As a selfless caregiver, you focus much of your efforts on caring for others. While the job can tend to be challenging at times, there are tax related benefits to be aware of.

Before you file your next income tax returns, take time to understand the deductions and tax credits that might help you.

Whether direct or indirect, caregiving expenses are eligible for deductions and tax credits. Check out how you can use your tax credits to replenish the money you spent in the last financial year.

If you are considering a retirement residence for a loved one, read more about finances and cost of living at Seasons Retirement.

Tax benefits for caregivers in Canada

Caregivers in Canada enjoy a wide range of tax benefits. Here are some of them:

1. Medical expense tax credit (METC)

If you have any unreimbursed costs on medical grounds for the person you care for, you would be eligible for a tax credit. However, the qualified medical costs for someone that have been claimed on your tax should exceed 7.5% of the adjusted gross income. Besides, the total itemized deductions should exceed the standard deduction.

Some of these expenses include:

● Acupuncture

● Activities with older adults who require care

● Eyeglasses

● Bandages

● Assisted living expenses for medical reasons

● Deductibles and copayments

● Hearing aids

● Insulin

● Modifications made in vehicles or homes for mobility and safety

● Physical therapy

● Health aid costs

● Prescribed equipment or medicine

● Expenses for hiring nurses

● Expenses for purchasing wigs

● Transportation for medical services or appointments

However, the expenses made on services and items for household benefits are not included in the deductibles.

2. Disability tax credit (DTC)

The disability tax credit will help you minimize the payable tax bill significantly. You can claim this benefit under the following conditions:

● The person you are taking care of is dependent on you.

● The person has impaired mental or physical functions that persisted for at least one year or are expected to experience the same.

This way, you can save between $1,500 and $2,000, depending on your province. This encompasses both provincial and federal taxes.

To qualify for a tax credit for disability, you would need the assistance of a medical professional. They need to fill up a form and authenticate that the receiver has been experiencing prolonged and severe impairment.

Next, you need to get this form approved by the CRA. Once done, you can proceed to the claim process. Alternatively, you might transfer this credit to your common-law partner or spouse.

3. Home accessibility tax credit (HATC)

Have you installed a walk-in bathtub, a wheelchair ramp, or a grip bar in the residence of the person you are caring for? In these cases, you can benefit from HATC. Each individual can claim up to $1,500 in a calendar year. These expenses are applicable for any sort of home alteration, addition, or renovation.

To qualify for this deduction, the renovation has to be made to assist an older adult or someone with a disability which has already received a sanction for DTC.

This deduction is meant to acknowledge and return to some extent the monetary expenses of the caregiver. Such expenses are generally awarded for:

● Ensuring better mobility

● Obtaining better access to the property

● Mitigating the risk of injury or harm

Some of these installations include wheel-in showers, walk-in tubs, handrails, grab bars, lowering cabinets, or widening doorways through which wheelchairs can navigate.

If you took out a loan for these renovations, you will not be able to claim the charged interest. Furthermore, HATC does not apply to the costs of gardening, housekeeping, or household appliances.

4. Canada Caregiver Credit (CCC)

In case you have been providing shelter, food, or clothing to a person with an illness, injury, or disability, you can benefit from Canada Caregiver Credit. The persons who you care for are termed as ‘infirm dependents’, meaning that they have a condition that prevents them from carrying out basic tasks independently.

If you have been taking care of an infirm dependent, you can claim CCC. It might be your child, partner, parent, grandparent, close relatives, or sibling. However, the following conditions have to be fulfilled to claim the CCC:

● You are the caregiver.

● You consistently give the people you care for all or some of the basic needs of life.

This is even applicable for people who do not share a blood relation with you, such as in-laws or stepchildren. Moreover, the care recipient need not qualify for the CCC or live with you. Note that the amount of tax deduction would depend on the nature of your relationship.

Additional tax-saving tips for older adults

● Splitting your eligible income from a pension with your spouse can lead to a reduction in tax liability. As an older adult, you can use this to save tax.

● If you are older than 65 and your earnings are less than $85,863, you can get up to $7,333 as a tax benefit.

● If you or your spouse have been undergoing treatment for mental or physical health issues, you can benefit from the disability tax credit. Besides, you can split these expenses between yourselves.

● Counting the medical expenses can help you save tax significantly. Make sure to keep all your prescriptions, copies or certificates, and receipts. You can benefit from these credits when you file a tax return.

Endnote

As an older adult or caregiver in Canada, you may be able to save money on your taxes. However, as you can see from the preceding, there are several details and ifs-and-buts involved in the entire procedure.

Therefore, consulting an expert would be the best option if you're confused. Professionals who have been taking care of their clients know the tax deduction provisions in and out.