Archives for taxes

Post Secondary bursaries and scholarships

  

I have found many good leads for funding at this site: disabilityawards.ca

Don’t forget to follow up with the disability organization that supports your child in your province as well. For example, here in BC the Cerebral Palsy Association has bursaries for post-secondary students who have Cerebral Palsy.

Check out STEPS Forward as well, they have some great ideas: steps-forward.org

Finally, dont’ forget to take all the tax breaks you can to help fund your student’s education.

 

Tax Tips for Workers with a Disability

  

Thanks to the Tax Detective, here are some tax tips for the person with a disability who decides to work, even for a low amount of income. There are incentives to work, some new, some old, in the tax system. Some government benefit programs are dependent on the calculation of net income and may be affected by increased net income, but there are several claims for expenses that may reduce the calculation of net income. 

A program for the working poor, Working Income Tax Benefit will actually pre-pay benefits if you can figure out how to claim. More information: Line 453 WIT

Medical Expenses

By claiming medical expenses you may find a supplement you are entitled to, a credit of a bit over $1,000 per year…see Line 452: Refundable Medical Expense Supplement

Child Care
If you work and pay for Child Care, child care is usually only deductible by the lower income spouse, unless there are extenuating circumstances, such as a parent in school, infirm, jail or hospital.  The result of claiming child care is to lower net income. If the claimant is a person with a disability, reducing their net income will aid in preserving tax credits for a claim by a supporting spouse or other family members and may also reduce the impact on other government benefit programs that rely on the calculation of net income, such as Persons with Disability Benefits, Pharmacare and MSP premiums.

Disability Supports Expense
If a person with a disability works and has specific medical expenses that qualify, including attendant care and various devices and equipment,  they may be claimed on Line 215 to reduce net income. All qualifying medical expenses are listed HERE.

A benefit of disability supports expense claims is other credits such as the disability tax credit may still transferrable to supportive family because net income is lower than the total of other credits.
The family may also claim other credits such as the caregiver or infirm over 18 tax credits. These credits are all dependent on the calculation of net income, so it makes sense that if the disability supports reduce net income, this is a good thing.
Normally medical expenses don’t reduce net income. They are reported on Line 330 as a medical expense credit and the taxpayer must deduct 3% of their net income or on Line 331 if paid by the supportive relative net of 3% of the net income of the person with the disability who is supported.
Only the person with the disability can claim Disability Supports on Line 215 and only for the calendar year. There is no carry over for 24 months in year of death or flexibility of claiming any 12 months that end in the year, or having their spouse claim instead if it’s more advantageous, all of which are possible with medical expenses, both on Line 330 for self, or if paid by someone else on Line 331 net of 3% of the supported persons’ net income.
Eileen Reppenhagen, CGA, ACG, CL
www.taxdetective.ca

Trouble navigating the disability system?

  

Our Disability Benefits Navigator allows you to quickly find what you might be missing: http://www.abilitytax.ca/navigator/home.html

 

 

 

 

What can I claim as a medical expense on my taxes?

  

What can I claim as a medical expense?

You can claim the total eligible medical expenses you or your spouse or common-law partner paid for:

  • Yourself
  • Your spouse or common-law partner; or
  • Your or your spouse’s or common-law partner’s children born in 1992 or later and who depended on you for support
  • Your or your spouse’s or common-law partner’s child who was born in 1991 or earlier, or grandchild; or
  • Your
    or your spouse’s or common-law partner’s parent, grandparent, brother,
    sister, aunt, uncle, niece, or nephew who was a resident of Canada at
    any time in the year

Along with prescribed medications, medical expenses you can claim
include travel expenses for medical services, respite care expenses,
homeopathic services, tutoring services, ambulance transport, and costs
associated with seizure response dogs. Below is a list of medical
expenses you can and cannot claim in your tax return.

Expenses you can claim: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/llwbl-eng.html

Expenses you cannot claim: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/ntllwbl-eng.html

An authorized medical practitioner must prescribe expenses and
original receipts must support claims. Eligible expenses must have been
paid in the claim period and any reimbursements from insurance
companies, work medical plans, etc. must be deducted from the amount
claimed.

For more information about medical expenses, read this Canadian Revenue Agency (CRA) webpage.

Maximize deductions/Minimize the tax you pay!

  

DISABILITY TAX CREDIT

The Disability Tax Credit (DTC) is a federal non-refundable tax
credit specifically for people with disabilities and serious medical
conditions. It can be claimed by the qualifying person, or a family
member, to reduce the amount of taxes he/she has to pay. This means you get to keep more of the money you earn.

You also need the DTC to open a Registered Disability Savings Plan
and qualify for up to $90,000 in federal government contributions. In
addition to the DTC, there are many other valuable benefits and tax
credits available to people with disabilities, mental or physical
impairments, or those whom have serious medical conditions. Many
Canadians are unaware of the tax benefits that they are entitled to or
are unable to navigate through complicated applications and filings.

