How to calculate allowable amount of medical expenses for other dependants at line 331 - an example - 2012

When you claim medical expense credit for other dependants at line 331, each dependant's allowable amount has to be calculated separately. You can only claim the expenses in excess of the lesser of $2,109 and 3% of the dependant's net income, whichever is less.

Example [For year 2012 tax return]

John and his wife Helen live with their son Michael who is 19 years old. John's parents, Steve and Sara, depend on them for support. When they were filing their tax returns, they added up the medical receipts. Here are the amounts of eligible medical expenses: $200 for Michael, $800 for Sara, and $400 for Steve.

Michael made no income since he is a full-time student. Sara's net income was $10,000 and Steve net income was $15,000.    

Here is the calculation of the allowable medical expense amount:

  • Michael: all eligible medical of $200 is allowed since net income is zero.
  • Sara: 3% of her net income is $300. It is less than $2,109. So the allowable amount is $500 ($800 - $300).
  • Steve: 3% of his net income is $450. The allowable amount is 0 because $400 medical expense is lesser than $450.

Total medical expense amount is $700 ($200 + $500 + 0). Either John or Helen can claim this amount at line 331 regardless of their income. It gives a tax saving of $105 at tax rate of 15%.

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