Did You Have Medical Expenses in 2015 That Are Eligible to Claim on Your Income Tax Return?
April 12, 2016
Young or old, anyone's health can take a turn for the worse though out the year and not only can this be a trying occasion emotionally - It can also have an impact on your bank account in terms of expenses associated with those health issues. On the bright side, if you paid for hospital services, paid to live in a nursing home or incurred costs related to certain medications or medical devices, you might be able to claim those expenses on your 2015 income tax return as a way of reimbursement in the form of a non-refundable tax credit.
What is a non-refundable tax credit?
A non-refundable tax credit (also known as a wastable tax credit) in this case is a tax credit that reduces the amount of income tax you owe during the year by the amount you paid in eligible medical expenses. However if the amount you owe in income tax before applying your credit in medical expenses is less than the amount you've paid in medical expenses you don't receive a refund cheque for the difference in amounts. For example, if you owed $2,500 in income tax before applying a tax credit of $3,500 for your eligible medical expenses you paid for in 2015 - the amount of income tax you owe after applying the credit would be $0 - and the remaining $1,000 of eligible expenses are null and void. This means that you would not receive a refund cheque from the government for the additional $1,000 that you paid in medical expenses, as a non-refundable tax credit can't reduce the amount of tax owed to less than zero dollars.
How do I know if my medical expenses are eligible to be included as a tax credit?
There are many misconceptions in regards to what medical expenses are and are not eligible to be claimed. For example, the cost of an artificial limb is an eligible expense, including any travel expenses you might have incurred in relation to being fitted for the limb and any hotel stays you might have had to pay for depending on the distance you had to travel to get to the specialist. A trip in an ambulance is eligible for the tax credit, as well as the cost of a braille note-taker device for someone who is visually challenged. Expenses that are not eligible to be claimed are things like a fitness membership or organic food which can be thought to be a medical expense as they assist you health-wise, but they are not currently recognized as eligible expenses. Whether you plan to file your own taxes personally or if you have an accountant or bookkeeper filing for you, make sure the expenses you are claiming are eligible to be claimed under this tax credit to avoid possible reassessments or issues in a future audit. To help you with this here is a quick link to the entire list of eligible expenses.
In addition to the expenses being eligible, in order to be able to claim these expenses they must have been paid for by you, your spouse or your common-law partner in the 2015 tax year. If the expense was actually incurred in 2014, it is not eligible to be claimed on your 2015 tax return.
What do you need to provide in order to claim these medical expenses?
In order to claim your eligible medical expenses you will need to supply the proper documentation including:
• Receipts which outline the exact company or individual to whom the expense was paid
• A prescription from your doctor or specialist to support your need for the medical expense and claim
• Certification from your doctor or specialist to support your claim
• and a CRA approved T2201, Disability Tax Credit Certificate
If you are looking to learn more about the T2201 form or would like to obtain one - Click here for more details.
As we age, we do tend to incur more costs medically though not all expenses eligible to be claimed have to be from your own personal medical needs. For example, if you are paying for your mother-in-law to live in a nursing home or if you've paid for your nephew's assistance animal, you may be eligible to claim those expenses on your own personal income tax return. If you have any questions as to how to claim your medical expenses or to verify whether your medical expense is eligible or not - Give Paul a call at 705-728-6469. At CAL Accounting we're here to help you and your family with all of their income tax needs - Whether it be a quick question or something a little more complex - We're a phone call away when you need us.