Claiming Medical Expenses on Your Taxes
Medical expenses can be used to help reduce your personal income taxes. Any medical expenses, (according to CRA’s list, which is extensive) that you pay all or part out-of-pocket, can be claimed as a non-refundable medical expense credit.
Why is it called non-refundable? You don’t save taxes (and get a possible refund) if you are not paying income taxes.
For example, if you are a senior earning less than $18,000 taxable income or a couple, who are both 65+, earning a combined $36,000 or less, you likely are paying no taxes. There are so many other credits to help reduce taxes payable (basic, age, pension) that may already offset your taxable income. So claiming medical expenses may not help you. If you do not have any taxes payable (line 435), medical expenses do not provide a refund.
Except in one situation: there is a refundable medical expense credit for those with some employment or self employment income. The employment income needs to be at least $3,000. You could receive some refund without having any taxes payable. This needs to be a combination of low taxable income and high medical expenses.
For most taxpayers to claim medical expenses, it does need to exceed 3% of your net income. For example if your income is $30,000, the medical expenses need to be more than $900.
Families can combine their medical expenses and claim on one of the spouse’s tax returns. Often it’s the spouse with the lower tax return (but only if that spouse has taxes payable).
Here is a shortened list of some of the more common medical expenses we ask our clients about:
Premiums paid for a health plan: This can be paid as a deduction from your regular pay, or from your monthly pension plan, or direct from your bank account. We need proof of what you paid: get a receipt if it’s direct from your bank account.
If your premiums paid are a deduction from your regular pay, it should be on your pay statement (keep your last pay statement of the calendar year). If it says “group insurance”, that is not enough, because it may include life insurance and disability insurance; we can only use the health and dental plan portion. You need to get a letter from your employer that confirms how much you paid for the health and dental plan.
Medical Travel: Keep your 2017 wall or pocket calendar. Use a medical log sheet to record the date, doctor’s name, name of clinic or hospital, and number of km (must be more than 40km one way for a service you cannot get locally). We can provide you a medical log for you. If you didn’t keep track of all your medical appointments, you can call Manitoba Health and get a printout for the year. If you have to travel more than 80km, you can also claim parking, accommodations and meals ($17 per meal).
Prescriptions: Go to your pharmacy and ask for a detailed list for 2017. Easier than keeping all those little receipts! Ask for one for each member of your family.
Out of Pocket: If you have health plan, you can claim the amounts the plan does not cover: you may have a yearly deductible of $25 or more, plus the 10, 20 or 30% the plan does not cover. If you have a Health Spending Account, then we can only claim what you cannot claim in your HSA.
Other Medical Expenses: There are so many possible medical expenses: dental; dentures; orthodontics; chiropractor; physiotherapy; eye exams and prescription glasses; travel health insurance; portion of your rent if you are in senior assisted or supportive housing; laser eye surgery; incontinence pads; hearing aid batteries and hearing aids; medical marihuana; gluten-free products.
Moving expenses: You can claim reasonable moving expenses to move a person who has a severe and prolonged mobility impairment, or who lacks normal physical development, to housing that is more accessible to the person or in which the person is more mobile or functional, to a limit of $2,000.
Tutoring services: If they are additional to the primary education of a person with a learning disability or an impairment in mental functions, and paid to a person in the business of providing these services to individuals who are not related to the person.
Home Accessibility: certain home renovations can be claimed such as grab bars, wheelchair ramps, walk-in bathtubs and showers.
What we cannot claim: Some common ones are massage therapy and acupuncture; blood pressure monitors, personal response systems like Victoria Life Line; vitamins and supplements (except B12 can be claimed); over the counter medications; organic food.
If you have medical expenses that you could have claimed on your 2017 taxes or in the past ten years, we can adjust your previous tax returns and get you some additional refunds. Just ask.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact her at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or Info@SteAnneTaxService.ca