The Disability Tax Credit
Posted by Gail | Filed under Taxes
Many people have been asking for more information about the disability tax credit. Last month Susan Mladenovich, CMA, who told us all about the new Registered Disability Savings Program, promised to give us a lowdown on the Disability Tax Credit. We’ll she’s a woman of her word. Email Susan directly at susan@accountingdepartment.ca or visit her website at www.accountingdepartment.ca. Here’s Susan…
There are two types of disability tax credits: non-refundable and refundable. Non-refundable tax credits can reduce tax owed to zero, but can’t be used to get a refund. A refundable credit can reduce your tax below zero and provide you with a refund.
The Disability Tax Credit (DTC) is a non-refundable tax credit, which means that someone who has low or no income will not benefit from this credit. However, the credit is transferable. So someone who qualifies could transfer all or a portion of the DTC to a spouse – legal and common law — who can then reduce his/her tax payable.
A lot of confusion comes from is the fact that the criteria for qualifying for the DTC is not precise. In 2001, the criteria were expanded to include life sustaining treatments requiring 14 hours per week or more. In 2005 the criteria were expanded further to include the time needed to calculate dosage for medications that require dosage on a daily basis.
To simplify the qualifying criteria, the condition must exist for longer than 12 months, and must markedly affect one or more of the basic functions of life, which include walking, eating, speaking, and self-care, or require a significant time commitment to manage life sustaining treatments.
You are eligible for the disability amount only if a qualified practitioner certifies that you have a severe and prolonged impairment and it’s effects on the form T2201, and the form is approved. There is a self-assessment questionnaire available on the T2201 form itself, so you can have a look-see to determine if you might qualify. Also on the form are definitions of “life sustaining treatment” along with other terms. If you believe you may qualify, proceed with an application. No harm is done if you don’t receive approval but tremendous benefits can be claimed if you are.
If you are approved for the DTC, it is usually retroactive and in place for several years. Once approved, claims for the past years are done through a T1 adjustment. In the event that the approved taxpayer does not require the entire credit, an adjustment must also be done for a spouse’s or parent’s return. These adjustments are processed manually by the tax centre so they may take some time, but they can result in large refunds.
Here are some examples for you:
- A man and his wife have never applied for the credit. Based on statements by the husband, their accountant recommended that they request their doctor to complete a T2201 form to apply for the DTC based on the wife’s deteriorating condition due to dementia/Alzheimers. The husband was reluctant due to the fact that his wife was in denial about the severity of her impairment. The application was approved retroactive to 2004. After adjustments, the couple received over $7,000 in refunds.
- A couple with young children have been challenged by the wife’s cancer diagnosis. Her condition requires ongoing travel for treatment at Princess Margaret Hospital. Her application was approved and her taxes were reduced by $1,700 in 2007. In addition, she applied for credits for travel and meals for the trips into Toronto for the treatment.
- A gentleman experienced a rapid decline after being diagnosed with pancreatic cancer, passing away within four months of the diagnosis. We processed a DTC application after his death and were able to adjust the return for the year he died. And a portion of the credit was transferred to his common law partner.
If you think you may qualify for the Disability Tax Credit, here are the steps you need to follow?
- Download the T2201 form from the CRA website. There is also a fillable version of the form.
- Have your doctor complete the form. Most family doctors are familiar it. They may charge you a small fee for completing the form.
- Send the form into the CRA and wait. And wait. And wait. Your application is reviewed to ensure that you meet the criteria.
Once you are approved, you will receive a letter indicating to which years any retroactive approval is available. The letter will also indicate how long you may claim the deduction without having to reapply.
For retroactive years, you can download an adjustment form or request that your tax preparer complete the form for you. Send the form in and wait. And wait. And wait! These adjustments often take 6 – 8 weeks to process.
If you or your spouse will be claiming this credit, you should update your withholding information at your workplace by completing a new TD1 form. This will reduce the tax withheld on each pay, putting the money into your hands sooner rather than waiting for your tax return to be assessed.
Remember, once you are eligible for the DTC, you are automatically qualified for the Registered Disability Savings Account including all the grants and bonds.
September 4, 2011 at 4:25 pm
And as far as i know the doctor fills them out and sends them in. i don’t think you need to be there. It’s a Clarification Letter they sent him or her . Something like this .
http://www.taxspecialistgroup.ca/disability/content/letter_en.htm
September 6, 2011 at 12:32 pm
Bella mine says the following on the website:
You are eligible to claim the disability tax credit for yourself.
What does this mean that is is being processed?
