If you're 65 and over, it's like being 40 all over again. Below are some tips just for you.
Always File Your Tax Returns
When you file, you could be entitled to other credits, deductions and benefits that get triggered by your tax return such as GST/HST credits. If you’re receiving Guaranteed Income Supplement (GIS) through Old Age Security, make sure to file on time to ensure their benefits continue uninterrupted.
Splitting Your CPP Benefits With Your Spouse or Partner
You may be able to split part of your CPP retirement benefits with your spouse depending on how long you lived together when you were contributing to the plan. This is an advantage if one senior is in a higher tax bracket than the other. There are certain rules that apply before you file your taxes to take advantage of this benefit. To find out more, Canada Revenue Agency or Human Resources Canada.
Income Splitting
You’re allowed to split up to half (50%) of your eligible pension income with a spouse or common-law partner. Income splitting allows some seniors to enjoy a significant tax reduction. In the situation where the lower-income spouse has very little income, the tax savings are substantial. If your spouse is unable to completely offset his or her age amount, pension income and disability amount against tax payable, he or she may transfer the unused portion to your return.
Medical Expenses
Save all you medical related expense receipts. Everything from medication to nursing home fees, and even medical insurance for a trip or wintering in another country is considered eligible. Medical expenses are reduced by a percentage of your income, so it is usually more beneficial for the lower income spouse to claim them. And if you had to travel (more than 40kms) to obtain medical treatment that was not available where you live, you may be able to claim the cost of transportation, meals and accommodation.
Are You Dependent On Family Members For Care?
If you are over 65 and dependent on your children or other family members because of an impairment in physical or medical functions, they may be able to claim the Canada Caregiver Tax Credit. To qualify for the tax credit, your earnings need to be less than $23,906 in 2019 and a doctor needs to supply a note explaining the nature and duration of the impairment. If you are eligible for the disability tax credit, they may also be able to claim any portion that you do not need to reduce your taxes to zero.
Income From Foreign Countries
If you are like many people who have worked or lived in another country outside of Canada for an extended period of time, you may be receiving a pension from that country which could be considered taxable and fall under a special tax treaty. Come in and talk with us at DTA to find out if there is a treaty applicable to you.