People of any age may qualify for the DTC. People with a visual
impairments or who are on life-sustaining therapies qualify. Otherwise,
people must have a mental or physical condition (including a medical
condition) that affects one or more of the basic activities of daily
living listed here:
Speaking     Dressing     Elimination (bowel or bladder functions)
Hearing     Feeding     Walking
Performing the mental functions necessary for everyday life

In addition, the condition must have lasted or be expected to last for at least 12 months.

Examples of disabilities and conditions that may qualify for the DTC
are listed below. Please remember that people with many other
disabilities and conditions may also be eligible.
Bipolar Disorder     Diabetic     Fibromyalgia
Brain Damage/Injury     Arthritis     Learning Disability
Depression/Anxiety     Down Syndrome/Autism     Multiple Sclerosis

Benefits of the Disability Tax Credit

Some of the benefits of qualifying for the DTC include:

  • Reduce your tax payable – The DTC was established to reduce the amount of tax you must pay to compensate for some of the additional expenses people with disabilities face.
  • Transfer credits to eligible family members – If you do not pay taxes
    (e.g. you have no employment income), the DTC may be transferred to an eligible family member (e.g. a parent or a spouse) who does pay taxes.
  • Make Retroactive Claims – Once you have been approved for the DTC, retroactive claims may be submitted for the past ten years to offset previously paid taxes.
  • Make Future Claims – Once approved, you will be able to claim the DTC in the future to reduce your future taxes.
  • Claim Additional Credits/Enhancements – Once approved, you are eligible for additional credits
  • Become eligible to open an RDSP – You must be eligible for the DTC to be able to open a Registered  Disability Savings Plan. The RDSP is a powerful savings tool. The federal government will contribute as much as $90,000 to your RDSP.

Get help filing your return

  

Get help filing your tax return:

If you qualify for the Community Volunteer Income Tax Program and have a simple tax situation, a trained volunteer will help you complete your income tax and benefit return.

To maintain an individual’s eligibility for the RDSP they must file a tax return.

To receive your GST rebate, you must file a tax return.

For more information, go to:

www.cra.gc.ca/volunteer

For clinics in BC Click on the LINK to Volunteer Tax Preparation Clinics.

Make your RDSP Contribution early this year !

  

The Registered Disability Savings Plan (RDSP) was introduced by the
government of Canada to help families and people with disabilities save
for their long-term financial security.

The benefits of saving in an RDSP:

Contributions to an RDSP are not tax-deductible, but they grow within
the plan on a tax-deferred basis. In addition, contributions may be
eligible for the Canada Disability Savings Grant (the grant) and the
plan may be eligible for the Canada Disability Savings Bond (the bond).
The grant provides matching contributions; no contributions are required
for lower income individuals/families to receive the bond. Together,
they could add up to $90,000 to your RDSP.

There is a lifetime contribution limit of $200,000 per beneficiary and no annual contribution limit.

Note that withdrawals trigger the repayment of any grant or bond received during the previous 10 years.

Making the most of your RDSP:

Here are some age-related strategies that may help you maximize the value of your plan, depending on your circumstances.

When the beneficiary is a young child:

  • Make contributions that attract the grant as early as possible, to
    maximize tax-deferred growth and to minimize the effect of the grant
    “clawback” — if a withdrawal is made, any grant payments received in the previous 10 years must be paid back.
  • Try to make an annual contribution large enough to attract the
    maximum matching grant contributions. The earlier you start, the better chance you will have of reaching the maximum grant amount of $70,000.
  • The tax-deferred status of contributions makes the RDSP an ideal
    way to invest in long-term solutions like a growth oriented mutual fund.

When the beneficiary is a young adult:

  • Try to contribute every year because the grant and bond cannot be
    received following the year the beneficiary turns age 49.  Even if there is no intention to contribute, the bond can be maximized simply by opening the plan early enough.
  • Upon reaching the age of majority, a beneficiary who is capable of
    managing his or her own finances can become the holder of his or her
    own plan. This isn’t compulsory, however. If you are the parent and have been the holder while the beneficiary was a minor, you can continue as holder.
  • At this stage, an investment solution that strikes the right balance
    between growth and safety may make sense depending on when withdrawals are planned.

When the beneficiary is a mature adult (40+):

  • Contributions to an RDSP do not qualify for grant contributions
    following the year the beneficiary turns 49. In addition, plans are not
    eligible for the bond after this time.  But beneficiaries can still
    benefit from tax-deferred growth by contributing up until the year they turn age 59.
  • Lifetime Disability Assistance Payments (LDAPs ***See explanation below) can begin at any age but must begin by the end of the year in which the
    beneficiary turns age 60. Consider waiting at least 10 years after the
    final grant and bond have been received into the plan before requesting LDAPs; otherwise, the grant and bond payments received in the previous 10 years will have to be returned to the government.
  • The portion of the LDAP consisting of grant, bond and investment
    income is taxable at the beneficiary’s marginal rate, which may
    influence the decision to begin payments. For example, if the
    beneficiary’s marginal tax rate is likely to decrease at retirement age,
    it may be advantageous to delay LDAPs until that time.
  • More conservative investment options, including those that generate
    regular tax-efficient income while providing some growth to offset
    inflation, should be considered as payments from the RDSP must begin.

