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Don’t miss out on claiming medical expenses on your income tax return. Discover how to track and calculate your monthly medical expenses.
Track Monthly Medical Expenses Without Leaving Money On The Table
Come Income Tax season, the last thing you want to do is scramble to find and calculate your monthly medical expenses, so why not track them?
Claiming medical expenses on your income tax return is a big deal, especially if you’ve paid them out of pocket.
That means if you’ve submitted a health expense to your employee benefits program you cannot claim that amount.
All you can claim is the amount that they did not cover. Easy enough, right?
As of 2018, you can claim less than $2302 or 3% of your net income on lines 330 and 331 on your income tax return.
Related: Medical Expenses You Can Claim On Your Income Tax Return
So, what’s all the fuss about?
Mrs. CBB and I are getting older, and our monthly medical expenses are climbing.
There’s only so much my employer will reimburse us for, so it’s a priority to ensure we keep all our receipts.
Monthly Medical Expenses Claimants
You can claim for yourself, your spouse/common-law, and your children under 18 and/or born before 2001 on your income tax return.
You can also claim dependants that were under your care, such as;
- Your or your spouse’s or common-law partner’s children born in 2000 or earlier or grandchildren
- Your or your spouse’s or common-law partner’s parents, grandparents, brothers, sisters, uncles, aunts, nephews, or nieces who were residents of Canada at any time in the year – Revenu Canada
Anything you claim must be for a 12-month period ending in the year you are claiming for.
For example, from July 2018 to June 2019,
How We Used To Track Monthly Medical Expenses
Typically, we keep all of our prescription receipts in a folder in my office, along with the rest of our budgeting tools, such as our budget binder.
That was the easy part, but when it came to all of our other expenses, we were struggling to find them come income tax season.
Claiming out-of-pocket monthly medical expenses can make a big difference in your income tax return, even if they were not paid in Canada.
It reached the point where income tax time was not fun for us, mainly when we were not organized.
We were lazy and would grow anxious, trying to locate everything we needed to avoid missing anything.
Don’t be like us.
The last thing you want to do is forget important expenses you paid for that can be included on your income tax return.
How We Track Our Monthly Medical Expenses in 2020
So, we have wasted another year locating our monthly medical expenses for 2019.
We’ve had enough, so I created a Monthly Medical Expenses Tracking Sheet for our Budget Binder.
I bet you were wondering what took me so long.
I didn’t realize how much work we were putting into the end-of-year income tax preparation until now.
With my wife having a life-long medical condition and now potentially our son, we’ve got big expenses coming our way in 2020.
BIG into the thousands of dollars no employer or insurance company will cover.
One program he will participate in will cost us $7500 plus taxes for the year.
The hard part is that we don’t know if he will need one year of assistance or two.
His occupational therapist told us to pay for 6 months of the training to see if it makes a difference.
From there, if he needs further assistance, then we could move forward and pay for the rest of the year.
If we pay for the full year and he doesn’t need it; then we will pay for nothing.
Of course, they probably won’t tell us that.
I will have to take a chunk of money from our savings account to cover these costs for him.
Increased Prescription Costs
We’ve also had to pay for glasses above and beyond what my employer covers to $200.
He chose Raybans, so of course, they were the most expensive glasses. We bought two pairs, one for home and school.
For Mrs. CBB, her expenses come in the form of medicinal marijuana oils and synthetic, both of which come with a big price tag.
The synthetic spray costs us $38 a month, whereas the oil is $125 a 5ml bottle at max 5 bottles a month.
Trust me, she tries NOT to use that much because the cost is far too much, so she supplements with synthetic spray.
Monthly Medical Expenses Tracking Sheet
We’re fine doing anything we can for him, but we must track these monthly medical expenses.
By creating the monthly medical expenses tracking sheet, we can enter the data we need and total it at the end of the month.
We have a folder with 12 envelopes that will contain our receipts, and they are labeled by month.
You can use anything that works for your family to store your receipts, so you don’t have to follow what we do.
I printed 12 copies of our monthly medical expenses tracking sheet (you can save to your computer as well) and put them in our budget binder.
Each month, when Mrs. CBB adds up all of our monthly receipts, she will enter the date for our health costs.
I can’t tell you how happy I am that I finally got us on board to do this.
Why? There are four reasons why a monthly medical tracking sheet will improve our income tax return experience.
Let’s go over what Mrs. CBB and I discussed.
Lowered Stress
At the beginning of January, we get the income tax sweats because we know we have lots to do.
With Canadian Budget Binder as my business, I need to be meticulous with business expenses.
We felt that by creating this monthly medical tracking list and having our receipts organized by month, it would lower our stress levels.
Income tax time can be overwhelming for many people, especially if you have many expenses you can claim.
Organizational Benefits
This was a big one, and with the addition of the monthly medical tracking sheet, we won’t have to go through our monthly budget receipts searching.
That’s what we did.
When we calculate our monthly budget, all the receipts in our folder go into a Ziploc bag labeled with the month.
