Preparing for your 2010 Tax Returns

The Tax Season or Time has been over for a month now. While the experience is still fresh in our minds and we are only five months into 2010, I thought it would be a good time to give you a few tips for the next one.

Have a “special” folder for all the receipts that can be used towards a tax credit. This comment is aimed at the younger readers since I am sure most of you have one these already. In this folder put the receipts that relate to the following:

Medical Expenses
Receipts for prescriptions, dental work (teeth cleaning, etc), eye exams, glasses, contacts, orthotics, physiotherapy, massage therapy, chiropractic and naturopathic visits. You can claim expenses as long as they are from a regulated profession.

If you travel to Cranbrook to see a doctor, you can claim the mileage. Write down the date of your appointment and name of your doctor and put it in the folder. You can claim the mileage for medical treatment that is more than 40 kms away from your home.

If you travel to Calgary or Lethbridge, you can claim the mileage and meal and hotel expenses. In this case, the medical treatment available needs to be more than 80 kms away from your home.

Premiums paid to Blue Cross and Manulife, for example, are eligible.

Unfortunately, these expenses can only be used as a credit if they exceed 3% of your net income. Hold-on to these receipts if you cannot use them because you may be able to the following year.

Any unclaimed receipts for a 12 month period ending in the tax year can be used. What does this mean? Here is an example. I wasn’t able to deduct my prescriptions and dental expenses for the 2008 or 2009 calendar year because they were less than 3% of my net income for each year. I looked at my receipts and found that most of my expenses were incurred during the 12 month period of June 1, 2008 to May 31, 2009 (ending in the 2009 tax year) and they exceeded 3% of my net income. So I go a credit! It also could have been for the period of December 1, 2008 to November 30, 2009 as long as they have been unclaimed and the period ends in the tax year that you are filing.

Children Fitness Expenses
The maximum is $500 per child and does not include the cost of the equipment purchased; it is only for the cost of the program. Also to qualify, the program must be ongoing either a minimum of eight consecutive weeks with a minimum of one session per week or in the case of children’s camps, five consecutive days. Had my daughter wanted to be in the eight week program at the ski hill this winter, I would have been able to claim the expense but no she only wanted to be in the four week program, so I wasn’t able to claim the cost of her ski lessons.

You can claim them for the current year plus any unclaimed donations made in any of the previous five years. If you have a low income for a year, keep your receipts and use them for a year when your income is higher.

Also, please write down any questions you may have throughout the year and put them in the folder. At the end of the year, review these questions, you may have answers for some by then or may need to speak with a tax professional.

I recommend you have a look at the CRA website next spring before you file your return because the eligible expenses may change for 2010. You never know what CRA may do!