Are you among the many Canadians that travel each year?
If so, travel insurance should be a key element in your preparations. It's essential because it provides coverage in the event of an unforeseen accident or illness outside of your home province. But are you aware that it can also give you a tax advantage?
Although it's not a deduction that directly reduces your taxable income, travel insurance premiums related to medical expenses can give you a significant tax credit.
Understanding the tax credit for medical expenses
When it comes to your taxes and travel insurance, it's crucial to understand that it's actually a medical expense tax credit, not a direct deduction from taxable income. Here's what you need to know to take advantage:
For snowbirds and occasional traveler
Whether you travel frequently or sporadically, the medical portion of your travel insurance premiums qualifies as a medical expense tax credit. This credit can reduce your income tax liability.
The portion of your travel insurance that covers medical expenses may be considered an eligible medical expense by Revenu Québec and the Canada Revenue Agency. This means that a portion of the costs you incur for this insurance may allow you to claim a tax credit when you file your income tax return.
Evaluating eligible amount
It's essential to take a close look at your travel insurance policy to determine the portion of costs that relate to medical care. This is the portion that can be converted into a tax credit.
Remember that other benefits, such as trip cancellation, trip interruption, accidental death and dismemberment, and baggage insurance, are not eligible for the medical expense tax credit.
Document your expenses
While protection in the event of a medical emergency is the primary reason for purchasing travel insurance, it's comforting to know that you can also benefit from a tax credit. So, before you leave on your next trip, make sure you find out about the tax benefits of your travel insurance, and keep your receipts to show your accountant or tax advisor.
For more information on eligible medical expenses and tax credits, visit the Revenu Québec and Canada Revenue Agency websites.