I know this has been discussed here before, but I’m having a hard time finding it. Simply put, will my CPP-D retro pay lump sum be counted as income on my 2018 return even though I will be forwarding that entire amount to my LTD insurer? I’m thinking yes?
Is the cppd lump sum for years before 2018?
If yes, you can have the income spread over the years it was for.
I would phone CRA.
Yes, I’d have it itemized for the months it should have been received (part of 2016, all of 2017, part of 2018). I’m considering getting someone to do my taxes for me for 2018, things are more convoluted this year for sure. My lawyer provided the breakdown and form for the LTD retro, which is great. I was told that the contingency fee paid to my lawyer out of my settlement could be used for tax purposes, but will have to look into that further.
It sounds very complicated, good luck.
Fees paid to a lawyer to recover LTD money are claimable as a tax deduction. The best practice is for your lawyer to provide you with a sworn statutory declaration (similar to an affidavit) that explains the information Rev Canada needs to know and attaches his or her invoice as an exhibit. We do this for all clients for both CPP disability and any LTD settlements that are taxable.
You will likely run into problems if you just send in the lawyers invoice without explanation.
Disability Lawyer with Resolute Legal
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Thanks very much, David - I have the detailed statement of account and breakdown of fees, but nothing showing as a sworn statutory declaration. I’ll check again but otherwise will request this from my lawyer.
My lawyer’s office has informed me that as long as I have their statement of account and the T1198 form, I should be good to go.