Most people know the common tax tips for saving money on your personal income tax return: medical expenses, tools for tradespersons, meals for truck drivers, child care expenses and the like. But there are some unusual ones that I find out about from time to time, or some items that are not very common.
For example, laser eye surgery is becoming more common as people tire of wearing glasses or contacts. Did you know this is an eligible medical expense credit? And since it costs hundreds or thousands of dollars, it can mean quite a saving on your tax return. If you have had eye surgery in the past ten years, you can still go back and adjust that past tax return (I hope you still have the receipt or can get a duplicate of one!
Speaking of medical expenses, you do not have to use the normal calendar year. Say you had major expenses at the end of one year and at the beginning of the next year. You could claim all of these on the one tax return. You could choose the 12 month period ending say March 31 2010 and use expense going back to April 1 2009 if that is a better tax savings for you on your 2010 tax return.
Hair transplants are also considered a medical expense; it’s considered to be beneficial to the patient’s health. Although some cosmetic medical surgery has been eliminated from the list of eligible expenses, many are still claimable if it’s recommended by your physician.
Did you use a lawyer to receive additional compensation from your employer? Maybe a severance payment? These lawyer fees are a deduction from that income.
One that is very unusual is a farmer who deducts the costs of his cats (food and vet bills) because they are used for pest control. Yes, if you can prove you need the cats or dogs legitimately for your business then you can certainly deduct their expenses as business expenses. Of course if you have a service dog, you can deduct the dog food and other related expenses. I have seven furry friends, too bad I can’t figure out a way to deduct their expenses!
Do you pay for a “lunch program” at school for your child? This is supervision and is considered child care expenses. This also applies for any before and after school programs you pay for if it includes “supervision”.
Moving expenses can also be claimed as a deduction if you moved more than 40km to be closer to your new job. Although many people are reimbursed by their employers (and cannot deduct these expenses), I find young people are often moving around and are not claiming these expenses, even if it’s just the vehicle expenses (based on a per kilometre amount) and meals. Other expenses of course could be a moving van and accommodations or even storage costs.
If one spouse has dividend income and by having the other spouse claim it the spousal amount is created or can be made larger, then it can be moved to the higher income spouse. I’ve only seen this situation a couple of times over the years.
Pension Income Splitting is fairly new (2007 was the first year), but when I review some past tax returns for new tax clients, I find that most are claiming the full 50%. This is not always the best option. Sometimes splitting less than 50% means more medical expenses can be claimed by the lower income spouse. Tax software used by professionals makes this exercise a lot easier.
These are just a few examples of why it sometimes pays to have a professional file your taxes for you. At least every few years if you really want to do it yourself
Unfortunately the way our tax system works, it’s up to you to find out what you may be eligible for. That’s why I like to ask lots of questions especially of my new tax clients.
Anni Markmann is an independent financial planner and tax professional working, living, playing, and volunteering in our community. Contact her at 422-6631 or anni@steannetaxservice.ca or at 36 Dawson Road in Ste Anne.