As a senior in Canada, your filing situation looks a bit different than other groups. There are a number of tax benefits you are eligible for including a few that younger taxpayers don’t have access to, which means you have more opportunities to save on your taxes. We know that with so many additional credits and deductions to consider, filing your return can be a complicated and confusing process. Not to worry, TurboTax is here to help you easily navigate through your tax return.
Here are some important considerations you can make as a senior or retiree when filing, as well as the major seniors’ tax credits available that might apply to you when you file this season.
- Many seniors’ tax credits available that can apply to eligible taxpayers in Canada
- Recommended to apply for major tax credits with broad requirements
- Use tax filing software to simplify the process and automatically check for applicable credits for seniors
Are there any tax credits for seniors in Canada?
There are plenty of tax credits for seniors that you might qualify for, depending on your tax situation. We’ll list some of the more common options, but know that there might be additional credits and deductions available to you when it comes to filing your return.
Medical expenses can be a major part of your spending as you get older, and the costs that you haven’t been reimbursed for already can be claimed as expenses on your tax return.
There are many types of medical expenses that you can claim, from doctor visits and prescription costs, to assisted living devices like hearing aids. Things like air conditioning to improve your home’s air quality can also count as a medical expense when it comes down to filing your return.
Make sure to check out the CRA’s full list of which medical costs are deductible and which aren’t. You might be required to show proof for any expenses you claim, so hang on to your receipts and statements after you file your tax return.
If you’re 65 years or older at the end of the tax year, you can claim a non-refundable tax credit towards your federal taxes.
To qualify, your net income must be less than $39,826, and the amount you may claim varies depending on your income.
For your 2022 tax return, the age amount is $7,898. Since the only requirement for this credit is being above a certain age, it’s one of the easier tax deductions for seniors in Canada to claim. Learn more about the age amount here.
Tip: If you qualify for the age amount but you do not need it, you can transfer all or part of it to your spouse or common-law partner.
Pension Income Amount
“As people get older, they often stop working, meaning their income may be derived from a public pension plan, such as the Canada Pension Plan, or private pension plan,” said Randy Larson of Focused Bookkeeping in Vancouver, British Columbia, a certified bookkeeper with more than 17 years of experience.
For Quebec residents, you can claim a provincial age amount on line 361 of your return TP-1.
Eligible income may include pension or annuity income you received as payments for a pension or superannuation plan, payments you received from an RRSP, or payments from splitting your spouse/common-law pension.
It might also be a good idea to look into splitting or sharing your pension amount with your spouse or common-law partner. “If you are married or have a common-law partner, you may shift pension income from one partner to another so the family pays lower tax,” said Larson.
You can check out our additional resources for pension splitting and sharing to get a better idea of how it might apply to you.
Disability Tax Credit
If you or someone you know is 65 years or older and has a disability, you can apply for the Disability Tax Credit (DTC). This credit is meant to reduce the strain of extra spending on disability expenses. The maximum disability amount in 2022 is up to $8,870 .
Home Accessibility Tax Credit
If you’ve made improvements to your home to make it more accessible, then you can apply for the Home Accessibility Tax Credit (HATC). HATC is a non-refundable credit that you can claim for up to $10,000 in home improvement expenses that are associated with improving the accessibility around your home. For example, installing a stair lift, widening your doorways, or adding wheelchair ramps are all valid expenses for the Home Accessibility Tax Credit.
This credit doesn’t just apply to seniors 65 years or older; relatives who made these home improvements to support a senior citizen living with them can also claim this on their refunds.
Province specific tax credits
There are many provincial tax credits available to seniors who paid for ease of living or lifestyle improvements this year. Your eligibility depends on which province or territory you live in.
For example, the Seniors’ Home Safety Tax Credit is available in Ontario for any households with residents 65 years or older. It covers everything purchased for your household from handrails in showers and walk-in bathtubs to non-slip flooring and automatic garage door openers to help improve the home’s safety. It’s a fantastic seniors’ tax credit that gives you a good reason to commit to those otherwise expensive, necessary improvements within your home. If eligible, you may claim 25% of up to $10,000 in expenses, for a maximum of $2,500. This credit is available for the 2021 and 2022 tax years.
The Low Income Grant Supplements for seniors is available in British Columbia for Canadians 65 and over that reduces how much you pay towards property taxes. To qualify for the low income grant supplement for seniors you must:
Qualify for the home owner grant for seniors, Have a property with an assessed value over $1,975,000 and have an adjusted net income of $32,000 or less (including your shared-income partner’s income, if applicable)
If you’re 70 and over, you may qualify for the Senior Assistance Tax Credit You may be entitled to $800 if you had a spouse on December 31, 2021, who is also an eligible individual or $400 if you did not have a spouse on December 31, 2021.
Old Age Security (OAS) Pension
The Old Age Security (OAS) pension is for Canadians 65 years or older and is designed to help you financially throughout your retirement. It’s usually determined by how long you’ve lived in Canada as an adult, and gets sent to you as a monthly payment from the government.
If your income exceeds a certain amount ($81,761 for 2022), you may need to repay some of your OAS pension back to the government. This is known as the OAS Pension Recovery Tax, or OAS Clawback. This threshold amount changes each year.
There are a few different strategies to lessen the amount that you have to pay back, such as:
- Splitting pension with your spouse
- Using a TFSA to generate income that doesn’t get taxed
- Avoiding capital gains before you reach retirement
You can read our breakdown on how you can reduce the amount you need to pay on OAS Clawback here.
RRSPs can help defer your income when you’re earning the most money. The money you contribute and earn in this plan is sheltered from taxes until you withdraw it.
The most effective way to generate retirement income from your RRSP depends on when you retire, the value of your RRSP and the amount of any other retirement income you receive.
By selecting the right options when setting yours up, you can keep your tax expenses low while also generating more money for when you’re ready to retire.
Some of the ways you can convert your RRSP into income are:
- Setting up a Registered Retirement Income Fund, or RRIF
- Purchasing an annuity
- Withdrawing money from the RRSP when needed
Deciding between an RRIF and annuity or when to withdraw your funds depends on your financial situation, so it’s a good idea to go over your options to see what’s the best for you.
How do I make sure I’m not missing out on any seniors’ tax credits in Canada?
Filing your taxes can be complicated at times, especially in the current pandemic environment. With new measures, grants, and tax credits added by the government, you might find yourself overwhelmed by the increasingly large sum of new information.
To make sure you’re not missing out on potential deductions and claims, TurboTax has a variety of options to suit your needs. Our simple and easy software automatically asks you the right questions and uses your answers to figure out which credits you’re eligible for, no matter your situation.
Another reason to use TurboTax software is how it allows you to pull your information automatically from the CRA using the Auto-fill My Return service. Getting your tax details directly from them can be a great time-saver, and it makes sure that you don’t run the risk of making typos, entering in the wrong information, or missing key details when you submit your return.
For extra assurance, we recommend upgrading to TurboTax Live Full Service, where our tax experts will handle your tax return for you and ensure you get the maximum refund possible.
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