THERE MAY BE MONEY FOR YOU IN DISABILITY TAX CREDITS
There are tax credits for disabled people most popular being The Disability Tax Credit in Canada but knowing where to look and how to apply takes time.
Applying for the Revenue Canada disability tax credit certificate was something I did to help our friends’ parents who originally paid a company more than they needed to.
Often you hear stories about how people were taken advantage of or paid too much for a service they could have easily done themselves.
In my opinion, getting approved for the disability tax credit is simply a pen and paper process.
Being eligible for the DTC can open the door to other federal, provincial, or territorial programs such as the registered disability savings plan, the working income tax benefit, and the child disability benefit.
Understanding Disability Tax Credits
What is the disability tax credit?
The disability tax credit is a non-refundable credit that helps persons with disabilities or their supporting persons lower the amount of income tax they pay each year.
The purpose of the disability tax credit is to assist with financial relief to those with disabilities who have extra costs that normal taxpayers do not have to face.
The doctor must outline how the disability disrupts day to day life of the person with the affliction. It must outline what the disability IS, and how the person’s life is changed.- Alan- Big Cajun Man
Over-Priced Government Form-Filling Services
My friends’ mother had not realized that she could claim the Canadian disability tax credit until it was mentioned to her by her daughter.
She wanted to claim for the 10 years previous to recoup at least some of the money she had over-paid the government while working and looking after her very ill husband.
Her mother had already tried accessing the disability tax credit through a company that advertised online and charged her $1300 for the service to no avail.
It reminded me of the time when my wife and I were filling out the immigration forms to become a permanent resident in Canada.
I was able to hire a representative to complete the tedious forms but it was so easy we did them ourselves.
Too many of these online services make form-filling out to be a difficult task that consumers believe they need to seek professional help.
All they really do is fill out the forms and read the instructions so if you can use a pen, use a computer and print then you can do it yourself.
Save YOUR MONEY
It’s the same thing with the disability tax credit application process which means you don’t have to waste your money.
I think that people get too overwhelmed when it comes to government forms but they are pretty straightforward.
In the case of applying for the disability tax credits through my research Revenue Canada is telling you what they want in terms of information and you give it to them.
The hired company charged her to fill out representative forms and the T2201 form for a few of the years and billed her $1300.
The money they charged her came off the disability tax credit amount before they released it to her.
This bill is ridiculous in terms of costs of the work completed but it did complete the process even at an exorbitant amount.
There are unscrupulous companies and individuals that are lurking ready to whisk your hard-earned money away.
Then again they are there to make money so if you don’t do your research then be prepared to pay big for something you can do for the cost of one Canadian stamp.
Her next port of call was a much more established tax centre in her city that talked her through the disability tax credit process and filled the remainder of the forms out for her.
This service cost her an additional $329 but this time the disability tax credits were applied to her taxes for the remainder of the years missed by the first company.
Sometimes just representing yourself is the cheapest option or seeking assistance from professionals face to face is far easier.
How To Apply For Disability Tax Credit Canada
This fiasco happened 2 years ago but I was asked to go through this process because it was time for her mother to re-apply for her husband’s final 2 years worth of disability tax credits.
I’m not a tax professional and I’m not writing this post to say this is the way it’s done as a rule but I did learn quite a bit.
This is the way we executed the disability tax credit application process with little guidance and research and as you’ll see it’s easy.
I helped them because I was curious about this disability tax credit and wanted to learn as much as I could.
It turns out I taught them how to save money in their budget instead of spending more than they will ever have to again.
The main applicant would be the husband in which tax credits would be applied to any income he has.
If there is no income left to apply for the tax credits against then any remaining tax credits would go to the wife.
As I understand she can receive the tax credits because she is a caregiver to her husband who can’t work.
I did not see the original T2201 form so I cannot confirm or deny that this the reason for her tax credits.
Only the doctor and the government would know what was filled out on that disability tax credit application.
