How Does the Disability Tax Credit Work?

If you have a disability, you may qualify for the disability tax credit (DTC). The credit is designed to assist individuals with disabilities or the people who support them reduce the amount of income tax they must pay. In addition to being able to lower your income tax to allow for the payment of costs necessary to take care of yourself or a loved one with a disability, your or your loved one may be eligible for other programs. These programs may be available from territorial, provincial, or federal agencies (i.e. working income tax benefit, registered disability savings plan, or the child disability benefit).

Once you are approved, you can claim the tax credit on your tax return. If you are under the age of 18 years, you may also qualify for an additional credit. If you have a dependent, spouse, or common-law partner who is eligible for the credit, that person may transfer the credit to you under certain circumstances. Depending on your relationship with the person (i.e. yourself, dependent, spouse) you must claim the credit on a different line on your tax return.

The maximum credit and supplement changes each year. For 2016, the maximum amount you can claim as a disability credit is $8,001, with an additional $4,667 for persons under the age of 18 years. However, you may also be eligible to claim credits for previous years on the current year’s tax return if you were just approved for the DTC. It can be complicated when trying to decide who should claim the exemption, what amount to claim, and where to put it on your tax return. A professional can help you decide the best way to take maximum advantage of the DTC.

Am I Eligible for the Disability Tax Credit?

You can use the list of questions available on the Canada Revenue Agency’s website to see if you might be eligible for the credit. However, to determine if you are eligible to claim the tax credit, you must complete form T2201 Disability Tax Credit Certificate. You must complete Part A of the form yourself, and your medical provider must complete Part B of the form. Once the form is complete, it must be filed with your tax centre.

What Happens After I File My Application Form?

Your application will be reviewed to determine if you are eligible for the DTC based on the information you and your doctor provided. The CRA may request additional information. Every case is unique so the process for approval or denial may be slightly different from another person’s experience.

If you are approved for the DTC, you can begin claiming the disability credit as applicable under the tax laws. However, if your application is denied, you can request another review if you have additional information or you can file a formal objection. The deadline for filing a formal objection of a denial is 90 days after the notice of determination.

Do You Need an Ontario Disability Lawyer?

The amount of money the disability tax credit can save you can be substantial, depending on your situation. It is important that your application is given the proper consideration and the CRA makes a correct determination. Having an experienced lawyer help you with the application and provide guidance throughout the process can ensure that you are treated fairly. A lawyer also has experience filing applications and appeals and can reduce the risk that you make a mistake that delays your claim or results in a denial of the claim.

The team of lawyers at Diamond and Diamond help individuals and families seek disability benefits. Call our 24/7 injury hotline at 1-800-567-HURT or visit our website to speak to someone now. We offer free consultations and case evaluations.

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