It’s not easy living with type 1 diabetes. Most individuals with type 1 diabetes do not consider themselves disabled but carefully manage their condition. However, individuals with diabetes face significant out-of-pocket medical expenses.
Did you know that people living with Type 1 Diabetes can qualify for the Disability Tax Credit (DTC) and Registered Disability Savings Plan (RDSP)?
The Disability Tax Credit has helped many diabetic patients reduce the amount of money they must pay out of pocket for their medication, devices, and supplies. It can also assist individuals with diabetes in covering the cost of related expenses such as travel to medical appointments or equipment costs.
Recently, the Government of Canada has finally recognized this by expanding eligibility for the Disability Tax Credit and the Registered Disability Savings Plan to people with type 1 diabetes.
We’ll answer the following questions:
- What is the Disability Tax Credit?
- What is a Registered Disability Savings Plan?
- How can I learn more about accessing the DTC and opening an RDSP?
What is the Disability Tax Credit?
The purpose of the DTC is to help reduce the income tax that people with mental or physical impairments (such as type 1 diabetes) or their family members have to pay.
To be eligible for the DTC, you and your primary physician must fill out form T2201, attesting to your type 1 diabetes and explaining how it impacts your health.
You may be eligible to have the DTC applied to tax returns for prior years (up to 10 years maximum) if you spent fourteen hours a week maintaining or treating your diabetes.
You can claim the DTC for yourself, your spouse, or a dependent.
What is a Registered Disability Savings Plan?
An RDSP is a long-term savings plan, also known as a Registered Disability Savings Plan. You (or your dependent) must be approved for the DTC before you are eligible to open an RDSP. In addition, the beneficiary must have a valid social insurance number (SIN).
The purpose of an RDSP is to help people living with physical restrictions or life-long medical conditions (such as type 1 diabetes) save for their future. You can open one for yourself if you have type 1 diabetes or for a dependent with type 1 diabetes.
The RDSP is similar to an RESP in that the government will help match your contributions – up to 300 percent! However, the government’s contribution amount will be based on your adjusted net family income. In addition, all recipients are eligible for the Canada disability savings grant, and low-income recipients are also eligible for the Canada disability savings bond.
No taxes are owed on any growth in the RSDP until the beneficiary makes withdrawals from the plan.
How can I learn more about accessing the DTC and opening an RDSP?
Dealing with the government can be overwhelming, but we’re here to help! We can advise you on applying for the DTC and applying it to previous tax returns if you’re approved.
We can also explain the best way to set up an RDSP. Reach out to us today to learn more!
