Are you planning to move because of work or school? If so, you could be eligible to claim moving expenses on your next tax return! Understanding the criteria and eligible expenses can help you maximize your deductions. Here's a detailed guide to help you navigate through the process.
Who Can Claim Moving Expenses?
You may claim moving expenses paid in the year if you are an individual who is:
- Employed or self-employed, or
- A full-time student, and
- Moving at least 40 km closer to the new work location or school.
For Employed or Self-Employed Individuals
If you are an employee or a self-employed individual, you can claim moving expenses if you are moving to a new home for work or run your business in a new location. The moving expenses can only be deducted from employment or self-employment income earned at the new work location. However, if you have received any reimbursements or allowances from your employer to cover your moving expenses, these amounts must be deducted from your claim. The Canada Revenue Agency (CRA) may request you to provide a letter from your employer stating that you were not reimbursed for the moving expenses being claimed.
Any remaining moving expenses that are unused can be carried forward to be deducted against employment or self-employment income at the new work location in a future year. However, you cannot carry back moving expenses to deduct against income from a prior year even if you earned employment income or self-employment income from the new work location in the prior year.
For Students
If you are a student, you must be enrolled full-time in a post-secondary program at an educational institution. If you are studying outside of Canada, you must have significant residential ties in Canada, such as a home, a spouse or common-law partner, or dependents in Canada. Alternatively, you must be deemed a Canadian resident, such as:
- A member of the Canadian Forces overseas school staff,
- A Canadian government employee who was a tax resident of Canada before going abroad, or received a representation allowance in that taxation year.
The moving expenses can be claimed at the beginning of each academic period, but they can only be deducted from parts of income from your scholarship, fellowship, bursaries, prizes, and research grant amounts included in income. Any unused moving expenses can be carried forward to the future year to be deducted against scholarship, fellowship, bursaries, prizes, and research grant amounts included in income. However, you cannot carry back moving expenses to deduct against income from a prior year even if you earned scholarship, fellowship, bursaries, prizes, and research grant amounts included in income from the new location in the prior year.
40 km Distance Requirement
The new home must be at least 40 km closer to the new work or school location by the shortest public route. This requirement applies to both students and employed or self-employed individuals.
Eligible Moving Expenses
Eligible moving expenses include:
- Transportation and storage costs,
- Travel costs,
- Temporary living expenses up to 15 days,
- Lease cancellation costs, except rental payments before the cancellation of your lease,
- Incidental costs related to moving,
- Costs of maintaining your old home when vacant up to $5,000 (such as interest, property tax, insurance premiums, and utility expenses; you cannot claim these costs if the home is rented),
- Costs related to selling your old home,
- Costs related to buying a new home, including legal or notary fees paid to purchase the new home and taxes paid on the transfer or registration of title (excluding GST/HST).
Moving can be a stressful and costly process, but knowing the tax benefits available can help ease the financial burden. Make sure to keep all receipts and documentation to support your claims, and consult with a tax professional if you have any questions. Happy moving!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.