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Disability Tax Credit and Divorce

August 19, 2013

There are a number of challenging decisions to make when dealing with divorce. This type of separation requires more consideration from people with disabilities. When living with a disability or serving as the family caregiver of a disabled child, divorce may affect how the Disability Tax Credit (DTC) is distributed.


The outcome of divorce differs depending on location and circumstance. A divorce hearing may be necessary to resolve who receives the DTC or how much is divided among each parent.

Canada federal government issues the Disability Tax Credit. These benefits effect how income is taxed. It may result in annual tax breaks and tax refunds between $1,500 and $40,000.

To best understand how divorce impacts these benefits, know basic Disability Tax Credit facts, how to transfer the DTC to a supporting person or family caregiver, and how the tax credit may be divided among two parties.

Facts about the Disability Tax Credit

The Disability Tax Credit minimizes taxable income. The DTC is a set amount of money that is deducted from tax filings each year. However, the actual tax refund dollar amount is subject to personal income and other benefits.

Large sums of money are also available through the Disability Tax Credit (between $1,500 and $40,000). A person living with a disability is owed this money if he or she could have qualified for the DTC but has not claimed the tax benefit in the past 10 years.

When the Disability Tax Credit goes to a Caregiver

Another benefit of the Disability Tax Credit is that its full amount can go to a supporting person if the individual living with a disability is fully dependent on the caregiver. Also, part of the tax credit can be applied to the family caregiver if the disabled individual has unused money on his or her tax form. (This is any sum that would make the taxable income below zero.)

What does this mean for Divorced Parents of a Disabled Child?

In a divorce hearing, the Disability Tax Credit may be considered an item of significant value. Therefore, it may be divided between two parties. However, in order for a family caregiver to claim this credit, the disabled child must be completely dependent on that person for basic life needs (food, clothing, shelter, etc.).  If one parent acts as full-time caregiver, the other parent may not be able to claim part of this credit. If both parents share caregiving responsibilities, the sum of money may be divided equally. However, the full amount of the Disability Tax Credit will not be given to each parent.

In the midst of divorce, there are a lot of financial questions that need to be considered. The Disability Tax Credit may be one of those issues. It is important to know how this tax benefit may be impacted by a separation.

Those who are divorced or going through the process of divorce and living with a disability may be eligible to receive part or all of the Disability Tax Credit. Similarly, a single parent caring for a disabled child may qualify for this financial support. The National Benefit Authority can help an individual file for the Disability Tax Credit and receive this money from government.

The government of Canada has money set aside for people with disabilities. Instead of letting the financial burden of disability be an additional stress during the process of divorce, explore the Disability Tax Benefit. Tax savings and large refunds may bring good news in challenging times.

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