Tax Breaks for You and Your Caregivers
With many Canadians caring for aging parents or receiving care ourselves, it’s good to know that there may be federal and provincial tax breaks available to us: Below are excerpts from the Canada Revenue Agency (CRA) website, http://www.cra-arc.gc.ca, detailing three of the available federal benefits. Click on the links below for more information, and note that these benefits apply not just to the elderly, but to any qualified care recipients over the age of 18, such as adult children. Caregiver Tax Credit You may be eligible for this tax credit if you meet ALL of the following conditions: • You maintained a dwelling where you and a dependant lived at any time during the calendar year. • Your dependant is: * your or your spouse’s or common-law partner’s child or grandchild; or *your or your spouse’s or common-law partner’s brother, sister, nephew, niece, uncle, aunt, parent, or grandparent who was resident in Canada. • This person was not only visiting you. • Your dependant meets all of the following conditions: * 18 years of age or older at the time he or she lived with you; * Net income in 2011 (line 236 of his or her return, or the amount that it would be if he or she filed a return) of less than $18,906; and * Dependent on you due to an impairment in physical or mental functions or, if he or she is your or your spouse’s or common-law partner’s parent or grandparent, born in 1946 or earlier. • You did not have to make child support payments for this dependant. • No one other than you claims an amount for an eligible dependant (line 305) for that dependant. Disability tax credit As per the Canada Revenue Agency website, claimants for the disability tax credit (DTC), must meet the three following conditions: • The claimant must have an impairment that is prolonged, which means it has lasted or is expected to last for a continuous period of at least 12 months. • The claimant’s impairment in physical or mental functions must be severe and it must restrict him or her all or substantially all of the time. • The claimant’s severe and prolonged impairment must be certified using Form T2201, Disability Tax Credit Certificate, by a qualified practitioner. If your dependant is able to claim the disability amount, and does not need to claim all or part of that amount on their tax return, they may be able to transfer all or part of this amount to you. Click here for a list of “impairments” that qualify for the Disability Tax Credit: http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/qlfd-prcts/dtrmnng/menu-eng.html Finally, if you pay for someone’s nursing home fees, you may be able to claim them under “medical expenses for other eligible dependents –line 331”. Provincial Tax Credits It’s worthwhile to check whether your provincial government offers caregiver tax relief as well. You can start by searching online for “caregiver tax credit” together with the name of your province. Need assistance with your CRA returns? Consult a tax professional or click on the link to our previous article to learn more about help available for older persons with preparing tax returns....
Read MoreTax Filing for Low Income Seniors
Seniors may feel the effects of a major change in tax filing procedures for Canadians introduced for the 2012 tax year. As a cost-saving measure, the Canada Revenue Agency is “encouraging” Canadians to file our returns on-line. Beginning this year, paper forms will no longer automatically be mailed out! However, you have these other options: Pick up forms at a post office or Service Canada outlet (tax office). Download and print forms from the CRA website Order a copy from CRA by Internet or by phone. Call 1-800-959-2221. Note that the TELEFILE service has also been discontinued. Since these changes presents a potential problem for persons with mobility issues, please plan well ahead for yourself and your loved ones…and help spread the word. For more information, consult this web page. April 30 is the deadline for filing personal income tax returns in Canada. Maybe you (or a senior in your family) feel that, because you have a low income, filing your taxes can’t possibly make a difference to you or the government. However, filing a tax return can be especially important for low income seniors. Many Government of Canada programs that help low income seniors require that you file a tax return. In some cases, the application for the program can be submitted with your return. Some low income seniors may struggle to complete their tax return, or may need physical assistance to read and to complete their return. Help is available in many communities, in different formats. • Volunteer Clinics – Volunteers meet with you and help you complete your tax return. Usually clinics run at specific times and places. You may need to pre-book an appointment • Do-it-yourself clinics – Bring all your paper work, T4, tax forms, and learn how to fill in your own return. • Drop-off service – Bring all your paper work and drop it off. Your return is completed by a staff member or volunteer and you return to pick it up at a specified time. Again, you may need to book an appointment. Volunteer tax preparation clinics are offered every year between February and April in various locations across Canada. For more information about these free services, you can: 1. Search online for “volunteer tax preparation clinic” with your city or town, 2. Call the Canada Revenue Agency at 1-800-959-8281 3. Click on www.cra-arc.gc.ca/volunteer/. This article was updated in February 2013 Vol.2, No.8; © ElderWise Inc. 2006-13. You have permission to reprint this or any other ElderWise INFO articles, provided you reproduce it in its entirety, acknowledge our copyright, and include the following statement: Originally published by ElderWise Inc., Canada’s go-to place for “age-smart” planning. Visit us at http://elderwise.memwebs.com and subscribe to our FREE e-newsletter....