New Update 2019
You can now send Form T2201, Disability Tax Credit Certificate, and any supporting documents using the secure online tool “Submit Documents” in My Account or Represent a Client – a quick way to send your form and get confirmation that the CRA has received your documents.
Claiming Disability Tax Credit In Canada
So, the disability tax credit eligibility process goes like this:
- You need to print off or fill in form T2201 from the Canadian Revenue Agency. Fill in your details and any other information that it requires from you.
- Take the form to your doctor who will then fill in the appropriate parts that they need to.
- Send the form to your tax office that deals with disability tax credits. In our case, her mother had to post hers to Winnipeg. You are currently applying for the disability tax credit certificate which you will then use to apply the credits to your taxes.
- Wait, they will send you notification that the disability tax credit certificate is successful or not.
- If successful, you can then apply to get the disability tax credits applied to your current taxes or back taxes. As far as I know, you can go back up to 10 years and apply the disability tax credits to taxes filed then.
- To apply for the disability tax credits, you now need to write a letter or fill in T1 Adjustment forms for each tax year. I went down the letter-writing route as suggested by the lovely lady I spoke to from revenue Canada. I was told to be repetitive and redundant in writing the letter to eliminate any chance of misunderstanding between what we had been told and what the person receiving the letter read. Anything you don’t understand they will tell you if you make the simple phone call.
Sample Disability Tax Credit Letter
Here is a sample letter for applying for your disability tax credit:
Address line 1
Address line 2
Address line 1
Address line 2
I (Name) (Social Insurance Number) would like to apply my approved disability tax credits towards my (Year) taxes.
If I cannot make maximum use of the disability tax credits on my taxes, can you please apply them to my (husband or wife) (Name) (Social Insurance Number) taxes of the same year(s).
Name (First and Last)
Maximum Disability Tax Amounts
|Year||Maximum disability amount||Maximum supplement for persons under 18|
The above chart from Canada.ca abbreviates the maximum disability tax credits up to the year 2018 of $8235 and for those under the age of 18 $4804 dollars.
If the disability tax credits are to be applied against a number of years because you are claiming for previous years you could abbreviate the years to 2005 – 2018.
Personally, I wrote the letter according to the rules given to me over the phone from the Canada Revenue Agency (CRA).
I listed each year separately which sounds a little monotonous however it certainly seemed to work in our favour.
There was no possibility of reading the instructions incorrectly as they were straight-forward, at least for me.
My understanding of the application process led to her receiving her disability tax credits with no issue.
I didn’t think that was too bad considering all I did was make a phone call and a bit of investigating.
Take your time and phone the CRA as they were a great help and are there to answer your questions.
When you receive the disability tax credit cheque in the post there will be some paperwork that accompanies it.
Don’t throw your disability tax credit paperwork away thinking you are all finished.
There will be a line on the paperwork stating how much interest you earned over the period if you applied for previous tax years to be re-calculated.
This interest is considered as taxable income and will need to be entered in on your income tax return for the year it states in the sentence.
She was so happy and we will apply again for next year’s disability tax credits in the same manner.
This time however I will simply review what they do since she knows how to apply for the disability tax credits on their own.
Costs To Apply For Disability Tax Credits
The grand total for me to apply for her was the cost of a Canadian permanent stamp, an envelope and a sheet of paper.
If you are completing the disability tax credit application for the first time you will likely get charged $20 – $40 from your doctor to fill out the T2201 form needed for the disability tax credit certificate.
I would be wary of those companies advertising promising that they can get you up to $40,000 in disability tax credits as they will charge you an extortionate rate.
If you feel that your situation is too complex call the CRA and talk to them and let them know your situation.
They will walk you through the process like they did when I made the phone call to learn about applying for the disability tax credit.
In Summary, before you hire someone to fill out the disability tax credits application find out how easy it really is and save yourself some money.
Discussion: Have you ever applied for the disability tax credits? Share your story in the comments below.