Bifalgorithm post

So if you spend $10,000 on medical expenses, how much do you actually get back? It's not $10,000, nor is it 30%. In Canada, medical expenses give you a non refundable tax credit. That means it reduces the tax that you owe, but not on a dollar for dollar basis. And it's not cashback. It's based on a formula with a threshold and you can only claim any amount above the threshold and the threshold is calculated as 3% of your net income, the lesser of 3% of your net income or roughly $2,800, which is imposed by CLA. Now let's use an example. Let's say you earned $60,000. 3% of that is $1,800 compared to the CLA imposed amount of $2,800. Obviously the threshold is $1,800 because the lesser amount becomes the threshold. So $1,800 and take $10,000 medical expenses, $10,000 minus $1,800. The $8,200 is the actual medical expenses that needs the qualification. But that isn't what you are claiming. Unfortunately, you take $8,200, the Qualifying Medical Expense Amount, multiply by 20%, being the lowest tax bracket tax rate, which results in $1640, and that $1640 is the non-refundable tax credit that you can use to reduce your personal tax owing. Three quick tips here. Claim medical expenses on the lower income spouse, and remember, is a non-re refundable amount. So if you have no tax owing at all, you don't get any tax benefit. And obviously the more income that you make, the higher the threshold and the less you can claim. If you're a small business owner out there, you may be able to structure medical costs through your corporation and deduct them as business expense. And that will give you very different tax results.

So if you spend $10,000 on medical expenses, how much do you actually get back? It's not $10,000, nor is it 30%. In Canada, medical expenses give you a non ref…