Medical Deductions – what are they?
With medical expenses having a reputation of adding up very quickly, they can be onerous. There is relief though. This comes in the form of medical deductions from SARS and although you will not get everything back, something is better than nothing.
There are 3 source codes on your tax return (ITR12) that relate to medical payments made by you and or your medical aid. Some background first. This assumes that you are a member of a medical aid and have claimed from that medical aid as well as paid some extra. You will need your medical aid tax certificate to complete these medical deduction amounts.
Lets explain them:
Source code 4005:
- The medical aid scheme to which you contributed, the name and your membership number. This can be more than one.
- State the contributions you made to the scheme.
- There is also a place for the contributions made for an immediate family member who is dependent on you for family care and support.
- This is critical for a medical deduction claim
Source code 4034:
- This is the amount for all qualifying out-of-pocket medical expenses.
- This code represents all the expenses that you paid for but did not submit to your medical aid.
- These are not reflected on your medical aid tax certificate.
- These are expenses not claimed from medical aid.
Source code 4020;
- This amount is reflected on the tax certificate as not recovered from medical aid.
- These are recorded by the medical aid but cannot be claimed as out of pocket expenses. They have already been entered into the system to be claimed.
Important tip: whatever code the expenses falls into, be sure to keep ALL the invoices AND proof that you paid them.
BUT WAIT- THERE IS MORE!
- SARS also give you a medical Tax credit EVERY MONTH.
- This is a fixed amount per person registered to a medical aid scheme.
- This is given to the main member for themselves and the dependants on the policy.
- eg: I have my family on “my” medical aid, 2 kids and my wife and I, I receive the tax credit for all of them to be claimed in my tax return
- This is a credit, not money paid to you monthly.
- To be claimed, you must submit a tax return.
To understand more about this topic or help to submit returns and claiming the above, please contact us.
This post was updated on 18th February 2021