Thanks,
Jack
September 8, 2011 at 2:52 pm
So, I was told today over the phone that I have been approved a letter is on its way. I am just a little confused. So I do not have to do anything for 2005-2011 since they will process the credit for me automatically right? But I will need to send them a letter to re-assess 2001-2004? This is so confusing.
2005-2011 You are eligible to claim the disability tax credit for yourself.
2001-2004 You did not apply for the disability tax credit for yourself.
September 9, 2011 at 6:59 am
Jack there is a limit to how many years they will go back…so either a) you have been reassessed for the max number of years or b) you were not eligible in those earlier years…a phone call to CRA should get you the correct answer:)
September 11, 2011 at 5:01 pm
Well a Clarification Letter was sent to the doctor he has 30 days to send it back . All this is so hard on me . And once they get the letter from the doctor how long do i wait ?
September 12, 2011 at 3:13 pm
Doctors call ask me to come in to go over the new forms . Next week i have never waited so long before in my life for something i feel will be a no .
September 18, 2011 at 2:51 pm
If I am approved for the disability tax credit and contribute but then am no longer eligible for the tax credit in say 5 years, will I still be able to cash in those bonds after 10 years?
September 19, 2011 at 8:53 pm
Hey guys,
Today I checked the website and it now says….2004-2011 you are eligible for the disability tax credit. It no longer says processing….does this mean its approved??
September 20, 2011 at 6:58 am
@Di;…yes, that’s what mine said when I was approved…you should click on the returns for those years and it should tell you the amount you will get back accordingly….
September 20, 2011 at 8:35 am
I’m not sure where u mean? How do I figure out my return?
September 20, 2011 at 5:48 pm
Well i go see the doctor tomorrow and get the forms done. Can anyone tell me what kind of forms they are and how long does it take . This is a clarificaition letter.
September 20, 2011 at 8:14 pm
@Di.. if you have requested that past returns be reassessed then you can…log in to your account on the cra website….it opens on the welcome page…click on the top tab called tax returns…then click on view returns…it will have a listing of assessed and reassessed years, you can click on them to see how they have been reassessed….if you have NOT requested a reassessment, then you need to do so in writing…you simply write a letter stating which tax years you would like reassessed with the disabiltiy tax credit…include your SIN number…it takes several weeks for the reasessment but it’s usually worth the wait…we did it with our son, and then years later I did it with my husband…I am in the process of doing it again for our other son…as I am the only one currently working I basically end up getting back all the tax I paid during the year so even though our second son will probably qualify there’s probably no money left to be repaid to me…BUT once his is earning his own income he can claim himself so I am still going to make the application….
September 20, 2011 at 8:16 pm
Yup same form as I had. Just wants more detail. Your doc was too vague on his answers. Its multiple choice though. Three answers to all questions. Its about 5 pages. Very easy but another 60 bucks!
September 20, 2011 at 8:16 pm
@bella;…the wait is long indeed but potentially very worth it…a clarification letter just means they want more detail…I would take that as a good sign…if they were going to just say no they would have done it already…if they want more detail then they are at least still considering your request…
September 21, 2011 at 8:17 am
Thank you so much for all your kind words. I am on my way to the doctor now .
September 21, 2011 at 8:31 am
I would like to thank you all, this is a great support group. Mine was approved and is now being processed. I will have to be patient and wait. You all have been really supportive.
September 21, 2011 at 4:14 pm
Went to the Doctor forms all filled out . Doctor told us to fedx them . So we did . All went very well . Ty again w ill keep u all posted.
September 21, 2011 at 4:44 pm
I will keep my fingers crossed for you Bella:)
September 22, 2011 at 10:08 am
Bella I wish you the best of luck!!!
September 23, 2011 at 1:39 pm
Hey guys…
So now that I sent the letter in to ask for the reassesments for my taxes (2005-2010) it once again says processing. Any ideas of a time line on this process?
September 24, 2011 at 9:33 am
Well if you had it done at a H&R block they say first 3 years comes in about 2 too 3 weeks and then then other years in about two months is what i was told . But i am still waiting to hear if i was aproved .I am sure someone can tell u.
September 24, 2011 at 1:29 pm
Well good luck to u my friend!!! I get my taxes done with our accountant. I didn’t tell him that I did this as I usually don’t talk to him till tax time. Haha!!!
