Tax Time Nears

Document Sample
Tax Time Nears Powered By Docstoc
					Tax Tips for Retirees
There are a number of tax savings strategies that you should look into before the tax
deadline sneaks up on you.

1. Medical expenses: Any money you paid directly for medical services that
   exceeds the lower of 3% of your net taxable income (line 236) or a set annual
   minimum, may be claimed as a tax credit. The period of medical coverage need
   not be the calendar year – any 12-month period that ends in tax year being
   reported may be used.

   Common medical expenses are those payments made by you or your spouse that
   were not reimbursed by MSP, your EHC plan, Dental plan, or insurance plan,
   such as:
        Payments to a medical doctor, dentist, nurse, osteopaths, chiropractors,
        naturopaths, therapists, podiatrists, optometrists, some physiotherapists,
        psychiatrists, psychologists, speech therapists, or Christian Science
        practitioners;
        Payments to public or licensed private hospital;
        Payments for respite care (up to the maximum allowable);
        Payments for artificial limbs, wheelchairs, crutches, hearing aids,
        prescription eyeglasses or contact lenses, dentures, pacemakers, prescription
        drugs, and certain prescription medical devices;
        Payments for attendant care, or care in an establishment;
        Expenses relating to guide and hearing-ear dogs.
        Premiums paid to private health services plans, such as Pacific Blue Cross,
        (but not premiums paid for you by the Teachers Pension Plan)
        Premiums paid for a Long Term Care insurance plan.
        Premiums paid for a Travel Medical Insurance Plan.
        Note: MEDOC premiums include non-deductible travel cancellation
        insurance. (Suggestion: Claim ¾ of the MEDOC premium, letting the
        remaining ¼ reflect the non-deductible insurance portion of the premium).

    Premiums paid to MSP are not claimable.

   If you have a spouse or common-law partner, consider combining all your
   medical expenses on one tax return, usually that of the spouse with the lower
   income.

2. Pension Income Splitting.
   Income splitting works best when there is a big disparity in the income of the
   couple, but it can still save taxes even with smaller difference. Pension income to
   be split does not include CPP or OAS payments, withdrawals from a RRSP, and
   does include private pension income, like your Teachers’ Pension, RRSP annuity
   payments, and RRIF income.
   3. Tax-Free Savings Accounts.
      If you have cash or investments that are earning taxable income, you can transfer
      up to $5000 (2009). The $5000 limit will be indexed annually – it may be slightly
      higher for 2010. Money in a TFSA can be invested in bonds, mutual funds, etc. –
      any investment vehicle allowed for a RRSP. Your TFSA fund earnings are not
      taxable, and you can take money out of your account at any time with no tax
      implications.

   4. RTA dues are not tax deductible. Only fees required to earn income are tax
      deductible – example: College of Teachers’ fee, union dues.

   5. Disability Tax Credit. If you have a disability you may be eligible for a
      disability tax credit from Canada Revenue Agency. A disability is an impairment
      in physical or mental functions that lasted, or is expected to last, for a continuous
      period of at least 12 months. See form RC4064 Medical and Disability – Related
      Information and have your doctor complets form T2201 Disability Tax Credit
      certificate. You may be subject to a fee from your doctor to complete this
      certificate, but the fee may be claimed as part of your total medical expenses – see
      above. If your disbility has been ongoing for some time, consider asking that
      your previous income tax reports be reviewed.

   6. Home Renovation Tax Credit.
      This 15% tax credit applies to the cost of home renovations in excess of $1,000 to
      a maximum of $10,000 purchased in 2009. The renovation does not have to be
      completed in 2009, but the payments must be made in 2009.


Tax laws are complex and changeable. For specific information about your tax return,
consult an accountant or tax advisor.


Ken J Smith - 2009