If you have incurred a significant amount of medical expenses within the last 12 months, you may be eligible to apply for the Medical Expense tax credit. In Canada, the medical expense tax credit is designed to help citizens with medical expenses. We’ll talk more about what type of expenses this covers, as well as how much you can claim and how you can apply.
What is the Medical Expense Tax Credit?
As mentioned above, the medical expense tax credit is a refund that you can apply for during tax season if you have incurred significant medical expenses within the last 12 months. You can also qualify for the medical expense tax credit if your spouse has received medical expenses within the previous 12 months.
In most cases, you can qualify for all expenses paid even if they were not paid in Canada. With that being said, if you have received any other form of reimbursement for your expenses, you will not be eligible to claim them under the Medical expense tax credit.
What does the Medical Expense tax credit cover? – CRA eligible medical expenses
The Medical Expense Tax credit covers a long list of medical expenses. The list includes things like ambulance services, breathing devices, limb braces, cancer treatments, dental services, doctor visits, and medication prescriptions. Of course, this is not an extensive list of all the medical expenses covered, and you can find the list on the Canada website.
Depending on your medical condition, things like air conditioners, air filters, bathroom aides, and chairs may also be covered.
Some medical expenses are not covered under the Medical Expense Tax Credit. These include things like birth control, diapers, filler Injections (like botox), hair replacement procedures, and other cosmetic procedures.
Some of the medical expenses that are covered require prescriptions, while others do not. There are also some medical expenses that are covered but must meet certain conditions.
Wigs, for example, maybe covered, but they are only covered for people who suffer from a medical condition that causes them to lose their hair.
How do you calculate your Medical Expense Tax Credit?
The formula to calculate your medical expense tax credit is quite complex. It takes into consideration your paid expenses, as well as your net income and the Lowest Provincial Marginal Tax Rate.
You can calculate your medical expense Tax Credit using the following 4 steps:
Step 1: Net Income x 0.03 = A1
Step 2: Choose A1 or $2, 397 (whichever is lower of the two). Let’s call this A2
Step 3: Eligible Medical Expenses – A2 = X
Step 4: X * (Lowest Provincial Marginal Tax + 0.15) = METC (Medical Expense Tax Credit)
If you are unsure of how to use this calculation properly, you can speak to a financial professional.
In conclusion, if you have incurred any medical expenses within the last 12 months, you may be eligible to receive some of that money back. Always be sure to keep your receipts and any prescriptions, and let your financial advisor know about them come tax time.