Money and Taxes
One of the challenges of having a child with a disability is the extra expenses. In addition to increased child care needs (perhaps leading to a loss of income), we tend to have extra costs like therapies and diaper purchases longer than expected for a typical child. We also need to consider the future: will our children need help longer than we are around to provide it?
Fortunately there are some financial options and strategies for us. Here’s what you should look into after your child is diagnosed:
1. Apply for the Disability Tax Credit
To do this, you need Form T2201 (click here) to be filled out by your doctor. The second time I had a child evaluated for autism, I brought it along to the diagnosis meeting and the doctor filled it out there and then. Send it in and once you get a letter indicating your application has been approved, you can claim your child’s disability as a tax deduction.
You can apply for the tax credit to be retroactive to your child’s birth. You do that by filling out a T1 Adjustment Form for each tax year (up to ten) and sending it in. But you have to have the Disability Tax Credit approved first.
Once it’s approved, you will also automatically get a monthly Child Disability Benefit, which is a supplement to the Child Tax Benefit.
2. Apply for Caregiver Tax Credits in Your Income Tax
If you or your spouse are not working (or are working only part-time) in order to care for your child, there is a Manitoba provincial credit and a federal tax credit you can claim.
- The federal Canada Caregiver amount can be claimed once your T2201 form is approved.
- To get the provincial Primary Caregiver Tax Credit, you have to do a separate application, and you have to keep track of the days that you work through the year. The application form is here: Primary Caregiver Tax Credit (Manitoba).
3. Save Your Receipts
There are quite a few things that can be considered deductions for medical expenses when you submit your taxes. Among them:
- the cost of therapy received by a person who qualifies for the disability amount. The therapy has to be prescribed and supervised by a medical doctor, a psychologist (for a mental impairment), or an occupational therapist (for a physical impairment).
- the amount paid for you or a relative to learn to care for a relative who has an impairment in physical or mental functions and is a member of your household or dependent on you for support.
You can read the complete list here. According to the Revenue Canada website and a call made to Revenue Canada, you can claim speech or occupational therapy as a medical expense if it’s received by a person who is eligible for the disability tax credit (DTC), given by someone who is not the spouse or common-law partner of the person who is claiming the expense and who is 18 years of age or older when the amounts are paid.
The therapy has to be prescribed and supervised as per one of the following:
- for a mental impairment, by a medical doctor or a psychologist
- for a physical impairment, by a medical doctor or an occupational therapist
There’s a little uncertainty about the elegibility for this, so certainly call and check with Revenue Canada if you aren’t sure if your therapy costs qualify. To cover your bases it might be wise to get a note from a doctor indicating the therapy is necessary, and also to save any records indicating the therapies are not covered by your health insurance.
4. Seriously Consider Saving with a Registered Disability Savings Plan
This plan encourages families to save for their child’s future needs. Withdrawals cannot be made for ten years after the last contribution.
Here are some basics:
- For every $1 put in an RDSP account, the federal government will match it (if your family income is below $87,123) with up to $3! This is the Canada Disability Savings Grant.
- For people living on a low-income (less than $25,356), the federal government will invest $1000 each year for 20 years! This is the Canada Disability Savings Bond.
- After your child turns 18, his income determines whether he receives the Bond.
- Anyone can contribute to an RDSP – family, friends, anyone who wants to support your child. This gives people who want to help a way to do so!
- RDSPs offer some of the best returns on investment available. Your money will grow. It might even triple what is put into it!
- The RDSP is exempt from most provincial disability and income assistance benefits. The government will not claw this money back. (To find out how your province treats the RDSP, go to RDSP: Federal, Territorial and Provincial Benefits.)
- There are no restrictions on how RDSP withdrawals are spent.
5. Start a Registered Education Savings Plan.
How do you measure potential in a preschooler? Many of us have no idea of what the future holds for our children (actually, no one does). But it’s good to plan for success. A registered Education Savings Plan will provide financial support for a post-secondary education. It can be set up to benefit any or all of your children, depending on their needs and choices, and if it doesn’t work out that they continue their schooling, the money can be rolled into an RDSP.
- The lifetime RESP contribution limit is $50,000 per child
- The Canada Education Savings Grant (CESG) from the federal government may add to your RESP contribution, up to $500 per year, per child. If there is unused grant room from previous years, the CESG could be up to $1000 per year, per child through additional contributions. The CESG is payable until the end of the calendar year a child turns 17, and the maximum lifetime CESG payment is $7,200.
- Money in an RESP can be placed in mutual funds or other forms of investment to maximize growth.
6. Talk to your Family Services Worker
After your child’s diagnosis, you will be referred to a Family Services Worker. His or her job is to inform you about other supports that may be available to you. These include things like diapers, respite time, nursery school/daycare support workers, summer camps, and other programs or necessary items. What’s available depends on your child’s age and needs, so let your FSW know what your difficulties are. They are the ones who know what’s available and can connect you to the resources your child needs.
7. Start Thinking Long-Term
What are your child’s interests and skills? What might your child enjoy pursuing as an occupation? Are there ways you can build their skills and give them experiences in those activities?
As your child gets older, you’ll also want to consider what supports they will need and qualify for into their adult life. Your school’s resource teacher will be helpful in this regard. Be aware that most post-secondary educational institutions have supports available for students with disabilities.
For information about adult supports, employment and income assistance, this section of Autism Spectrum Disorders Manitoba will be helpful.
We all know planning for your children’s future is important, and can sometimes be overwhelming. But the things we start now can have a long-term impact.
This article was first published in 2014, and has been updated.