Expert Blog

Filing Taxes for a Senior? 7 things You Can do to Maximize Their Return

Posted November 29th 2016

Whether you’re caring for your aging parents or just helping them with their taxes, here are some tips to keep in mind so you can both get the most back when you file your taxes.

1. Make sure they file a tax return: Sounds simple, but some folks think that if they didn’t earn an income, they shouldn’t file a return. Filing always makes sense, because they could be entitled to other credits, deductions and benefits that get triggered once they file a tax return. For example, they’d need to file to receive the Guaranteed Income Supplement (GIS) – and filing late could interrupt the GIS benefit, GST/HST credits and other automatic benefits.

2. Split pension income: Seniors are allowed to split up to half of their eligible pension income with a spouse or common-law partner, so they can assign a portion of what they earned throughout the year to their better half. This can mean a significant tax reduction when one spouse has very little income, and the other has a lot. Another way to reduce taxes is through transfer amounts. If one parent is unable to completely offset their age amount, pension income and disability amount against their taxes payable, they can transfer the unused portion to their spouse’s return.

3. Claim medical expenses: A portion of most medical expenses can be claimed! If your parent is part of a couple and the spouse with the lower income owes any tax, it usually makes the most sense for that person to claim them. Are your parents globetrotters? If they travelled to another country and purchased medical insurance for the trip, it’s considered a medical expense. If they traveled to obtain medical treatment that wasn’t available where they live, they might be able to claim the cost of transportation, meals and accommodation, depending on how far they needed to go.

4. Claim the caregiver amount: If your parent (or parents) are 65 or over, have earned less than $20,607 and live with you, you should be able to claim the caregiver amount. The kicker here is that you must be living together under one roof, so sending your parents money from afar won’t qualify you. If one of your parents happens to be living with you because of an illness or infirmity, they’ll need a note from their doctor describing their condition, and you can make this claim regardless of their age. If that’s the case, the caregiver amount increases by $2,121.

5. Split the disability tax credit: If your parent qualifies for the Disability Tax Credit but doesn’t have enough taxable income to take full advantage of it, they might be able to transfer an unused amount to you. In order to qualify for this, your parent must depend on you for all or some of the basic necessities of life.

6. Claim the cost of attendant care: If a senior is living in a retirement home and is eligible for the Disability Tax Credit, they can claim the costs relating to attendant care as medical expense. To make this claim, the retirement home provides you with an invoice detailing the amount paid for attendant care, which includes housekeeping, laundry, transportation and meal preparation. Rent and food expenses are not covered. If you claim attendant care in excess of $10,000, you cannot also claim the disability tax credit.

7. Claim nursing home expenses: For full-time care in a nursing home, there’s no limit on the total that your parents can claim as medical expenses. If you pay your parents’ nursing home fees, you might be able to claim them as a medical expense, however you’ll be subject to limits. It’s important to know that you can’t claim both nursing home fees and the Disability Tax Credit, so it might make more sense to restrict your claim to the attendant care portion of the fees, as long as they don’t exceed $10,000.

Want more cash in your pocket for making memories? If you’re in your golden years or taking care of a family member who is, take a minute to review what credits and deductions you could both be eligible for.

Still have questions about your pension, trust or other tax credits? Chat with a Tax Expert at an H&R Block office near you. Ready to file? Do it yourself with our free online software.

 

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