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Tax tips for North Shore seniors
Seniors on the North Shore fall into all income levels; no matter which one you’re in, chances are you’ll be filing a tax return this year. And once you’ve turned 65, you qualify for several extra tax breaks. Taking advantage of all the benefits you qualify for can make a significant impact on personal finances, whatever your income. (Note: dollar values used here are based on 2012 amounts.)
The age amount
Anyone who is over 65 and earns less then $78,000 qualifies for what’s called “the age amount.” The full amount can be claimed by seniors with lower incomes and is reduced proportionately at higher income levels until it can no longer be claimed. The age amount, however, may be transferred to a spouse or common-law partner who is over 65.
Basic homeowner grant
Homeowners who are Canadian citizens or permanent residents and who live in Canada qualify for the basic homeowner grant if their property value is less than $1,285,000. As with the age amount, the basic homeowner grant amount diminishes as the property value increases. Seniors who live in B.C. may also qualify for an additional grant amount.
Disability tax credit
The disability tax credit is available for anyone with a health problem that prevents them from carrying out everyday activities — problems with speech, mobility or hearing, for example. Anyone applying for this credit must submit a disability tax credit certificate to the Canadian Revenue Agency (CRA). It’s made up of two parts, one to be filled out by the applicant and the other by a medical practitioner. The completed form is then submitted to the CRA (always keep a photocopy for your records).
Many seniors mistakenly believe they don’t qualify for the disability tax credit because their disability is age-related. This is not the case, and applying is well worth the $7,546 credit.
Those who don’t pay tax may be able to transfer their disability tax credit to a tax-paying relative who supports them.
If you haven’t claimed your disability tax credit, but have been coping with a disability, you can claim it retroactively for up to 10 previous years. If you start having problems that could eventually result in a disability, ensure that they are noted in your medical records.
Old Age Security
Old Age Security is taxable income, and those with incomes over $65,000 (roughly) will end up losing it through taxes. For those with lower incomes, however, the additional $6,400 per year can make a big difference to quality of life. The CRA recommends applying for old age security six months before your 65th birthday. Application kits are available at Service Canada Centres. Contact them at 1-800-277-9914.
Income splitting is a strategy that can result in “a dramatic reduction in overall taxes for senior couples,” says Gabrielle M. Loren, a certified general accountant. She uses the example of a couple in which one spouse makes $60,000 a year and the other has no income. The spouse earning $60,000 a year may not qualify for low income tax credits. However, with income splitting both spouses can claim $30,000 each, putting them both in a lower tax bracket.
Also, both will qualify for the $2,000 pension deduction, whereas without pension splitting they would only qualify for one.
Seniors who have re-married later in life also tend to keep their finances separate in a “what’s mine is mine, and what’s yours is yours philosophy,” says Loren. She advises couples to sit down and calculate the financial advantages of income splitting before ruling it out.
Medical tax credit
Another tax issue that concerns seniors is claiming the cost of care. For example, those who’ve moved into assisted living residences don’t receive any kind of tax break, but those who employ a caregiver to help them with activities such as bathing, could claim a medical expense tax credit.
“Don’t discard anything to do with someone helping you as being personal expense until you’ve checked it out with your accountant,” explains Loren.
Seniors who live in residences that provide some form of medical assistance can claim the medical portion of the total cost as an attendant care expense.
The residence will supply a cost breakdown that can be included with the tax return.
In cases where family finances are complicated or one partner is not familiar with the financial arrangements, it can be helpful to establish a long-term relationship with an accountant.
Loren tells the story of one of her clients, a retired executive who had been handling his family’s finances. He asked her to become familiar with his financial affairs to help his family manage after his death. Years later when he passed away, his wife was grateful that he had established this relationship. More recently the family’s grown children have expressed the same appreciation for their father’s foresight.
While many seniors prefer to fill out their own tax returns, those on the North Shore who need some assistance have several options.
In March and April, Silver Harbour Seniors’ Centre (604-980-2474) and North Shore Community Resources (604-985-7138) offer income tax clinics. Trained volunteers prepare returns for seniors whose yearly incomes are less than $25,000. Contact them to make an appointment. The Canadian Revenue Service website is a good source of information about tax credits for seniors. Information about seniors is found under the “Individuals” tab.
No matter what our financial situation is, we can’t escape taxes, but we can certainly make sure that we claim all the benefits we’re entitled to.
— Josie Padro is a writer/researcher for the North Shore Caregiver Support Project.