Some Lesser Known Tax Credits
My previous article for February had the basics of taxes and how they work. Here are several tax credits and deductions that may not be known by all tax payers.
Caregiver Amount – this credit is available if you provide in-home care to a parent or grandparent age 65 or older. The credit is up to $4,402; but the net income of the dependant must be less than $19,435.
There is a similar credit for Infirm Dependents for any dependent relative who is 18 and over and infirm and living with you. But the net income of the dependent must be less than $13,078.
Attendant Care is a medical expense credit that can be claimed by anyone eligible for the disability tax credit and pays for attendant care. This can be claimed by for those living in Senior Assisted Living and the monthly payment includes fees for housekeeping, food preparation, recreational services and/or laundry service. The operator of the “retirement home” should provide a receipt showing the “attendant care” portion of the rent.
Medical Expense Tax Credit is known and claimed by most tax payers, but remember to include premiums paid to a health plan via your pay cheque or pension payment plus the out of pocket cost that are not covered. And any travel health insurance premiums. And remember the medical travel (47cents/km in 2012 for 40km or more one way) for any appointments for services you cannot receive locally (often specialists in Winnipeg). If it’s more than 80 km one way, you also get to claim the meal ($17).
Refundable Medical Expense Supplement is for those with lower income but high medical expenses. It is a refundable credit of up to $1,119. But you need to have employment (or self-employment) income of more than $3,268. If you have lower pension income and higher medical expenses, and capable of working, might be worth considering getting a part time job!
Children’s Fitness and Arts Credits are available up to $500 each per child under the age of 16. Keep those receipts for all your children’s activities.
There is also a Manitoba Young Adult Fitness Credit for those 16-24. Keep those receipts for the Gym membership or other activities (including curling!)
There is an adoption credit for expenses relating to the adoption of a child. Maximum amount is $11,440. The credit can only be claimed in the year the adoption is finalized, but may include eligible expenses incurred in previous years.
Disability Tax Credit is a credit I write about often because it’s a credit worth $7,546 and can reduce taxes payable up to $1,800 per year. If you have difficulty walking, hearing, feeding yourself, dressing, seeing, speaking, elimination (bowel or bladder functions), or performing the mental functions necessary for everyday life, or if you need life sustaining therapy (often diabetics who regularly test their blood and adjust their insulin) then you may be eligible. There is also a section for “cumulative effect of significant restrictions” that applies to two or more of the above items. So if you are not “markedly restricted” in one, but “significantly restricted” in two or more, you may still qualify.
The Working Income Tax Benefit provides a refundable tax credit up to $931 for an individual, or $1,762 for families, couples and single parents. If you can get a part time or casual job (earn at least $3,000), it may be worth considering. If you are receiving CPP disability, you can earn up to $4,600 and not affect your CPP disability eligibility. And if you are receiving the Guaranteed Income Supplement, you can earn up to $3,500 without a reduction.
Tradesperson’s Tools Deduction is $500 but I think it’s overrated. You need to spend $1,595 to get the full $500 deduction that is worth $75 to $145 in actual savings depending on your federal tax bracket. Don’t buy tools just to get this credit, but if you are buying the tools anyway, keep the receipts.
This credit may not apply to us in the rural, but if you know someone in Winnipeg, make sure if they are using transit that they know about the Public Transit amount and claim their transit costs.
Moving Expense deduction is not well known, but you do need to move at least 40 km to start a new job or a business.
Pension Income Splitting is known to most pensioners. It can be a private pension plan at any age, or Registered Retirement Income Fund payments at age 65+.
Charitable Donations are well known too, but remember you can carry them forward up to five years, so keep them even if they are small. You get a small tax break for the first $200, but a bigger break on the amount over $200, so you may not want to claim them every year.
GST Credit is available once you turn 19, so young people should be filing a tax return regardless of their income.
Remember that the Government of Manitoba refuses to increase their credits with inflation (ok, the basic has increased a very small amount) and so they are far behind the federal tax credits. So with all these tax credits, you might reduce your federal taxes payable to zero, and yet still have provincial taxes to pay. If that upsets you (and it should!) contact your MLA and our provincial Minister of Finance!
After you have filed your taxes for 2012, compare your federal tax payable to your provincial tax payable. In the year 2000, the Manitoba taxes payable used to be 50% of the federal taxes payable. I don’t see that much anymore. More and more tax filers are paying way more Manitoba taxes than they used to because our current provincial government refuses to increase the tax credits with inflation. Make some noise and let all the provincial parties know this is not acceptable and should be an election issue next time around!
There you have the sometimes lesser known tax credits and deductions. Keep them in mind when you file your own taxes (I shudder to think of what you might be missing) or when you visit a tax professional like myself.
Anni Markmann is a Tax Professional and owns Ste Anne Tax Service. She lives, works, and volunteers in our community. Contact her at 204-422-6631, firstname.lastname@example.org or 36 Dawson Road in Ste Anne.