 2007, 2008, 2009 etc…I did it when our son qualifed (we were compensated 6 years back for him) and then for my husband for which they back paid us 3 years…all they can do is say no but it just might be a yes so give it a whirl…the criteria for the disability tax credit is quite strict (he must be “markedly restricted” in certain areas of day to day living) so make sure the doctor answers in detail…good luck!!
March 7, 2011 at 11:56 am
Found it! IT-519R2, paragraph 65:
“Medical expenses paid or provided for by an employer but included in the employee’s income are deemed by paragraph 118.2(3)(a) have been paid by the employee and, therefore, can be claimed by the employee”
Can’t find paragraph 118.2(3)(a) in the document. I am not sure yet about the interpretation of “included in the employee’s income”.
March 7, 2011 at 1:23 pm
The bookkeeper doing our taxes told us we could now put in for up to the last ten years of medical taxable benefit (currently about $100 per month) – so it should make a significant difference added to previous medical claims.
Also, has anyone been able to get disability from CPP? I imagine it would be extremely difficult to document to their satisfaction.
March 7, 2011 at 2:35 pm
confused: so if we have never claimed my husband’s deductions off his pay for dental and medical we could claim them this year? How do you find the amount? Do we look at the last paystub of every year to find it out? Would the employer have it on file?
Or did I misunderstand this whole post?
March 7, 2011 at 2:38 pm
very timely! I was wondering about the medical receipts and at what point the amount mattered that just yesterday!
March 7, 2011 at 3:08 pm
Just got our tax refunds today… put more than half straight on the Visa and every cent of the balance straight in the savings account. My husband was laid off at the end of 2009 and we were without medical benefits until November 2010 so we were well above 3% for our family of four! Thanks for clarifying about the employer premiums, I had included mine for Nov & Dec but was second guessing… now I don’t have to fear an audit!
March 7, 2011 at 4:37 pm
Thanks to everyone for their help and warm wishes! It’s been a difficult few weeks, as we didn’t expect his kidneys to fail so suddenly (although he’s been having medical problems ramping up for two years.) Gail, thank you so much for the link – I have downloaded the forms to fill out tonight. Psychsara – thank you for the encouragement to get the doctor to fill this out – it’s nice to hear that a doctor thinks it’s very doable! Sparky, I’m not sure that he would qualify in any year previous to this one – while his health was declining, I’m not sure he would qualify as disabled – just very uncomfortable. We’ll certainly look at the qualifications though! Thanks!
And to DLM: From what I understand, it’s only difficult to get CPP disability if the condition or diagnosis is fuzzy or if your definition of disabled does not quite match the CPP’s. It is not a means-tested benefit, so there’s no problem if your assets exceed a certain amount. ODSP, on the other hand, practically has you living in the street before you qualify.
March 7, 2011 at 6:49 pm
I just wanted to post a little victory – got my tax refunds on Friday, and today I paid off my last credit card, so I am now officially, totally debt free. I am so proud.
March 7, 2011 at 8:23 pm
Congratulations to Tara C!
March 7, 2011 at 8:29 pm
For benefits deducted off you pay look at your last paystub YTD (year to date) figure. Or if you know how much per pay you can figure it out that way. However, on a bi-weekly pay period it’s not $$$ X 26 but rather $$$ X 24 since 2 pay periods are not deducted — the freebee pay cheques.
Also, there is a REFUNDABLE Medical supplement for low income persons with high medical bills Line 452.
March 7, 2011 at 9:44 pm
How far back can I claim my premiums? I’m part time now but was full time for 7 years and paid 120/month. Never ever claimed them. Is it possible I may be able to get my emergency fund quicker than I thought?
March 8, 2011 at 8:44 am
Way to go Tara C!!!!!!!!!!!!!!
March 8, 2011 at 3:57 pm
Thank you Marie and Melanie! We celebrated last night with champagne.
