As a senior, finding programs and credits that can help you financially can be incredibly important. This tax season, here are three non-refundable tax credits you should know about when filing your tax return.
Age AmountIf you are 65 or older in 2020 and your income is under the specified amount, you are eligible to claim the Age Amount Tax Credit in the amount of $7,637 in 2020 - unless your income exceeds $38,508 at which point the credit will be reduced by 15% of the amount made over and above $38,508.
Pension Income Amount
This can be one of the most effective tax planning tools for seniors but, unlike the Age Credit and Pension Income Credit, is under-utilized as many seniors are unaware of this tax-saving opportunity.
If you are 55 or older in 2020 and you received eligible annuity or pension income, you may be able to claim a non-refundable tax credit in the amount of $2,000 (or your pension income if it is less than $2,000).
Eligible income:
- DPSP Income
- Regular Annuities and IAAC
- RPP Lifetime Retirement Benefits
- RRIF Income
- RRSP Income
- Elected Split Pension Income
- EBP Benefits
- Variable Pension Benefits
- Foreign Pensions
Note that conditions apply to some of these incomes for those over 65 and under 65.
Medical Expenses
You can claim a non-refundable tax credit for medical expenses that were partially or fully-paid for out of your pocket (i.e. not covered fully by your provincial healthcare plan or a private plan). The medical expense tax credit is unique in that you can choose to claim expenses for any 12-month period ending anytime in 2020.
This can be beneficial if you had a costly medical expense at the end of 2019/ beginning of 2020.
Unfortunately, there is no general rule that can be followed for determining the eligibility of a medical expense. To find out whether an expense is eligible, head to the Canada Revenue Agency (CRA) website.
Once you have determined which of your medical expenses qualify, it is time to determine your tax credit. The rule of thumb, for claiming eligible medical expenses in 2020, is that any amount over the lesser of 3% of your income OR $2,397 can be claimed for the medical expense tax credit.
Put simply, if your net income is less than $79,900 in 2020, you can claim all eligible expenses over 3% of your income. If you make more than $79,900 you can claim any expenses over $2,397.
For more information on non-refundable tax credits available to seniors, contact us today. Our team of chartered accountants will ensure you make the best tax decision for your specific needs.
