Consider these Tax Tips before 2016 ends
Canadians typically consider April as the time to think about income taxes, but don’t forget there are a host of considerations to make before the year ends.
Buying Medical Insurance
Whether you’re self-employed or simply buying extra benefits for your family, purchasing medical insurance can add up. Luckily, insurance premiums that you pay towards medical and dental insurance are generally tax-deductible.
You may be able to claim medical expenses not covered by your plan – but you must pay for these expenses before December 31.
Prescriptions and Glasses
If you paid all or some costs out-of-pocket, you may be able to claim prescriptions and glasses on your tax return. Make sure you pay for these expenses before December 31.
Keep in mind that to claim these medical expenses, the costs must meet a certain threshold to receive a tax credit: you can receive a tax credit for medical expenses exceeding $2,237 (in 2016) or 3% of your net income.
Renovations for Home Accessibility
Did you make renovations in 2016 to make your home more accessible for yourself or a family member with a disability? You may be eligible to claim the non-refundable Home Accessibility Tax Credit (HATC) if you paid for these renovations before December 31.
The tax credit is equivalent to 15% of up to $10,000 per year of expenses towards renovations that:
a) enable the qualifying individual to gain access to or be mobile/functional within the home or
b) reduce the risk of harm to the qualifying individual in the home or gaining access to the home
If you hired an electrician, plumber, carpenter, or other tradesmen for help with these renovations, remember to get receipts for the work!
Disability Tax Credit
The Disability Tax Credit can be claimed retroactively up to 10 years – but if you wait too long you can potentially lose out on claiming the Disability Tax Credit for the earliest possible year.
For example, let’s say our friend Shane Alberta was approved for the Disability Tax Credit since 2006 and it’s now 2016. Shane forgets to claim the DTC for the year 2006 (worth $1,716.30) and when January 2017 rolls around, it’s already too late – he can no longer claim his 2006 Disability Tax Credit and will not receive a refund for that tax year.
Shane can still, however, claim the DTC from 2007 onwards.
This is why you should not hesitate on claiming the Disability Tax Credit. It’s quite literally a “use it or lose it” type of tax credit.