Veterans have volunteered to give their lives for the country, and as a small token of appreciation, the government offers a number of special programs and credits to help them and their families. If you do tax prep for any veterans or their surviving family members, you may want to see if they can qualify for Canadian Forces Income Support or the disability supports deduction.
Who Qualifies for CFIS?
To qualify for the CFIS tax-free monthly payment, your clients must be low-income veterans who were claiming the Earnings Loss Benefit in the past but no longer qualify. The Earnings Loss Benefit is a program for veterans of the Canadian Armed Forces who are receiving Veterans Affairs Canada rehabilitation services, and this benefit ensures their current income is at least 90% of what they were earning while in the armed forces. Additionally, veterans must be under the age of 65 and looking for work.
The surviving spouses and children of deceased veterans may also qualify. Again, they must have been previously eligible for the Earnings Loss Benefit, or their spouse or parent must have been claiming CFIS at the time of their death.
How Do Your Clients Apply?
Your clients can apply directly through the VAC office or the Integrated Personnel Support Centre. They can also apply online with MY VAC Account. If you want to help them apply, you can print out the application, fill it out, and mail it to the VAC.
How Does Income Affect Benefits?
As of 2018, single veterans can earn up to $1,132.26 without seeing a reduction in benefits. Veterans with a spouse or common-law partner can earn an additional $586.85 per month, and you can also add $283.07 per child to this threshold. Surviving spouses can have monthly income up to $1,132.26, and orphans can earn up to $606.77.
If your clients’ income passes these thresholds, their benefits may be reduced. This includes earned income, self-employment income, and income earned from rental properties, but your clients may be able to claim some deductions against these amounts. Of course, they can deduct business expenses from their income, and if they have rental income, they can deduct the expenses they incur as a landlord. They can also claim the following deductions:
- Employment expenses such as travelling expenses and costs related to being a salesperson
- Canada Pension Plan contributions
- Employment Insurance premiums
- Contributions to registered retirement plans
- Rent paid by clergy for their residences
- Union dues
- Contributions to the Teacher’s Exchange Fund
- Legal fees incurred trying to get salary from old employers
- Salary and disability payment reimbursements
Disability Supports Deduction
Regardless of whether your clients qualify for the CFIS benefit, you may want to look into the disability supports deduction. Unlike CFIS, this is not a program run through the VAC. Rather, it’s a deduction that you can claim on your clients’ tax returns.
The deduction is for eligible medical expenses such as attendant care expenses and job coaching services. To qualify, your clients must have a physical or mental impairment, and be working, going to school, or doing grant-based research.
To work out the amount of your clients’ deduction, use Form T929 (Disability Supports Deduction). Then, transfer the relevant number to line 215 of their general income tax return. Keep in mind that although this deduction is great for injured vets, it’s also available to others who have a qualifying impairment.
In addition to talking with your clients about these programs, you may want to mention using the MNET to apply for jobs. Providing your clients with tips and information about these types of programs can help make your accounting services more valuable, and customer satisfaction is key when working with people.