Supporting a family member has tax benefits
When we take care of our family members, be it elderly parents living with disability or family members that are infirm (this means not physically or mentally strong, especially through age or illness), the Canada Revenue Agency (CRA) provides tax credits. In some situations, this can help you financially in supporting your loved one. Consider this the CRA’s way of saying ‘thank you’ for being there for a family member in need.
There are however, certain implications and criteria you must meet to be eligible for these tax credits. Consider how some of the following might apply to your situation this year.
Caring about being a caregiver.
The Canada caregiver credit is a non-refundable tax credit that might be available to you if you have a relative who is dependent on you by reason of mental or physical infirmity. It used to be a requirement that the relative lived with you, but this is no longer the case.
What amount can I claim?
If you are not already claiming the spousal amount or the amount for an eligible dependant for your relative, the amount you can claim for a dependant 18 or over is $6,986 on Line 307. However, this is reduced by the relative’s net income over $16,405 and is completely eliminated if their income is $23,391 or more. For a child under 18, the amount is a flat $2,182 which is not reduced by their net income.
If you are claiming the spousal amount or the amount for an eligible dependant for your relative, you get an extra $2,182 added to the usual amount of $11,809. Because both of these amounts are reduced by your relative’s net income, this means that your claim will be completely eliminated if their net income is more than $13,991. However, if their income is between $7,005 and $23,391, you will get a supplementary amount on Line 304 to make sure you won’t get less than you would if you were claiming the amount on Line 307.
If you are supporting someone who is eligible for the disability tax credit and they cannot fully utilize it themselves because their income is too low, they may be able to transfer the unused portion to you. To do so, you will need to complete Section 2 of the relative’s form T2201 Disability Tax Credit Certificate providing details of your relationship. The relative must also depend on you on a regular and consistent basis for all or some of the basic necessities of life including food, shelter, and clothing.
While being a legal guardian and supporting a family member may have certain tax implications, it never hurts to consult a professional tax expert to understand how some of these implications might apply to you. Visit an H&R Block office near you to learn more about other credits and deductions you might be eligible for.