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The Disability Tax Credit (DTC) in Canada recognizes the challenges associated with having or caring for someone with a disability. The number of Canadians living with a disability (physical, sensory, cognitive, or mental) is significant.
In 2020, there were 1,380,180 unique eligible people with DTC certificates.
This fact deserves special attention. To qualify for a DTC, the condition has to block the person from basic activity of daily living (BADL). That is why the federal government wants to ease the tax burden of people who have or who care for people with disabilities.
Some notable facts from a 2017 Statistics Canada report about Canadians with disabilities include:
Many have unmet needs for disability aids, devices, and medication, as they are unable to pay for them:
Check out the difference between a tax credit and a tax deduction.
The disability tax credit (DTC) is a federal non-refundable tax credit that persons with disabilities or their caregivers can claim to reduce their income taxes. The individual with the disability can use the credit or transfer it to their spouse or supporting family member.
Check out these tax tips for low income individuals.
Three categories of disabilities may qualify you for the DTC:
Your impairment must have lasted a year or is expected to last a year in order to qualify in the above categories.
For 2022, the federal DTC for an someone 18 years and older is $8,870. The DTC for 17 and under is $14,044. That is because there is a children’s supplement of $5,174. The calculation is:
$8,870 (regular benefit) + $5,174 (children’s supplement) = $14,044 (total benefit).
To determine the benefit’s actual dollar amount, multiply this amount by the federal and provincial tax rates that correspond to your tax bracket.
For example, if you live in Alberta and earn $45,000 a year, the DTC’s dollar amount could be worth as much as $2,104 (15% federal and 10% provincial). Also, if the person with the disability is under 18 years old, they can qualify for the extra supplement worth up to $5,174.
You aren’t limited to utilizing the DTC in the current tax year only – it can be carried back up to 10 years, which may result in substantial tax refunds. To have the credit backdated to prior tax returns, you must file a T1-ADJT1 form for each tax year that you’d like to claim the benefit for (provided you qualify). Another option to backdate the credit is to fill out Section 3 of Form T2201.
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The DTC’s application process has a reputation for being complicated and drawn-out, so much so that few people are willing to apply for it. However, if you exercise patience, use sound judgement, and obtain advice when needed, the process will be a lot smoother. You can apply for the DTC by yourself or with the help of an expert.
If you possess all the information required to apply for the DTC, you can complete the application yourself.
To begin, you need to submit form T2201. You will need to fill out your personal details in Part A and then have your doctor fill out the necessary information in Part B. Your doctor must certify that you have a severe and prolonged ailment that interferes with your ability to perform everyday functions.
Keep In Mind The Following:
As mentioned, getting approved for the DTC isn’t an easy task. If you’re not confident with navigating the approval process on your own, consider seeking the help of a DTC consultant to guide you. These experts specialize in aiding people with qualifying ailments to obtain the DTC.
There are many reasons why hiring a DTC consultant is a good option:
Don’t let a complicated process stop you from applying for the DTC. The DTC is a helpful financial tool if you have a severe disability, or if you’re supporting someone who is. Instead of getting into debt because you need loans to care for yourself or someone with a disability, use the DTC tax break. The credit provides you with much needed financial relief, making each day a little bit less stressful and challenging.
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