DON’T FORGET TO CLAIM MONEY YOU PAID INTO HEALTH PLAN

The merits of tax-filing as a couple rather than individually as you enter the retirement phase of your lives, and useful websites for investing in the stock market, were topics raised in the last of our letters from readers. Here’s what they wanted to kn

Q: “My husband and I both retired this year and always filed our income tax individually as singles with no dependants. He’s 65 (since September), I’m 63. We both worked until midyear, earning about $21,000 apiece. I no longer have income, he gets an employer pension, Old Age Security and Quebec Pension Plan now. I’m waiting until 65 for my pensions because of the penalties. I also have RRSPs. I still contribute to my former employer’s medical/dental plan and will do so until age 65. My husband is now on the government prescription-drug plan. Our medical expenses while working could never be declared because the amounts not covered by our health plans (about 20 per cent on prescriptions) were never that high. Should we continue filing our taxes as singles or would it make sense now to join forces?” A: For starters, it sounds like you’ve missed claiming the largest deductible medical expense that most Quebecers have — their group health plan. This may be the most misunderstood of all personal tax deductions. The health and dental plan you pay for through work often runs into the thousands of dollars, and it’s an eligible medical expense. On the federal tax return, you claim the amount you paid (Box 85 on the T4 tax slip). On the provincial tax return, you claim that amount AND the amount your employer paid (Box J of Relevé 1), since Revenue Quebec considers it a taxable benefit. That’s on top of any out-of-pocket expenses for prescriptions and other services not covered by the plan. Furthermore, as a couple, you have the option of lumping your medical expenses on one partner’s tax return. That’s particularly advantageous if it’s claimed by the lower-income spouse on the federal return. The good news is that if you didn’t claim the medical expenses you were entitled to all these years, you can submit requests for federal and provincial tax adjustments going back 10 years. As for the joint declaration, Caroline Nalbantoglu of CNal Financial Planning says there are advantages to filing jointly. The fact your spouse is 65 means he can split as much as 50 per cent of his employer pension income with you, which could represent significant tax savings both federally and provincially. Charitable contributions can be lumped on one person’s return to maximize the benefit. If your income level (even after pension splitting) is low, it might be advantageous as well to make moderate pre-retirement withdrawals from your RRSP while your tax rate is low and before you start collecting OAS and QPP cheques.

Q: “I’m interested in the stock market but I don’t really know where to go for information. Is there a website you recommend?” A: The most useful and practical one I’ve found for tracking stocks and getting information is the Toronto Stock Exchange’s site, tmxmoney.com. It gives you timely stock quotes, financial reports, news (including archived news relating to specific companies), updates on commodity prices, and currency exchange rates. You can also call up the dividend history of a company or consult charts showing the evolution of its share price over time.

This is the final instalment of the tax strategy column dealing with reader questions.

Thanks to Gazette readers for a steady stream of interesting queries over the past decade. Sorry we couldn’t answer them all. Thanks, as well, for the constructive feedback, and to all the experts who so graciously supplied the answers.