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Medical expense tax credit calculator


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#1 Rick

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Posted 24 January 2005 - 02:44 AM

IVF medical expense tax calculator

This is a preliminary look at the calculator I'm working on. It compares both spouses and estimates the tax credit available (only one can claim). It also uses the BC tax rate which is lower than most other provinces. The Federal rate is 16%. The BC rate is 6.05%. Thus 22.05% overall tax credit for allowable expenses for BCers. In Alberta the provincial rate is, I believe, 10%. Thus Albertans would save 26% on allowable medical expenses. Note allowable expenses means expenses minus 3% income (maximum $1.813 in 2004 - I believe the max increases to $1,848 in 2005).

In some cases it is possible to get a refundable tax credit on top of the non-refundable. So far this has not been included. The calculator will be expanded to include that and more items in the future, i.e. travel/accomodations. This is a basic/preliminary version.

Note - A non-refundable tax credit reduces the amount of income tax you owe (or your spouse). However, if the total of these credits is more than the amount you owe, you will not get a refund for the difference. I.E. if you anticipate owing only $200 tax a $1500 tax credit would only save you 200 tax dollars (the rest is non-refundable). The calculator does not know how much tax is owed by you or your spouse.

There is also a 12 month rule, i.e. a 12 month period ending in the year you are claiming for. You can claim medical expenses paid in any 12-month period ending in 2004 and not claimed in 2003. You decide the 12 month period. E.G. Could be July 1 2003 to June 30 2004 (can't be, for example, Sept 1 2003 to December 31 2004 - that's more than 12 months). If you had cycles in September 2003, April 2004 and November 2004 a claim strategy could be September 1 2003 to August 31 2004, then next year a claim for September 1 2004 to August 31 2005 (claimed at tax time April 30 2006). The 12 month rule must be considered when you make a claim.

*wiping my brow* It's almost impossible to talk about taxes without making reference to a host of tax rules. Your comments and suggestions are always welcomed.

Rick

#2 Kulta337

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Posted 24 January 2005 - 11:51 AM

Rick,
So the credit is non-refudable?? I pay the highest tax bracket out so I get a little return at the end of the year - does that mean none of my expenses will count as $$ for me???
Thanks,
K

#3 Rick

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Posted 24 January 2005 - 08:55 PM

Rick,
So the credit is non-refudable?? I pay the highest tax bracket out so I get a little return at the end of the year - does that mean none of my expenses will count as $$ for me???
Thanks,
K

<{POST_SNAPBACK}>

Hi K. You will be fine. The verbage is confusing. The calculation is done before you factor in your withholding tax, i.e. taxes you prepaid at source or by schedule during the year. Once the taxes already paid are factored in you will know if you get a refund or not.

The non-refundable means you have to have tax payable to offset the credit. For example, if someone makes $8000 in one year they essentially have no tax payable, since they are under the basic exemption limit. They can earn the first $8000-ish tax-free. They would not receive the tax credit as a refund because they didn't owe any tax from their earnings. It can only be offset/deducted from tax payable.

Did you try the calculator and compare you and your spouse? If you both made more than approx $60,400 individually (e.g. $1,813/.03) then it might not matter much who claims it.

Rick

#4 Kulta337

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Posted 25 January 2005 - 11:02 AM

Thanks Rick!
K

#5 CountryGal

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Posted 26 January 2005 - 03:11 PM

Rick,

I am not good at this type of lingo... so can you help me out.
Here are is an example and I am just wondering if you can tell me what my return would be... If I made $45000 gross this year and we spent $6000 worth of medical costs (lets just say I have receipts) what would my return be???

I am a dummy with this stuff...... :bang:

C-gal :beach:

#6 Rick

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Posted 26 January 2005 - 10:59 PM

Rick,

I am not good at this type of lingo... so can you help me out.
Here are is an example and I am just wondering if you can tell me what my return would be... If I made $45000 gross this year and we spent $6000 worth of medical costs (lets just say I have receipts) what would my return be???

I am a dummy with this stuff...... :bang:

C-gal :beach:

<{POST_SNAPBACK}>


Here is what the calculator shows:

Net Taxable Income ................................$45,000.00
Medical Expenses ...................................$6,000.00
Less 3 % of Income (Max $1,813.00)..........$1,350.00
Allowable Medical Expenses .....................$4,650.00
Medical Expense Tax Credit ......................$1,025.33
(using 16.00% Federal and 6.05% BC Provincial tax rates)

If you will be taxed on $45000.00 income you will be able to deduct approximately $1,025.33 from those taxes payable.

This is different from, say, an RSP contribution. An RSP contribution reduces your taxable income, then you determine how much tax you owe based on that reduced income level. With the non-refundable tax credit you figure out how much tax you owe then deduct the amount directly from the tax (but that calculation can't, in itself, put you in a refund position). Later in your tax return you then show how much tax you've already prepaid (i.e. payroll deduction) and it too gets deducted from your tax payable. If at that point you are owed money you get a refund.

Clear as mud?

#7 CountryGal

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Posted 27 January 2005 - 11:10 PM

Rick,

Thanks... it's clearer now... I still don't get it ALL...
Not my area of expertice...

C-gal :beach:

#8 Tina

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Posted 02 August 2007 - 04:04 PM

Hi! I realize this thread is quite old but I thought I'd ask a few more questions. Basically I'm looking for a list of "allowable" medical expenses for a typical IVF procedure....so it would look something like this in my case:

IVF Cycle Cost - $5050
Remote IVF Admin Fee - $250
IVF Counselling Session - $200
Donor Sperm Handling Fee - $100
Donor Sperm - $1300
ICSI - $1500
Embryo Cryopreservation & 1 yr Storage - $500
Prescription Drugs - $3500 (less insurance coverage)
Travel to Clinic Location for Monitoring and Procedure (17 days @ Revenue Canada Simplified Method) - $3450

Which of these are covered??

Thanks in advance!

Tina