Claiming medical expenses, on your tax return, may provide a substantial tax savings.
Medical expenses cover a wide range of healthcare related costs such as:
- Pharmaceutical prescriptions
- Eye exams, glasses and/or contact lenses
- Dental and orthodontic work
- Chiropractic costs
- Hearing aids and their replacement batteries
- Massage therapy
- Medical travel insurance
- Medical plan deductibles
The list is extensive so it is worth checking before you throw away receipts that could be valuable.
To claim medical expenses, the total costs must exceed three per cent of your net income and only the portion that exceeds your net income is claimed. Example: if your net income is $30,000, your medical expenses have to exceed $900 ($30,000 x 3%) and you can only claim the expenses over $900.
Taxpayers may claim qualifying medical expenses they paid in the taxation year, or in any period of twelve months ending in the taxation year. Any twelve-month period ending in the year may be selected to determine the most advantageous total for medical expenses. This could mean reporting expenses from June 2008 to May 2009 to give you the largest total to claim.
Even if you have medical or dental insurance that reimburses you for your health costs, you can still the claim the portion of expenses that the insurance plan does not cover. And the premiums you pay for private health insurance, like that which is deducted directly from your paycheque, can also be included as a medical expense.