Medical Expense Credit - From Rags to Reasonable

*I am not a tax professional. This is meant to be an educational tool and NOT a recommendation. Each personal situation is different and there’s a lot of grey area in self-employed deductions. If you have questions (even just little ones) … talk to a tax expert.*

If you’ve been keeping up with the blog over the last year you’ll know that I spent insane amounts of money on my teeth in 2015.

In fact, it was my biggest non-business expense (more than my housing costs).

Personal Spending 2015

And yes… that was after dental insurance, of which I have a minimal amount. #humblebrag

So, now that it’s tax time I found a way to turn some of that excessive spending into a tax credit!


… and it’s not just for dental, it’s for a whole bunch of medical expenses!

What is the Medical Expense Credit?

It’s a non-refundable tax credit for people who have had significant medical expenses. For single folks … they can just use their own medical expenses, but if you have dependants (a spouse or kids) you can claim their medical expenses, too!

This credit only pays off if you have quite a bit to claim. If you’ve only got a few hundred dollars of expenses… it probably won’t be worth it.

Remember that this is a CREDIT, not a deduction. That means that it gets applied directly to the taxes that you owe…

Need a brush up on Tax Credits? Check this out!

What qualifies as a ‘medical expense’?

  • medical and dental services
  • nursing home care services at home or in an institution
  • ambulance services
  • glasses/dentures/hearing aids
  • prescription drugs

For a full list of things that qualify go HERE.

How does claiming the credit work?

Here are a few things you need to know if you want to claim this credit:

  • You need receipts. (#taxfact)
  • You can claim expenses in a 12 month period (it doesn’t have to be the calendar year)… so pick the 12 months that are most advantageous, as long as they end in the current tax year – if you’re confused about that… talk to an accountant.
  • There’s no maximum to how big this credit can be (isn’t that nice).
  • You can’t claim an expense that was reimbursed. If an insurance company paid you for it already… don’t claim it.

How much do you get?

I told you that this credit is really only good for substantial amounts. So when you’re calculating you have to look at a few numbers:

  1. What are your total medical expenses?
  2. What is 3% of your NET income (that’s income after all the deductions)?
  3. $2,208 (the set max for the 2015 credit)

Got those?

Okay… so now take a look at your #2 and #3 numbers

Take the lowest one.

Subtract that amount from your total medical expense!

The rest of that amount is eligible for the tax credit. If you don’t have an amount left… this credit probably isn’t for you.

The remaining amount gets a 15% federal credit AND a provincial credit (Ontario is 5.05%).

How I found my total medical (read: dental) expense credit:

I don’t have my exact numbers (I’ll be going through that later today), but I’ll give you some general ones so that you can understand how it works.Medical Expense Credit - From Rags to Reasonable