Here is the second part on how to optimize the medical expense tax credit (METC), the most overlooked part of the tax return according to H&R Block. The first post, published on April 13, contained two recommendations. This one adds two more, one on the wide range of expenses that are eligible and the other on legitimate tax planning strategies.
3. Wide range of eligible expenses
A wide range of medical expenses are eligible and many taxpayers miss claiming them. With receipts (and written medical recommendations in most cases), the following qualify as eligible medical expenses (for more complete list, go to Canada Revenue Agency’s website):
• Amount paid to a medical practitioner, dentist, nurse, or licensed private hospital (includes payments to licensed chiropractors, masseuses, naturopaths and optometrists where recognized by the provincial jurisdiction)
• Cost of public hospital above and beyond provincial healthcare coverage (e.g. private room)
• Remuneration for full-time attendant; full-time care in a nursing home; attendant care if patient qualifies for the disability tax credit; care and training at a special school for a person with a certifiable handicap
• Amount for ambulance fees, artificial limbs, eyeglasses, wheel chairs, organ transplants and related items, prescription drugs
• Expenses that disabled persons incur to go to work or study such as talking textbooks, tutors sign-language interpreter
• Wigs, water purifiers, whirlpool baths, moving expenses, medical marijuana, gluten-free bread, home renovations for medical reasons (furnaces, air conditioners, ramps, driveway access, etc.)
• Premiums paid on private health care plans, premiums on insurance for traveling outside Canada, deductibles/out-of-pocket expenses for private health-care plans, transportation cost to travel to medical facilities over 40km away
• Cosmetic procedures were once allowed but no longer for payments after March 4, 2010 (still valid, however, are laser-eye surgery, dental veneers and cost of removing excess skin after rapid weight loss)
4. Some tax-planning strategies
1. Medical expenses can be calculated for any 12-month period ending in the tax year, so select the appropriate 12 months; some people also increase their METC by scheduling their important medical costs to incur within a 12-month period.
2. If you are missing receipts, almost all practitioners will provide a yearly printout on request.
3. Rather than claim the METC, the self-employed could make all their medical expenses 100% deductible against business income by setting up a Private Health Services Plan