The article “When can you claim medical expenses on your tax return” was originally published in MoneySense on March 21, 2022. Photo by Anna Shvets from Pexels.
After you pay for out-of-pocket medical expenses, what should you do with the receipts? Find out if you can claim these on a tax return.
I paid $3,000 for wisdom teeth removal, and my employer only reimbursed $2,000. I’ve heard that any taxpayer who paid medical costs for themselves, a spouse, and/or dependents is eligible, as long as they were not reimbursed for the amounts by their insurance, an employer or any other source. Can I claim the $1,000 that I paid out of pocket on my taxes? —Houssein
Can you claim wisdom teeth removal on your taxes?
Eligible medical expenses may qualify for a tax credit on your tax return. The medical expense tax credit is generally a non-refundable federal and provincial/territorial tax credit that is used to reduce your tax payable.
You can claim medical expenses for which you were not reimbursed by an insurance plan (or by way of any other tax-free reimbursement) on your taxes. If these medical expenses were paid by you (or your spouse/common law partner) for either of you or for your children you should be able to claim them. (Note: This only applies if the children were under the age of 18 at the end of the tax year.)
In some cases, you may qualify for even more. Workers with low incomes and high medical expenses may be eligible for a refundable medical expense supplement that results in a tax refund—even if they have no tax payable.
Can I claim medical expenses paid for other family members?
You also may be able to claim expenses for other family members paid by you (or your spouse/common law partner) if they depended on you for financial support. These family members include children over the age of 18 and grandchildren. The parents, grandparents, sisters, brothers, aunts, uncles, nieces or nephews of you or your spouse/ common-law partner may also be included. These family members must have been Canadian residents at some point during the year.
Expenses paid outside of Canada qualify as well. Children or grandchildren would include children or grandchildren of your spouse or common law partner, so, your stepchildren or stepgrandchildren.
Are there income limits on medical expenses?
There is an income limit that applies for claiming medical expenses. Your 2021 expenses need to exceed the lesser of your net income on line 23600 of your tax return or $2,241.
The tax savings is 15% federally and ranges based on your province or territory of residence from 4% to 10.8%. So, saving between 19% and 25.8% of the eligible expenses in excess of the limit. (Check out the MoneySense 2021 income tax guide for more tips.)
What medical expenses can be claimed on your tax return in Canada?
Some eligible medical expenses are obvious, but the list from the Canada Revenue Agency (CRA) is quite extensive. Some expenses can only be claimed by individuals with certain medical conditions or who are disabled. To find out, check this CRA list.
You can claim expenses incurred during any 12-month period that ends in the tax year. This may allow a higher claim amount depending on your income from one year to the next or the timing of your expenses, especially if your expenses would not otherwise exceed the minimum limit in a given calendar year.
In summary, Houssein, you can claim your $1,000 of out-of-pocket wisdom tooth costs. However, this expense, combined with any other non-reimbursed expenses, must exceed the income limit for the year.
Keep in mind that any health plan premiums you paid are also eligible medical expenses and might help you exceed the limit.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ontario. He does not sell any financial products whatsoever.
