As we approach the tax deadline this year, there are many questions concerning tax credits available for seniors. My friends at Kerr Financial have published a simple, yet extremely informative article on this topic. I hope you enjoy.
TAX CREDITS FOR SENIORS
By Robert J. Kerr, Chairman of Kerr Financial Group Inc.
I worry that Seniors and their tax preparers may miss out on some tax benefits available to them.
So at the risk of boring you, very organized taxpayers, let me bring up the following:
- Refundable Credit for Home Support Services for Seniors – For seniors age 70, this can be a very significant amount, as much as 33% of expenditures made on services like lawn mowing, snow clearance, handyman repairs, housekeeping, laundry and many of the services provided in a retirement/nursing home. The credit is limited to $6,435, although it can be even larger if you can provide assurance that you have to depend on others for your personal needs. The credit is reduced by 3% of your family income that exceeds $56,000.
- Medical Tax Credits – The federal tax system provides relief to Seniors by way of eligible Medical Expenses credits which have to be precisely interpreted. These may include nursing home expenses.
- Disability Tax Credit – We slip very gradually from independent living to a state where we need help to live our normal lives. No one wants to recognize this change, but it may be profitable for you to obtain a Certificate signed by your doctor evidencing your inability to carry out all the acts of living your normal life. If a medical professional will explain in what way you are markedly restricted in your living activities by, completing the prescribed forms for Canada and for Quebec, then you will be able to claim a tax reduction of $1,200 and possibly more. The Certificate enhances your Seniors’ Services Credit (above) substantially, and permits the claiming of retirement home expenses for the federal return.
The federal disability amount cannot be claimed when nursing home expenses are claimed as a medical expense. Whereas Quebec allows the disability amount for credit when Home Support Services for Seniors credit is claimed.
- Splitting Pension Incomes – a married or common law couple may split the pension income equally between them. This works for company pension receipts, RRIF income and annuities, but not for government social security payments. By completing the forms signed by both spouses, you can often shift a large amount of income, up to 50%, from the spouse with highest income to the lower income spouse, and save taxes and reduce the federal OAS pension claw back. It is worth giving this election a try.
- Pension Income Credit – claim a $2,000 tax credit for receiving this much or more of the pension incomes mentioned above. You will be eligible if you split pensions with your spouse or if you arrange to earn at least $2,000 per annum in annuity income.
- Credits are also available to family caregivers and family members who provide needed financial support.
There are many other ways to reduce your taxes if you or your tax advisor take the time to check out all possibilities. With everything costing so much these days, and investment returns being so low, you owe it to yourself to try to legally minimize your taxes. Maybe you should meet with Kerr Financial to see what you can improve. Give them a call (514-871-8213)!