September 24, 2011 at 2:36 pm
Hello all,
I just stumbled across this thread in the midst of doing a bit of impatient research. I sent in an application for the DTC for my 2.5 year old son the last week of July. Im a bit worried because my doctor (who just thinks hes “delayed”, but will catch up soon) was hesitant to fill in the form, and was quite vague about his impairments. However, since sending the form in, my son has been diagnosed with Eosinophilic Esophagitis as well as several cognitive impairments (as well as poor eyesight requiring prescription eyglasses, poor hearing, and an inability to consume anything more than a purreed consistency due to swallowing issues). Do i need to send in a NEW form as I still havent gotten approved for the previous? Im just really worried that Ive waited this long and theyre gonna say “no” because my dumb GP was too vague, and meanwhile we’ve received all these updates in his casefile. …. Just not sure where to go from here
September 24, 2011 at 5:14 pm
Hey Jveener,
If it was me, I would call Revenue Can and tell them your situation. I would also get an additional form filled out or a letter from the Doctor explaining the new diagnosis. It wouldn’t hurt anything but your bank account. Another 60 bucks for the form hurts! Its worth it though. If u wait and get denied you will only have to go through the appeal process. Better to keep the ball rolling instead of having to start all over.
Just my thoughts.
September 24, 2011 at 7:41 pm
Hi Everyone;
The actual reassessments take a few weeks…depending on how many years you have asked them to go back…just keep watching your account on the CRA website..it will update when it is done…no use phoning for updates you never get a straight answer…both time I applied the process from start to finish was about 3 months but well worth it:)
@Jveneer….give Rev Canada a call…you may have to wait for an actual decline on the first app and then you can file an appeal…or perhaps you can just send in the additional information…they are usually pretty good about telling you what is required although it can be challenging sometimes getting a consistent answer..
September 24, 2011 at 7:46 pm
@bella; all the years I requested to have reassessed were done at once and then the total refund was paid all at once…in one big fat sum:)
@Diana; that’s pretty lousy that your doctor charged you for those forms…neither my son’s doctor nor my husband’s doctor has charged for any of the forms we’ve had filled out…..I know that they could charge me but fortunately for us these are two kind and considerate individuals…another small blessing to be thankful for indeed:)
September 25, 2011 at 9:31 am
Hi sparky i rarther it in one lump sum lol not alittle here and litte later . Thats if i am aproved . Thanks again .
September 25, 2011 at 3:45 pm
So what comes along with my ADHD is the inability to understand numbers!! Can anyone give me some sort of an idea what kind of money you get back?
Also,
I heard about a a great saving account we can open for people with the disability. The government helps you by giving grants. You all should look into it.
September 26, 2011 at 7:36 am
@Di…it really depends on the amount of tax that you paid on your income…because this is a tax credit that means that although your level of income requires you to pay X amount of tax, this credit says you only have to pay Y amount…the difference is what you will get back….the two times I applied for the credit (first for my son then years later for my husband)…my refunds were over the 6000.00 mark…if you have a spouse that earns more than you, it would be more to your benefit to allow him to claim the credit…for my husband we were reassessed back enough that he claimed it for the first 2 years and I claimed the others because by then I was the bigger bread winner…
September 26, 2011 at 7:34 pm
Thank you sparky. My letter says I can claim from 2005-2016. So I will ask for the taxes to be looked at from 2005-2010 right?
September 26, 2011 at 7:53 pm
absolutely Di….then going forward you will automatically claim the credit(2011-2016)…you will have to reapply for 2017…those 6 years you are going to have reassessed should get you back a nice sum:)
October 7, 2011 at 8:23 am
Good Morning everyone . Well i was approved it said it on the site. So i called H&R block they been doing our taxes for years they sent out the request form for us . But they say another 12 weeks we can wait lol . Soooooooooo after christmas i guess. But i do want to thank everyone here for always listening and being so up beat it really helped . Thank you all . Hugssss
October 11, 2011 at 9:30 pm
I’ve got a few questions about this. My husband has type 1 diabetes and has had it since he was a young child. His mum used to claim the tax disability credit when he was under 18. Now that he’s an adult, can he still claim it? We asked our family doctor and she says he’s not “disabled” enough to be able to claim it, and that she wouldn’t fill out the forms for him. What changed that he was able to claim it before but not now?
Any ideas?
October 12, 2011 at 7:24 am
Louise is he isulin depended ? Sorry i spell that wrong . But diabetes never goes away if you are type 1. And most ppl i know with it does get the tax break . But it’s hard when you don’t have a doctor to stand behind you .
October 13, 2011 at 12:00 am
Hi Bella,
He is insulin dependent, and has been since he was diagnosed almost 25 years ago.
Once someone gets approved for this disability tax, are they then considered disabled?
Should we go back and talk to his doctor do you think?
October 14, 2011 at 8:05 am
Yes i do think you should go back . Because if his mother got it before then i don’t see why he can’t .All they can say is yes or no . But you need your doctor to do them forms .
October 19, 2011 at 9:05 am
Hello,
So i checked the site today and it says all my years are now being reassessed except for 2006.
