Disabled Children School Fees Medical Credit

How To Apply for Medical Tax Credit for School Fees or Training

In my post What are Financial Bloggers Good For, I mentioned the capability of a parent to claim their child’s school fees as a medical expense (if you qualify under the CRA rules). Mark helped me out with that, and he suggested that I outline the steps that I took to get that credit from the CRA.

As taken from the RC 4064 – Medical and Disability-Related Information 2012 page from the CRA site:

School for persons with an impairment in physical or mental functions – a medical practitioner must certify in writing that the equipment, facilities, or personnel specially provided by that school are required because of the person’s physical or mental impairment.

My Son Many Years Ago (nice rocking plane his sister made)

My Son Many Years Ago (nice rocking plane his sister made)

So, if you have a disabled child, you may be able to claim their school fees as a medical expense, however, it is not automatic, you must ask the CRA if you are allowed to claim the fees as a medical expense. Now remember that the school itself does not necessarily have to be a school for children with disabilities, however, it must offer a program, staff or equipment for your child’s learning disabilities.

How do you do this, you may ask, here are the steps that we took to apply to the CRA for this (yes, we were granted this tax credit, however, I have been asked (twice) for proof of fees, so remember to keep your receipts) (yes I will be linking to the articles I have already written on the topics involved, you can also find them on the RDSP menu item at the top of the web site):

  1. Apply to get the CRA Child Disabililty Benefit for your child, if your child is not identified by the CRA you cannot apply for this tax credit. In our case we had help from CHEO with all the paper work. (Your child will also need a SIN number to make this application).
  2. We found a school that will work with the specific behavioural issues my son has. In this case there was a first school, which then went bankrupt, so we found a second school, which knew about the Medical Tax Credit and was willing to help us as well. If you find a specific school for your child’s needs, ask if they have had folks apply for the Medical Tax Credit for Education before, they may be able to help you as well.
  3. We had our Occupational Therapist write a letter about the programs at the school and how they will help my son. Our O.T. went to the school to observe the programs (at each school) before she wrote this letter.  This letter alone is not enough for the CRA, so you have more work to do (an O.T. is not a sufficient medical practitioner).
  4. Our Doctor then wrote a second letter, referring to the letter from the Occupational Therapist and endorsing the school(s) program as being required for my son. This usually costs money to get from your Doctor (in this case my son’s Paediatrician) , however a small price to pay (usually $25). The Blunt Bean Counter helped out a lot here too, he consulted with me, as he had clients who had applied for the tax credit (he gave me a skeleton for the letter to the CRA).
  5. Collect the receipts for the year for your child’s schooling, as these must be included as part of the request (note, if you have found a public school that meets your child’s needs, congratulations, but you can’t claim the medical expense either).
  6. It couldn’t hurt to include duplicates of the original Disability Grant from the CRA.
  7. A third letter needsto be written by you (the parents), as a cover letter outlining:
    • Your child’s specifics (when the disability benefit was granted, their Social Insurance Number, Age, etc.,)
    • The letters you have included and why they are included
    • A request that the medical credit be granted for your child along with the Totals from your receipts
  8. Off you go to the Post Office to send a Registered letter with all the documents included (make sure they are signed originals)
  9. You wait. You can check the CRA web site to see what the current status of the request might be.

As with all of the other challenges you have as the parent of a Disabled Child nothing comes easily, but don’t let that deter you.

Follow on: It has been pointed out that your child may not have to be “disabled” (i.e. receive the CRA disability tax credit) to be eligible for this expense, so you can try to apply for this, even if your child does not receive the disability tax credit. The direct quote I received was:

That is, a child can neither qualify for the DTC nor the CDB and the family can still claim private school tuition as an eligible medical expense.

 

 

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Found Money: What to do?

Given I am taking some well deserved rest and relaxation, I decided to find yet another chest nut in my archives and this one from 4 years ago fits the bill quite nicely. What should you do with windfall found money? Pay debt is my regular answer but for some reason I was being quite forgiving and verbose about the topic 4 years ago.

Found Money: Windfall or Savings?

Simple Savings Routine

Some people have a very good equation at tax time:

  • Put moneys into RRSP up to Limit
  • Take Tax Rebate from this saving and apply to mortgage as overpayment
  • Repeat method each year

An excellent Savings routine, and if you can do this a good way to build up your RRSP and pay down your mortgage.

