Tax Tips for Parents of Kids with Disabilities

There are many credits and benefits available for children with severe and prolonged disabilities. These can range from severe vision or hearing impairments, to autism, and mobility restrictions. In order to claim or apply for these programs and credits, the first step is to meet with your child’s doctor or other medical practitioner to discuss your child’s condition as it relates to the Disability Tax Credit.

Disability Tax Credit (DTC)

In order to apply for the DTC, form T2201 must be completed by both the child’s parent(s) as well ad their medical practitioner. Depending on the type of impairment from which your child suffers, a practitioner could mean your child’s pediatrician, speech therapist, audiologist, or other medical practitioner who can provide details of your child’s impairment.
Once form T2201 has been submitted and approved by the CRA, you’re good to go! The only reasons why you’d have to resubmit this form are if your child’s condition improves, if CRA requests an updated form, or if there’s a change in who will be claiming the credit—like from one parent to another
Claiming the Disability Tax Credit opens the door to claiming a few other credits and additional benefits both at tax time and year-round!

Your Tax Return

The Disability Amount

The disability amount is one of the larger non-refundable credits at $8,113 for the 2017 tax year. Although it cannot get you a refund on its own, this credit lowers your tax payable. Once your child’s DTC is approved, the person named as the claimant (usually a parent) may claim the disability amount transfer on his/her tax return. There’s actually a specific spot on the form T2201 to name who will be claiming the credit. Don’t forget to fill out this section when submitting the form to Canada Revenue Agency.

Supplement for Children with Disabilities

In addition to the basic disability amount, your child may also qualify for the supplemental amount. This credit caps at $4,733 and is reduced by any childcare or attendant care expenses claimed.

Children’s Fitness and Arts Amounts

If your child is involved in qualifying fitness or arts programs, you may claim extra amounts for each of these credits for specific Provinces: Yukon Territory, Manitoba and British Columbia. As long as you have paid at least $100 in eligible fees, you may claim an extra $500. For example, if you enroll your child in swimming lessons at a cost of $100, you may claim $600 on your tax return for the children’s fitness amount. Similarly, if your child attends weekly tutoring sessions at an annual cost of $500, you may claim an additional $500 at tax time. Please note that the Federal part of the Children’s Fitness and Arts amounts credit is no longer available in 2017. However, the credit is available at the provincial level for the specific ones mentioned above.

Year-Round Benefits

Once your child’s DTC is approved, you may also see an increase in your monthly Canada Child Benefit (CCB). The Child Disability Benefit (CDB) is a tax-free addition to your regular CCB amount. The current amount is $227.50/month and is indexed annually for inflation. The good news is that there’s no need to apply for the CDB as the benefit will be automatically factored in once your child’s DTC is approved.

Retroactive Amounts

If your child qualifies for the DTC and the start date indicated by your practitioner is more than a year ago, you may receive a significant refund once the disability credit is applied. The CRA will adjust your previous tax returns to reflect the credit for up to 10 years! That means, if you factor in the amount of this credit, your total refund could be in the thousands!
Also, if you qualify for the CDB, you will receive the additional benefit for the past two tax years once your child’s DTC is approved. You can also submit a written request for benefits you should have been receiving beyond the past two years.

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