Top Ten Tax Mistakes

1. Not filing a T2201

This provides the basis for all subsequent tax claims and must be done correctly the first time. Refer to my page Disability Tax Certificate for more details. It is also important to note the commencement date of the disability (birth in most cases). The reason for this will become evident as you read on. Without filing a T2201, you will be handing over thousands of dollars to the Federal Government that rightly belongs to you.

The T2201 once approved, automatically sets you up for the Child Disability Benefit, which can be worth up to $2,504 per year.

2. Not claiming the Disability Tax Credit (DTC)

Once the T2201 has been approved, it is a simple matter to claim the DTC and the Disability Tax Credit Supplement (for those under 18) without any further documentation (line 316 of Schedule 1, Federal Tax for self or line 318 for the “Disability Amount Transferred From a Dependant”). This amount is worth about $2,284 annually.

3. Not claiming the caregiver amount

If you are caring for a person with a disability who is 18 years of age or older you may be able to make a claim. Visit the CRA site for more information Can you claim the caregiver amount?

If you can’t claim the caregiver amount because your child is under 18, you may be able to claim the Family Caregiver Amount.

3. Not claiming medical expenses

The BC Autism Funding does not come close to covering the therapy expenses. The remainder can be claimed as a medical expense, but it must be done correctly. This medical credit is worth about 20% between federal and provincial credits. Visit my page Medical Expenses for more information.

4. Submitting incomplete or incorrect receipts and invoices

The receipt must include the type of work carried out, the therapist’s SIN, the individual with the disability, the dates of service, and the therapist’s signature. It should also indicate “Paid”. A sample invoice and receipt can be downloaded here.

In addition the work must be labelled correctly. Some people are able to claim the work as ABA Therapy, but most successful tax filers use the term “tutoring”. This tutoring must be “prescribed” by a medical doctor (a letter from your doctor should suffice). All “tutoring” expenses submitted on your taxes should be labelled the same.

Do not make the mistake of having work labelled as Program Management, Overlaps, Training, Travel etc. The tax assessor will not know the details of the therapy program and will likely disallow those receipts.

5. Trying to claim for material costs

This has been tried before and gone to the Tax Court of Canada without success. Any materials should be claimed through the BC Autism Funds program.

6. Not organizing your files

Claims for medical expenses do not require receipts to be sent in with your tax form if you are filing electronically. The government may ask at a later date for the receipts and you should be able to access them without trouble. If you can’t produce the files, then your claim will be disallowed and you will lose money. See my page Organize your files for more help.

7. Not separating BC Autism Funds and medical expenses tax claims

One of the more common mistakes, this is called double dipping and will bring you nothing but trouble. Therapy that is covered by any funding source such as insurance or government programs is not eligible as a medical expense.

The federal government is well aware of the BC Autism Funding program and will be looking for double dippers. One tactic employed by many parents is to write a covering letter when they first submit “tutoring” expenses. This letter explains that while BC Autism Funding may have paid for some services, none of those services are being claimed on the tax form.

Remember that any invoices that were paid for by the BC government must not be included in your tax return.

8. Not claiming for previous years

Many parents gradually become aware of claims that they could have made in years past, but neglect to file a tax adjustment for those years. In fact, missed claims for the previous ten years are eligible. For example the T2201 may specify that the person had the disability from birth. Starting in 2016 the T2201 form gives you the option of having CRA recalculate the Disability Amount for previous tax years. Other tax credits may be back dated for all those years missed. The form to use is called the T1 Adjustment Request.

The Child Disability Benefit may also be back dated. See my page Child Disability Benefit for more information.

You do not need to hire a professional for this task as it is a very simple process. This claim alone may be worth several thousand dollars.

9. Not opening an RDSP

You may as well be flushing money down the toilet if you don’t open an RDSP. Depending on your income level and contribution, the government may add as much as $4,500 per year to the account. Refer to my page RDSPs for more information.

10. Not claiming child care or attendant expenses

If you are a single parent or both parents are employed, you should be able to claim up to $11,000 in child care costs (if the child qualifies for the DTC).  See Child Care Expenses.

If the above situation does not apply and you hire someone to care for your child, you may be able to claim attendant care expense. See Medical Expenses.