At tax time, we would have to look through them to find what we needed.
It was a disaster. We’re not your perfect budgeting couple; we’re human and learn from our mistakes.
I think that’s always the misconception that some people have: life is all roses behind the computer.
Well, it’s not. This blog was created from our mistakes and successes, and life is about learning.
Becoming organized is like having a clean desk where everything has its place.
Ah, isn’t that part of my mini budgeting series, Step 5 – 5S Organization.
I need to take tips from myself.
Running Totals
If you remember, I posted about how we lost our running totals from our monthly budget early this month.
I forgot to back up the budget, so we lost that vital information.
I won’t make that mistake again this year, but it scared me a bit.
What if the backup fails?
Perhaps I’m being a bit paranoid, but I’ve always been a paper-and-pencil guy, which is why I love printables.
Keeping the running totals of our monthly medical expenses helps us to know what we are paying out at the end of the month.
The problem with medical expenses is that you don’t know what they will cost you or what will happen.
Budgeting Projections
This leads us to our projected expenses and our monthly budget because we still need to budget for health costs.
As you will notice, our projected health expenses will increase in 2020, as mentioned above.
This is because we have some indication of what may happen throughout the year.
We also learned the average costs of Mrs. CBB’s prescriptions from previous income tax returns.
The great thing about tracking our monthly medical expenses in 2020 is that we will have better data to base our 2021 projected expenses.
When you can come as close to your future expenses, it won’t be so hard when further expenses are added.
Using our emergency savings to pay for healthcare costs is something we want to avoid since we have a budget category for this expense.
The idea is the tighter you keep your budget, and I don’t mean financially, but from an organizational point of view, the easier the process will be.
Come income tax time, you won’t break out in sweats because you’ll have all the data you need at your fingertips.
Now, that makes for a stress-free income-tax season.
You can download and print the free Monthly Medical Tracking form from my Free Downloads and Resources Page.
Discussion: How do you track your monthly medical expenses for income tax purposes?
Leave me your comments below, and I’ll be sure to respond.
Mr.CBB
Thank you for discussing the importance of keeping medical records. I am sorry to hear about your wife and son. You talked about it last year , and it got me to check ours. I found that half my income went to prescription. Also it was the first year I added it up, and put the amount on my income tax. It is one of the small things you do not realize that you can deduct what you have to pay over and above what your plan pays.
Yes, very true that many people throw receipts away and don’t claim them. I’m glad I did my homework before starting to do our taxes instead of paying someone else to production line finish them.
I get my pharmacist to print out a report listing all the drugs my husband and I buy during the year – it shows the total cost and the amount we paid. He prints it out for Feb 1st to Jan 31st, my reporting period as I don’t claim on a calendar year basis. Then he signs the report to authorize it in case the CRA asks for proof. I do save the receipts to back up the report too, just in case. For dental, eyeglasses, and other insured expenses I go online and print out the report showing what we had to pay for the year. I toss the actual receipts into my file too, just in case the CRA comes calling. Done!
Hi Patty,
That’s what we used to do but not anymore. We track as the receipts happen so we aren’t overwhelmed or miss anything. Great to hear you have a plan that works for you.
Please correct me if I’m wrong, but I understand only prescribed medical expenses are tax deductible. this would include prescriptions from your opthamologist for glasses or hearing aids. As above, I simply ask my pharmacy to print out the totals for me, it shows what has been covered and what I have paid. (Yes I keep receipts as well but usually don’t need them) than I tack on the eyeglasses (which are not pharmacy) and I’m set to go.
hope this is correct!! am I missing something here?
Yes that is correct but there are so many other medical expenses that can be deducted other than prescriptions, eye glasses and hearing aids which is why tracking those expenses are important. The other point is to average or estimate a projected expense for the following year so you can effectively create a budget for this category. I hope that answers your question, Mr
CBB. Thanks Ann
With respect to medical expenses, I keep a file folder for each member of the family so their receipts are kept separate. The larger the family the trickier it gets to stay organized. When a medical expense is incurred it gets tracked in our budget spreadsheet and then the receipt is filed in the appropriate folder right away. If you have any notes about the expense attach them to the receipt because you won’t remember all the details by the time tax season rolls around. It’s especially important to note how much of the expense wasn’t covered by your benefit plan, if you have one. Plus if both spouses have benefits you need to coordinate both plans – which means claiming the expense under each plan. This also applies to university and college students who can claim their medical expenses under their student plan and their parents benefits plan too. Hopefully you end up with 100 per cent coverage of the expense, but if you don’t you need to know the overage amount – and mark it clearly in your notes. Keep in mind that you’ll need to enter a total for each family member on your tax return so organization is key.
I love how organized you are. Could you imagine if you did not do that? Well, that was us but not any more. We also have a file folder and track as we go now. I could add it into our excel budget but wanted to have a printable version for those people who can’t use excel. Thanks for sharing how you keep your medical expenses organized.
Mr.CBB