If you have benefits through work, then you’re probably used to being able to claim medical expenses through your benefits, and getting reimbursed through your benefits provider. If you don’t have benefits, you’re probably used to thinking you’re just out of luck and out of pocket, right?
Not exactly!
Did you know that Canada offers a tax credit for those of us who either don’t have benefits, or have medical expenses that go way beyond what our benefits cover?
Me neither, until recently, and so I wanted to share in case it’s something you can take advantage of too. If you’re not in Canada, check your local government tax credits – you may have something similar available to you!
Which Medical Expenses Can I Claim?
Honestly, the list is pretty long – as of the date I wrote this article, there were 130 different categories of expenses that were eligible to be claimed. Some notable examples include cancer treatment, dental services, fertility procedures, laser eye surgery, and RMT massages
You can click here to view the full list of eligible expenses. There’s a search function included so that you’re not stuck browsing through all 130 items, but make sure to double-check manually if you don’t find what you’re looking for!
What Proof Do I Need to Show?
It depends on what you’re claiming. At a minimum, you’ll need to keep your receipts in case you’re audited. You might also need to show a valid prescription, a written certification by a medical practitioner, or a form T2201 (which is a disability tax credit certificate).
The good thing is that the website tells you exactly what you need to hold on to in terms of documentation, in the event you’re ask to show proof.
How Does it Work?
Ok, bear with me while I get into a little bit of math here. So how it works is this: first, you add up all your eligible medical expenses. You can claim all expenses in any rolling 12-month period that ends in the tax year you’re filing for, as long as you haven’t claimed any of those expenses before. For example, I had laser eye surgery in November of last year, and will be out of pocket for physiotherapy expenses from February to June this year. If I wait until it’s time to do my 2022 tax return, I can claim all of those expenses together, because the time from November 2021 to June 2022 is less than 12 months, and ends in 2022.
Here’s why that matters.
Once you have all your medical expenses tallied up, you then need to subtract something from that number. Think of it like the government’s deductible; you’ll subtract the lesser of 3% of your net income for the year, or $2,421. If your net income was $80,699 or less, the 3% works in your favour; if you earned $80,700 or more, you’re stuck using the $2,421 figure.
Take my example. My expenses for laser eye surgery and physiotherapy will total about $6,400. Because my net income will be above $80,700, I have to subtract the full $2,421 from that figure, which leaves me with $3,979 I can claim on my tax return.
That’s still a massive amount to be reimbursed!
But here’s the thing: if I wanted to claim my laser eye surgery this year and then wait to claim my physiotherapy next year, I’d have to subtract that $2,421 from both my 2021 expenses and my 2022 expenses. Because my deductible is doubled, I’d be way worse off if I did things this way, even if it does mean I get some money back faster.
One More Thing
Even if you’re the one who incurred the expenses, your spouse can claim them on their tax return on your behalf. If their income is substantially lower than yours, you might end up coming out ahead by doing it that way. You’ll have to crunch the numbers to see whose return is more beneficial to claim under, but it’s nice to have the option!
Bear in mind that you can also claim expenses under all the same categories for any kids you may have that are under the age of 18.
Wrapping it Up
My physiotherapist was the one who gave me a heads-up to these tax breaks, and it was a huge revelation to me. I consider myself someone who is pretty well-versed in the realm of personal finance, and yet I knew nothing about this. I have to imagine that I’m not alone! These tax deductions can literally help put thousands of dollars back in your pocket come tax time, so make sure to do your research, keep your receipts, and claim everything that you possibly can!