Let’s Go On Vacation

Other folks I know view Tax rebate moneys as “found money” and feel  that since it hasn’t been planned for, it can be spent however they wish and they typically use it towards a family vacation. Surprisingly, I don’t think this is a bad thing, if the family vacation is just that and not an excuse to spend more money on vacation and go farther into debt. Vacation and rest is important, as long as it is well planned (financially).

I Hate Tax Rebates

Another group of folks I know, despise getting a tax rebate, because that means the government has had your money for the year, when you could have had it instead, and they make sure their employer takes off as little tax as possible, while ensuring they don’t owe money to the government come April 30th either.

I like this concept as well, and usually try to make sure I pay as little tax as I can.

At the end of it NOT owing money to the CRA is a good thing.

Found Money?

So what if I “find” money (say it falls off the back of a truck, or a relative gives me some)?

If you go with the RRSP routine, it becomes a savings windfall:

  1. Money goes to RRSP and creates a tax rebate
  2. Tax Rebate moneys goes onto Mortgage or into a savings vehicle if Mortgage is paid off.

I like that idea a great deal.

What do you do with found money?

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Taxing Government Benefits

This is an interesting topic for me. I am asking specifically, why does a Government tax Benefits that they pay?

An example is the Child Tax Benefit is not taxed (i.e. you don’t pay income tax on it), however the Universal Child Care Benefit is taxable  income. The benefits themselves are quite similar, yet one is calculated on the basis of your previous year income and may (or may not) be paid to you on that basis, tax-free because the other is a payment everyone gets that is then clawed back as it is counted as part of your taxable income (unless you make too much money, in which case you don’t receive it at all). It’s no wonder folks make mistakes on their taxes with these seemingly similar systems with wildly different tax rules.

Taxable all of them

Taxable all of them

How much does the government spend on collecting these taxes? The CRA is one of the larger government departments, and there must be a great amount of money spent on calculation of who owes what and collection of that money (in most cases), but what if all government benefits were effectively tax-free?

It is already being done with some benefits, why are some taxed then? I realize things like CPP payments, EI Payments and such being untaxed would take a big chunk out of the Government’s income stream, but if the Government simply paid less, would it not end up being the same thing? There must be a way to make this all a zero sum game (i.e. the Government gets to keep their money, but folks still get their benefits as well).

You give out money, and then you must figure out a way to take it back because you think the recipients didn’t deserve that much, seems a very odd way to do business (in my opinion), isn’t it? Yes I am being a little simplistic in my statements, but why must it be some complex an argument?

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Keep Those Receipts for the CRA

One thing I have noticed over the past few years, is that every time I have added a new or different kind of Tax deduction, credit or such, since I start using E-file, inevitably, I receive something in the mail from the CRA telling me that, “You aren’t being audited, however, can you just kind of send us those receipts now?“.

The CRA wants their money too

The CRA wants their money too

You need to keep all of your receipts if you submit your return via E-file programs, this is very important.

The CRA seems to become quite interested when a “new” claim or some different kind of claim appears on my tax return, I end up with a nice letter asking me to send in copies of my receipts. My guess is their computer review flags “new and exciting” claims which then spits the nice letter to the tax payer asking for proof of this “change of life circumstance” (financially).

A few examples of an “interesting life event” would be:

  • The first time one of the girls went off to University (claiming tuition fees)
  • First time one of the girls claimed living expenses for school (yes they got a letter asking for receipts)
  • This year I am being asked for receipts for school expenses (this is the first year my youngest daughter is at school) and for my Medical expenses (for my son’s schooling).

The thing to remember that this is not an “audit” but it can turn into something bad if you ignore the nice letters from the CRA. Don’t IGNORE letters from the CRA!

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Tax Day 2013

Yes it’s that time again. Time to file your taxes, and you have the rest of the day to finish this task.

You don’t need a special NETFILE number any more to use this facility, you only need your SIN and your birthday and away you go, so you really should get moving on this.

I know a few people saying, “I don’t owe money, so I don’t have to rush”, and you may think that is the case, but are you sure you don’t owe money? If you haven’t done your taxes yet how can you be so sure you don’t owe money? If you do owe money and don’t file, that is when penalties start kicking in (and yes the CRA does go after folks who owe and don’t file, if you don’t believe me check their Twitter Feed for examples).

For those who owe money but don’t want to pay until the last day, here is a friendly reminder that, Today is the last day!

The bottom line is get it done today, and next year plan your tax filing better?

And finally a helpful video from Turbotax for all Taxpayers, pointing out the importance of Taxes before the Playoffs:

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