Any idea why one year is being left out ( i asked for 2005-2010 ) and how long does this process usually take? It said for the last three weeks that it was being processed again but now that message is gone.
Thanks!!!
October 26, 2011 at 11:21 am
Just found this site with lots of great info! We sent in a letter for my 3rd child to get approved for the DTC. WE have been waiting 6 weeks so far and no word. My son is 4 and has Developmental co-ordination disorder(originally was diagnosed with mild CP) He can’t walk very far has leg and knee pain constantly.His fine and gross motor assessments came back saying moderate delays and he is in a special playschool learning basic stuff like getting his own velcro shoes on, being independant ect. Our Dr marked down markedly restricted for walking, dressing, talking nad basic day to day functions. But in the info part she only put has developmental cordination disorder and needs care 24/7….hoping she wasn’t too vague! My older son who is 11 gets it as he has odd, add,sensory issues and learning disabilities(thanks goodness my 2 girls have no issues or we would be sent over the edge lol) When we sent in my older sons stuff the neurologist filled out the paperwork and it was so detailed that I am thinking this one is too vague…guess we will find out soon!
October 29, 2011 at 8:16 pm
Well hi again everyone . Wow seems i will be getting my first 3 years H&R block did the first 3 years it did not cost nothing for us to get them done . The others we are waiting on . But i checked and seems they are being done now as well .
November 10, 2011 at 9:23 pm
So I applied at the end of August, I’m a type 1 diabetic, have been since 2008. Checked my CRA account it says 2001 to 2007 ineligible and processing 2008 to 2010, however received a letter in the mail today that there is a delay. May have to call on Monday to see if they can tell me what the delay is. *sigh* a little frustrated that it’s taken as long as it has, H&R block told me 8 weeks
January 5, 2012 at 7:42 pm
Hi everyone me again . Just a question . My husband claim the credit for me , Can he claim one for himself as well ? He has crohns and clotitas mi know i spell that wrong sorry . Can he calim for 2011 seeing this is when he found out he had it ?
January 11, 2012 at 2:40 pm
My husband got approved for his DTC recently. In order to receive this refund that everyone keeps going on about, we or someone who knows what they’re doing, have to fill out a T1 am I correct?
Also I am wondering how this would work since it is a NON refundable tax credit? Due to the nature of his disability, mental illness, and the limitations on his work abilities that it imposes, we are not exactly a high income family (we live in subsidized housing for a start). So if we have not had a lot of deductions taken off our pay in recent years as a result how does this manifest itself into a refund? Or is this refund something only those with better incomes get to enjoy? Such is the irony.
I have been wondering how this would work for some time and would love some clarification. Thank you very much.
January 11, 2012 at 6:16 pm
@ bella; if your husband qualifies for the DTC he can claim you and himself…
@Patricia; you simply have to request CRA do a reassesment for the years he has qualified for…you must make this request in writing and you ask for the reassesment for the bigger wage earner…currently I claim my older son and my husband…waiting for approval for my younger son…then i will claim all three
January 12, 2012 at 2:21 pm
I was looking at the adjustment form that we are supposed to use. It says to use one form for every year that we would like adjusted and are supposed to supply details. My husband’s tax credit has been retroactivated for 2001. Since a person only has to keep their own tax info on file for five years, and we just shredded all our old outdated stuff, we no longer have those details. Earlier in this time frame, the before hospital years, was when we had the best, most steady income which would I imagine benefit the refund the most.
As the house secretary, what’s a gal to do?
January 12, 2012 at 3:02 pm
Patricia;
As Sparky said – don’t use the adjustment form since it is for several years. Send a letter indicating that you want to have the XXXX-XXXX year time frames reviewed based on the approval of the DTC. I drafted a letter for my Brother in Law and had no issues at all.
Also, while it is too late now, CRA indicates to keep 6 years worth of personal tax information.
January 12, 2012 at 8:03 pm
SIX years. I knew it was something like that. Someone told me five.
Thanks for all your help!
January 13, 2012 at 3:01 pm
Is there any particular department of Revenue I should direct it towards? And “To Whom it May Concern,” is that ok?
January 13, 2012 at 3:54 pm
Patricia;below is how I addressed my BIL’s letter and then used “To Whom it May concern”, modify to your Tax Centre as necessary
http://www.cra-arc.gc.ca/cntct/prv/txcntr-eng.html
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/chngrtrn-eng.html
Canada Revenue Agency
Tax Services Office
1050 Notre Dame Avenue
Attention – T1 Adjustments
Sudbury, ON
P3A 5C1
January 14, 2012 at 7:08 pm
Mucho Gracias!