Gasoline tax rebates, how to get them!

  

Provincial Gasoline Tax Rebate for Persons with Disabilities

People with certain disabilities may apply for a refund of tax paid on fuel purchased for their motor vehicles. The refund is based on the amount of taxes paid, to a maximum of $500 annually.

You must meet all of the following criteria to qualify for the program:
– you must be a "person with disabilities" as defined in the Motor Fuel Tax Act
– you must be at least 16 years old
– you must be a registered owner or lessee of a motor vehicle, or provide a letter from the registered owner indicating you are a joint owner of the vehicle

Qualified persons must first register before claiming a refund. Please see Register for the Fuel Tax Refund Program for Persons with Disabilities.

 

Applications and supporting documentation should be sent to:

Consumer Taxation
Branch

PO BOX 9442 STN PROV GOVT
VICTORIA BC  V8W 9V4

Fax: 250-356-219

 

Federal Excise Gasoline Tax Refund Program

If you are medically certified as having a permanent mobility impairment, and you cannot safely use public transportation, you can apply for a refund of part of the federal excise tax on the gasoline you buy.

For more information and an application form, see Information Sheet XE8, Federal Excise Gasoline Tax Refund Program.

Need access to your family member’s tax records?

  

You can have the ability to access the tax records of your family member with a disability to instantly find out whether they took advantage of all their credits/deductions or even if they did their taxes last year.

The Consent Form is called Authorizing a Representative (T1013) and can be found at:

http://www.cra-arc.gc.ca/E/pbg/tf/t1013/t1013-09e.pdf 

A person can have more than one consent form on their account so don’t worry if your family member has already authorized a tax preparation firm to represent them with the CRA.

You will be asked whether you want Level 1 or Level 2 authorization.  Level 2 allows adjustments to be made to returns so request Level 2 if you think you may need to make changes.

Also, make sure you and your family member are signed up for instant on-line access to your CRA account.  It is called an E-Pass and it takes about a week for the paperwork to go through the system, but you will never have to sift through a pile of old paperwork looking for your RRSP limit again!  Find the application form for an E-Pass at:

http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/myccnt/menu-eng.html 

 

Tax Tips for Working Folks

  

Thanks to the Tax Detective, here are some tax tips for the person with a disability who decides to work, even for a low amount of income.  There are incentives to work, some new, some old, in the tax system.  Some government benefit programs are dependent on the calculation of net income and may be affected by increased net income, but there are several claims for expenses that may reduce the calculation of net income.

A program for the working poor, Working Income Tax Benefit will actually pre-pay benefits if you can figure out how to claim.  More information: Line 453 WITB

By claiming medical expenses you may find a supplement you are entitled to, a credit of about $1,000 per year…see Line 452: Refundable Medical Expense Supplement

If you work and pay for Child Care, child care is usually only deductible by the lower income spouse, unless there are extenuating circumstances, such as a parent in school, infirm, jail or hospital. The result of claiming child care is to lower net income.  If the claimant is a person with a disability, reducing their net income will aid in preserving tax credits for a claim by a supporting spouse or other family members and may also reduce the impact on other government benefit programs that rely on the calculation of net income, such as Persons with Disability Benefits, Pharmacare and MSP premiums.

Disability Supports Expense

If a person with a disability works and has certain medical expenses that qualify including attendant care and various devices and equipment, all listed on the T929, they may be claimed on Line 215 to reduce net income.

A benefit of disability supports expense claims is other credits such as the disability tax credit may still transferrable to supportive family because net income is lower than the total of other credits.

The family may also claim other credits such as the caregiver or infirm over 18 tax credits. These credits are all dependent on the calculation of net income, so it makes sense that if the disability supports reduce net income, this is a good thing.

Normally medical expenses don’t reduce net income.  They are reported on Line 330 as a medical expense credit and the taxpayer must deduct 3% of their net income or on Line 331 if paid by the supportive relative net of 3% of the net income of the person with the disability who is supported.

Only the person with the disability can claim Disability Supports on Line 215 and only for the calendar year.  There is no carry over for 24 months in year of death or flexibility of claiming any 12 months that end in the year, or having their spouse claim instead if it’s more advantageous, all of which are possible with medical expenses, both on Line 330 for self, or if paid by someone else on Line 331 net of 3% of the supported persons’ net income.

Eileen Reppenhagen, CGA, ACG, CL

www.taxdetective.ca