Are Moving Costs Tax Deductible in Canada?
Moving is expensive, but you may not be aware of the fact that some of the costs associated with moving might be tax deductible in Canada. If you change your place of work or studies and some requirements are met, you can claim several expenses. Other losses can be related to transportation and of temporary housing. In this articke, we’ll discuss the details of who can claim these expenses, which costs are considered allowable and how to report these costs when completing the tax return. This guide will assist you to spend less when following the CRA guidelines.
Who Can Claim Moving Expenses?
To claim moving expenses in Canada, you have to meet certain conditions. First of all, you have to get to your new job or school. Your new home should be at least one half the distance of your previous home to your workplace. This rule applies to all moves, either from within Canada or from any other country. Here are the key points to consider:
- It requires that you are either employed or a business person.
- You have to work and generate income at the new place of work.
- It is also possible for full time students who have to move for school to claim for expenses.
- If it falls under these categories then you can begin receiving your moving reimbursement.
What Moving Expenses Are Deductible?
Not all moving costs are deductible. The CRA has a guideline to follow in determining which expenses are permitted. Here is a list of eligible moving costs:
-
Transportation and storage costs:
This includes payment of moving company, purchasing of moving materials and paying storage expenses.
-
Travel expenses:
Meals and lodging expenses might be claimed while on transit to the new home.
-
Temporary living expenses:
If you stay temporarily near your old or new home, you can claim up to 15 days of meals and lodging.
-
Lease cancellation costs:
If you cancel a lease on your old home, those costs may be deductible.
-
Incidental costs:
This can involve changing your address on legal documents and getting a new driver’s license.
-
Costs of Selling Your Old Home:
You can deduct advertising fees, legal fees, and real estate commissions.
-
Costs of Buying Your New Home:
This includes legal fees and taxes related to buying the new home.
| Expense Type | Description |
|---|---|
| Transportation & Storage | Movers, packing supplies, storage fees |
| Travel Expenses | Meals and lodging during the move |
| Temporary Living Expenses | Up to 15 days of meals and lodging |
| Lease Cancellation Costs | Fees for breaking a lease |
| Incidental Costs | Address changes, license replacements |
| Selling Old Home | Advertising, legal fees, real estate commissions |
| Buying New Home | Legal fees and transfer taxes |
What Moving Expenses Are Not Deductible?
Many costs can be deducted, but there are certain expenses which cannot be claimed. Here are some examples of ineligible moving costs:
- Selling expenses cannot be claimed if you suffer a loss on the sale of your old home.
- You also cannot deduct personal expenses that are not directly related to the move either.
- Moreover, the costs made before the moving date are not allowed as a tax deduction.
- The list of what you cannot deduct tells you what not to claim when preparing your taxes.
Can I Deduct Moving Expenses on My Tax Return?
It is very important to note that if your move meets the set conditions then you can claim the moving expenses. The first thing you need to do is fill the T1-M Moving Expenses Deduction Form when you are filing your income tax return. Follow these steps:
1. Download the T1-M Form
To get the T1-M Moving Expenses Deduction Form, you have to log into the CRA website. It works to provide you with the tools to determine your moving expenses and file them.
2. Fill Out the Form
Provide all of the allowable expenses from your moving process. Always double check your receipts and other documents that you have received.
- Section A: Write some information about your moving process. Be sure to include the dates, new contact information and the cause for the move. You could be seeking a job or for education among other reasons.
- Section B: List your costs. Some of the costs that you should include are the transport cost, the storage cost, the real estate costs, and the travelling cost.
3. Transfer the Amount to Your Tax Return
After filling the T1-M form, transfer the total allowable expenses to line 21900 of your T1 General Tax Return.
4. Keep Supporting Documents
It is recommended that you should keep all your receipts, invoices and payment proof for six years. The CRA may request for these documents where they want to verify your claim.
Special Rules for Students
If you are a student moving to attend a full-time post-secondary program, you might also qualify to claim moving expenses. However, the rules change slightly. You can only deduct expenses from your taxable income earned at your new location. This includes earnings from a part-time job. If you receive scholarships, bursaries, or grants, subtract these amounts from your moving expenses first.
Example Calculation
Let’s say you moved and incurred the following costs:
- Transportation: $1,000
- Temporary Living: $300
- Travel Expenses: $200
Total Moving Costs = $1,000 + $300 + $200 = $1,500
If your employer reimbursed you $500 for transportation:
Net Moving Costs = Total Moving Costs - Reimbursement
Net Moving Costs = $1,500 - $500 = $1,000
You would report $1,000 as your deductible amount on your tax return.
Carrying Forward Unused Deductions
When you move, you might not earn enough money to fully use your deductions in that year. If that happens, you can take any unused deductions and carry them forward to future tax years. This means that if you make enough money later, you can still benefit from those deductions.
Final Words
Now you undersrand that tax deductions can help reduce that financial strain. If you relocate for work or school and meet specific requirements, you can deduct many of your moving expenses on your Canadian tax return. It is important to keep good records and retain all receipts related to those expenses. Remember to use Form T1-M to make sure you claim everything correctly.
By knowing these rules and tracking your eligible expenses, you can save money on taxes when you move in Canada.
Add comment
Comments