Hello. This is Sharon from Gary Booth Chartered Accountants. Today I will be discussing two important tax credits: medical expenses and charitable donations. The claim to optimize medical expenses can be tricky: let me explain.
Medical expenses can include a claim of any 12 month period with at least one day in the tax year. For example -- let's say that the last 6 months of 2012 medical expenses were incurred but this amount was not sufficient to make a claim. If then during the first 6 months of 2013 you received medical expenses of a significant amount, for tax purposes you can claim medical expenses from July 1, 2012 to June 30, 2013.
The tax credit you receive is the amount of eligible medical expenses you had less the lessor of $2,152 (in 2013) or 3% of you net income. For example, if your income was $30,000 your medical expenses would have to exceed $900 which is 3% of $30,000. However, irrespective of your income, if your medical expenses exceed $2,152, then you can claim a medical tax credit of everything over $2,152. As you can see, this area is more complicated than people realize.
One important tax tip regarding medical expenses: If you are married, it is advantageous to have only one spouse claim medical expenses and the lower income spouse would normally claim the medical expense. Next I will talk about charitable donations.
You can claim a tax credit when you make a donation to a registered charity. The tax credit is based on the amount contributed. For the first $200, you will receive a federal tax credit of only 15%. After the first $200, you will receive a federal tax credit of 29% plus a provincial tax credit. As you can see, it is very advantageous to claim charitable donations that exceed $200. As a taxpayer, you can carry forward donations up to five years and can claim donations up to 75% of your net income. Similar to medical expenses, it is beneficial to have only one spouse claim all donations.
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