Are you among the many Canadians that travel every year? If this rings true for you, you are probably already aware of the importance of travel insurance during your travels. It protects you in case of an accident or unexpected illness that could occur while you’re outside of your province of residence. That's great, but did you know that you can deduct the cost of your travel insurance from your taxes?
Deducting your travel insurance from your taxes has a number of advantages. In addition to saving you money, it will also lower the amount of your taxable income.
While you should always consult a tax professional before making any major decisions regarding taxes, here are a few things you should know to help you maximize your tax deduction.
A Great Surprise for “Snowbirds”
If you have the habit of traveling several months out of the year, you are probably spending considerable money on travel insurance. Snowbirds are often unaware they can claim a tax deduction for part of these expenses. Don't forget to share this tip with all the snowbirds you know. They will surely appreciate it!
Travelers of all types, even those who travel only occasionally, can benefit from this money-saving tip. Whether you’re leaving for a day or a year, it is in your interest to take advantage of this tax strategy.
It's a double win to have travel insurance. Not only will you be covered while away, but you may also be eligible to receive a tax refund for a percentage of the premiums you paid. The medical portion of your travel insurance is deductible and counts as a recognized medical expense by the provincial and federal governments.
Thus, Revenu Québec and the Canada Revenue Agency consider the medical portion of your travel insurance to be a medical expense that is eligible for a tax credit. A reduction in your taxable income may be possible based on your income and other tax rules relating to medical expenses.
For information on all eligible medical expenses, visit the Revenu Québec website and the Canada Revenue Agency website.
How much can you put on your taxes?
You will need to understand your travel insurance policy in order to determine how much money you are entitled to claim on the medical portion. Make it a habit to thoroughly check the terms of your travel insurance. It will be helpful for you to know what is included and what is not included.
Your policy may consist solely of emergency medical coverage, including hospitalization. In this case, you can deduct the total amount from your travel insurance.
In addition to medical insurance, your travel insurance may cover other types of premiums.
Here are the other most common types of premiums that are not deductible from your taxes:
● Trip cancellation and interruption insurance;
● Accidental death and dismemberment insurance;
● Baggage insurance.
Therefore, these premiums are not medical expenses and are not recognized as deductible on your taxes. If your insurance includes premiums other than medical, you can deduct only the medical portion without the additional premiums.
Remember that if your travel insurance includes anything other than medical coverage, you cannot deduct the entire amount.
Get your tax receipt
In any case, asking a soNomad agent to obtain a tax receipt is essential. This receipt will provide you with the amount associated with the medical portion of your travel insurance, so you cannot go wrong.
Keep this receipt or these receipts and give them to your accountant or tax specialist when you file your tax return.
Even though the main reason for purchasing travel insurance is to protect yourself financially in the event of a medical emergency abroad, it is nice to know that you can also benefit from this deduction on your taxes.
What are you waiting for? Get in touch with a soNomad agent to arrange travel insurance before you leave for your next trip. Do not forget to insure your travels and deduct your travel insurance costs from your taxes. It's the best way to protect your health and your wallet!