Read MoreEstate Planning Part 2: Four Common Mistakes
Whether we like it or not, some parts of life are complex. We need help with areas where we lack experience or expertise. This is certainly true when it comes to certain legal, financial and tax matters – all of which can come into play with estate planning. But emotional pitfalls and relationship issues can also arise during estate planning. Here are four common estate planning mistakes to avoid: Mistake #1: Not changing your documents as you and your family experience life-changing events. There are dozens of life-changing events which should trigger the review of your legal and financial decisions. These include health problems, employment and business changes, births and deaths, marriages and divorces. For example, divorce does not invalidate a current will, but marriage does. If you purchase property outside your province of residence, the tax rules and laws of that jurisdictions may also affect your estate plan. Mistake #2: Joint ownership with or investments on behalf of children. Many parents consider joint property ownership with children as a tax-saving strategy. But property jointly owned may be vulnerable to claims by your child’s creditors – or spouses in cases of divorce. Similarly, making investments in a child’s name does not guarantee that the investments will belong to the child upon your death – unless reflected in your will. Mistake #3: Preparing your own documents. The examples above may show that both professional legal and tax advice are key factors in sound estate planning. By looking to save on professional fees to have your will prepared, you could end up costing your estate much more, and cause added grief to family members and other beneficiaries. It’s all in the details and the experienced oversight that professionals bring to the table. They are trained to catch the small mistakes or omissions that can make a huge difference. Mistake #4: Not explaining estate decisions to beneficiaries. Some people use their wills as an opportunity for “settling scores” or to establish personal power from “beyond the grave”. First and foremost, consider your motivation and how you would like to be remembered. Where a will is likely to be contentious or leave important questions unanswered, consider talking about the reasons behind decisions in your will while you are still alive. If that’s not possible, leave a letter with your executor to share with beneficiaries. Don’t put an executor in the difficult position of trying to explain or interpret your wishes. *** Our estate plan can be one of many vehicles that reflect our personal values and how we have lived them. Whatever we leave materially is only part of our legacy. But the way in which we order our practical and financial affairs gives us an opportunity to create maximum benefit and minimum burden for others. A good estate plan can serve as a powerful symbol of a life well lived – and an “end of life” well-planned. © ElderWise Inc., 2010 Vol. 6, No. 11 You have permission to reprint this or any other ElderWise INFO article, provided you reproduce it in its entirety, acknowledge our copyright, and include the following statement: Originally published by ElderWise Publishing, a division of ElderWise Inc., Canada’s go-to place for “age-smart” planning. Visit us at http://elderwise.memwebs.com/ and subscribe to our FREE...
Read MoreEstate Planning Part 1: Myth-Busting
With anything that we plan on a regular basis, like vacations and family get-togethers, we become familiar with what works, what to avoid and, hopefully, how to prepare properly in advance. But when it comes to the larger issues like estate plans, our mistakes can cause unintended hassle - and even hardship - for those we care for. Here are some common estate planning myths that call for a closer look: I’m not “wealthy”, so I don’t need an estate plan…do I? If you are happy to have your estate distributed by someone you’ve never met, using a formula created by the government, then you may not “need” an estate plan. For this reason, young people with few assets typically don’t have wills. But everyone else should consider developing an estate plan. I do have a will. Isn’t that enough? A well-thought-out will is one of the results of a good estate plan, but not a substitute for it. Powers of attorney and health care directives are, of course, other important parts of the plan. But a good overall estate plan gives you more than that: it ensures your wealth is transferred – without waste – to the people or purposes you choose. That way, you don’t incur unnecessary tax or probate fees, and you place the minimal burden on the people you care for. What kind of “burden” can an estate create? Disposing of and distributing assets is a big undertaking. But two things are especially important here. First, even simple estates can take a year or two to wind up…it’s a lot of work, and there are expenses involved. Beneficiaries may have to wait a long time before funds are released. That’s where life insurance can help, because funds are received soon after the date of death and are not tied to the probate process. Second, consider your executor – likely a relative or trusted personal contact. Make sure their job isn’t any harder than it needs to be. Get documents organized and let your executor know where they are located. Think about whether having a professional executor would make sense. So, what is estate planning really about? It might be easier to define what estate planning is NOT. It’s not primarily about tax planning, or avoiding probate fees, or buying life insurance, though all those things may be involved. It’s more generally about spotting potential future problems with any and all financial and legal decisions you are making today. But estate planning is also about exploring your values and your legacy. For example, what do you believe about leaving money to your children? If you have inherited money, what should happen to those funds? Do you believe in spending your wealth or preserving it for your heirs? What charities or social causes do you want to support? The reality is that many of us avoid estate planning – for the wrong reasons. Resolve to change that, and ensure your estate is optimized. For expert advice in this article, ElderWise interviewed Mr. Tom Junkin, Executive VP of Personal Trust Services at the Fiduciary Trust Company of Canada. Vol. 6, No. 10 © ElderWise Inc., 2010 You have permission to reprint this or any other ElderWise INFO article, provided you reproduce it in its entirety, acknowledge our copyright, and include the following statement: Originally published by ElderWise Publishing, a division of ElderWise Inc., Canada’ go-to place for “age-smart” planning. Visit us at http://elderwise.memwebs.com/ and subscribe to our FREE...
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