March 10, 2011 at 5:02 am
What we found was actually getting the CPP disability had about a 6 month wait from the time you hand in the paperwork until you find out if they approve your claim. We had the Administration Office call to let us know that they have reviewed the claim within 3 months of applying. The Admin Office do not approve the claim but could ask for more information if you have not answered any of the sections. The Administration then forwards your paperwork on to the Medical Office Section for review. Be thorough when you complete the paperwork. Look it over a few times. Complete all sections in great detail. Apply all of his limitations that he has to all aspects of the form ….NOT just what he cannot do at work …. say what he cannot do at home as well. The Service Canada Agent said that is often overlooked by the people applying….remember any medical issue has an impact…. Example … cannot stand for more than 5 minutes therefore cannot do the dishes ,shower,cannot climb a ladder to clean the gutters,paint the house, cannot sit for longer than 10 minutes therefore cannot ride the lawnmower or car , cannot go out to a restaurant.When we filled out a CPP Disability form we asked the Service Canada agent to review it & send it in for us. Ask them to photocopy the forms for you so you have a copy in case it gets lost. Follow up with your doctors office for the date they sent in your paperwork….did it just get put into the medical file by mistake unmailed/incomplete ?? what day did they send it….write it down…the claim starts from the date the entire paperwork is received. Eventually you should be called by their Medical Office & told either way …we were told a date ie 6 – 8 weeks that they would call by & a phone number to ask questions to by the Admin Office….but no call ever came thru. A few days after the cut off date we were at the bank machine & found the CPP was directly depositted…. the 6 month wait was over….the back pay for 5 months had been depositted …. & the mail to say it was approved arrived a week later. I really wish they would have told us the amount to expect so that we could have been able to compare CPP versus ODSP…..waiting & not knowing if you are approved is so hard especially when all you can do is hope. Good luck to you & your hubbie.
March 10, 2011 at 7:59 am
I have an e-pass for my cra account…go to their website cra.gc.ca and set yourself up with an e-pass…you can track anything you send into cra…tax returns, reassessments, disabilty tax credit apps…the works…you’ll know well in advance the status of your returns, the amount of refunds etc…it’s really very handy:)
March 11, 2011 at 5:02 pm
ERROR: MEDICAL EXPENSES
NOT COVERED, SO SAY CRA:
Search CRA
Which medical expenses are not eligible? Expenses you CANNOT claim
There are a number of expenses that are commonly claimed as medical expenses in error. Non-eligible expenses include the following:
•athletic or fitness club fees;
•birth control devices (non-prescription);
•blood pressure monitors;
•cosmetic surgery – expenses for purely cosmetic procedures including any related services and other expenses such as travel, incurred after March 4, 2010, cannot be claimed as medical expenses. Both surgical and non-surgical procedures purely aimed at enhancing one’s appearance are not eligible. These non-eligible expenses include the following:
?liposuction;
?hair replacement procedures;
?botulinum injections;
?teeth whitening.
An expense, including those identified above, may qualify as a medical expense if it is necessary for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.
•diaper services;
•health plan premiums paid by an employer and not included in your income;
•health programs;
•organic food;
•over-the-counter medications, vitamins, and supplements, even if prescribed by a medical practitioner;
•personal response systems such as Lifeline and Health Line Services;
•the following provincial and territorial plans:
?Alberta Health Care Insurance Plan
?Manitoba Health Plan
?Medical Services Plan of British Columbia
?New Brunswick Medicare Division of Provincial Department of Health
?Newfoundland Medical Care Plan
?Northwest Territories Health Insurance Services Agency of Territorial Government
?Nova Scotia Medical Services Insurance
?Ontario Health Insurance Plan
?Prince Edward Island Health Services Payment Plan
?Quebec Health Insurance Board (including payments made to the Health Services Fund)
?Saskatchewan Medical Care Insurance Plan
?Yukon Territorial Insurance Commission; or
•travel expenses for which you can get reimbursed
March 14, 2011 at 2:49 pm
NOT AN ERROR
@dlm: I think you’re referring to the premiums paid by an employer. These are eligible medical expenses, but only if they are included in the employee’s income.
See Marie’s post above, which says
IT-519R2, paragraph 65:
“Medical expenses paid or provided for by an employer but included in the employee’s income are deemed by paragraph 118.2(3)(a) have been paid by the employee and, therefore, can be claimed by the employee”
I agree with everyone, why does it have to be so difficult? Drives me bananas!
March 28, 2011 at 10:06 am
Can a medical expense be claimed if it has not been paid yet? For example, the treatment was done but with a financing option with no payments for 12 months…or does this have to be claimed in the year paid?
Thanks!
April 1, 2011 at 5:57 pm
As it turned out, no medical insurance claims would be allowed for insurance. The company-provided medical plan (prescriptions, etc.) was not paid for by the employee so was not allowed as a deductible expense; the provincial medical plan was a taxable benefit, included in employee’s income, but not allowed as a deductible expense. So the medical expenses allowed are what we directly paid for out of our own pocket (percent of prescriptions not covered, physio, etc.)
May 10, 2012 at 8:45 pm
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