Eligible medical expenses & non-taxable LTD income

Hello,

I am new to this forum and grateful to have found you. Hoping someone might be able to answer my questions around medical expenses for tax purposes:

I’ve been on LTD for 2 years now and the income is not taxable. On my tax returns, I did not include eligible medical expenses because my tax payable was so minimal that claiming medical expenses had no impact. In other words, from a tax perspective my medical expenses appear to be a sunk cost.

I’m now wondering, should I have included the eligible medical expenses on my tax returns regardless? Just to have them in there for information purposes. What are the benefits/risks? I have researched a ton and haven’t found a clear answer.
I would need to file a T1-ADJ and submit all the support to CRA in order to do so. Is it worth the effort?

What else might I be missing in this situation (non-taxable disability income but high medical costs) to help me financially? All this CRA stuff is so complicated.

Thanks kindly,
James

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I don’t see any reason to.

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I don’t include medical expenses unless it will reduce my taxes. I did not include my medical expenses in my 2023 return because my tax was zero. Back in 2022 I had to pay tax so I included my medical expenses to reduce my tax.

I keep all my medical receipts in case my LTD provider wants to see them.

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Thanks for the reply, much appreciated

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I’m not an accountant so this is not tax advice but if you have a spouse or common-law partner, you can have that person claim your medical expenses under their tax return. It will reduce their payable taxes or maybe result in a refund.

Last year I had zero income as my LTD is non-taxable, but I had a ton of medical expenses. When my accountant did my taxes recently, he added all my medical expenses onto my husband’s tax return. ie. my accountant combined my husband’s medical expenses with mine, and entered the total amount onto my husband’s tax return. If you file your taxes yourself, I’m not sure about the T1-ADJ and whether it would be worth the effort. I prefer to pay an accountant to save me the headache of all this stuff.

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Thank you for the info, glad to see my thinking is on the same track. I realized after posting that I was wanting confirmation because my experience with disability insurers thus far is you never know what they’ll try next.

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Thanks sunrise, I don’t have this situation but it’s really good info for others. I’ve come to the conclusion it’s probably worth finding a tax accountant myself. When you’re struggling with medical issues, I can tell you sitting on the phone with CRA doesn’t help

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I don’t think there would be any risks…I mean your insurer would see that you have enough money for various medical costs but that is irrelevant to their decision on whether to keep approving you for LTD or not.

I honestly can’t be dealing with the stress of doing my taxes or talking to CRA on the phone either! Unless you’re good at this kind of stuff, I do think it’s worth finding an affordable and reliable accountant in your province. All the best.

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Insurers don’t see tax returns.

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You’re right, they don’t. I was thinking more along the lines of if your insurer knows (not from your tax return but other sources of information) you are getting all kinds of treatment which could be costly. Even if they knew it wouldn’t matter, was my point. But like you said, insurers don’t check your tax returns so there shouldn’t be any risk that I can think of…

This is a bit off topic. Keep good records of all your doctor appointments. LTD once requested all the dates of my doctor visits. To have concrete proof I have been requesting a Statement of Benefits from my provincial healthcare. It is no cost and it lists all the doctors I saw during the past twelce months.

Actually thats not true. LTD requested income tax returns from a friend of mine last year.

From your friend, not the CRA?
What reason did they give for wanting to see them?
I don’t see why I should comply.
I’d like to hear what @David_Brannen thinks. :slight_smile:

Probably checking for income that they’re allowed to deduct from the LTD payments.

That’s pretty offensive to me. :slight_smile:

I would recommend including all possible deductions. The reason is that sometimes you can get re-assessed on past years taxes if you get a retroactive payment of taxable income. For example, CPP disability benefits. If you are paid these you will be taxed retroactively and the tax deductions you mention might be of use in that scenario.


David Brannen

Disability Lawyer with Resolute Legal

The response posted above is based on the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with a lawyer, fully explain your situation, and allow the lawyer enough time to research the applicable law and facts required to give an adequate opinion. The basic information provided above is intended as a public service only, a full one-on-one discussion with a lawyer should be done before taking any any action. The information posted on this forum is available to the viewing public and is not intended to create a lawyer client relationship with any person. If you want one-on-one advice, please click here to request a free consultation or call toll free 1-877-917-7050 to speak with a member with our disability claim support team.

I would need to know more details. LTD insurers can’t request your tax returns without your approval. They would never ask for tax returns form a friend, unless you perhaps gave them permission because the friend did the tax returns for you and has the records. Like others have said in this thread, LTD wants to see tax returns to verify all income sources.


David Brannen

Disability Lawyer with Resolute Legal

The response posted above is based on the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with a lawyer, fully explain your situation, and allow the lawyer enough time to research the applicable law and facts required to give an adequate opinion. The basic information provided above is intended as a public service only, a full one-on-one discussion with a lawyer should be done before taking any any action. The information posted on this forum is available to the viewing public and is not intended to create a lawyer client relationship with any person. If you want one-on-one advice, please click here to request a free consultation or call toll free 1-877-917-7050 to speak with a member with our disability claim support team.