Toronto Star

Apr 23, 2009 04:30 AM

James Daw

There is still time to squeeze the most tax savings out of your 2008 tax return. So here are some answers to last-minute questions posed by Toronto Star readers.

Q: Will it be possible to claim dental braces under medical bills or expenses?

A: Yes, orthodontic work including braces is an eligible medical expense. Unfortunately, expenses equal to the first 3 per cent of a person’s net income, up to $1,962, will not be covered.

So have the spouse with the lowest income claim all medical expenses, and choose a 12-month period ending any time during the tax year when you would have had the most medical expenses. You can search the Canada Revenue Agency website for a list of all eligible medical expenses.

Q: My partner has failed to file tax returns since 2001. She would like to catch up but she is unemployed. She was in graduate school from 2000 until 2006. What evidence is needed to successfully qualify for the taxpayer relief provision?

A: The details are all set out at First steps to apply for relief from interest and penalties: Gather records, complete the late tax returns and get in the application before the taxman comes knocking, and before the 10-year limitation period expires.

With all of the tax credits available to students, she may qualify for a refund at some point.

Q: I returned a quarter of my minimum 2008 withdrawal to my registered retirement income fund under the one-time opportunity you wrote about on April 2. Now how do I complete my tax return using tax preparation software?

A: Benjamin Gao of CuteTax Inc., provider of Tax Chopper online tax software, suggests users take advantage of the search function to find either “other deductions” or “line 232.” Click on the page, look for a box that refers to other deductions, and enter the amount of money you returned to your RRIF in the space provided.

Some people may have withdrawn money from a locked-in account and, if under the age of 72, contributed the money to an RRSP. In that case, report the contribution as an RRSP deduction on Schedule 7, a form you should find in the interview set-up. If you are using software that shows a replica of the tax forms, go directly to Line 232 or to Schedule 7.

Q: My wife and I and have a combined taxable income of $69,000. I applied for the Ontario senior homeowners’ property tax grant on form ON479, even though I realize our income is too high for the existing property tax credit. Will we get anything as a result?

A: Your combined net income – which would be higher than your taxable income if you were eligible to claim net capital losses or other deductions – is too high to qualify for even a portion of the grant.

The maximum grant of $250 ($500 starting next year) is only available to those homeowners who will turn 65 this year who have a net income of less than $45,000 as a couple or $35,000 as a single person.

A partial grant is available to couples with net income of less than $60,000 and single homeowners with net income of less than $50,000. Here is a link to a bulletin that includes a chart with examples of how much of the maximum $250 grant is payable at different levels of income:

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