Claiming Moving Expenses for Tax Deductibles

Moving is an adventurous process but did you know that you can claim a tax deduction for moving expenses? The thrill of relocating to form new relationships with neighbours and friends to share and engage in new experiences. However, moving can also be a scary and stressful process. The expenses pile on from all kinds of services required to complete a successful move: cleaning and moving services, changing utility accounts, realtor fees and legal fees. However, luck may be in your favour in the form of a tax break. If you are a taxpayer relocating for the following criteria, you are eligible for claiming your tax deductibles for moving:

  • Full-time post-secondary student
    • Moving for education
    • Moving for work
  • To pursue full time employment
  • For improved accessibility as a result of physical disability

Full-Time Post-Secondary Students Moving for Work

Many students have to work their way through school. However, the process of travelling to work can become cumbersome, if the distance between where you reside, and work is far. As such if the distance between your residence and workplace is at least 40 kilometres, and you move for work, you can elect to any eligible moving expenses from the income earned during employment. What qualifies eligible work? The following is a list of eligible work for students:

  • Co-op employment
  • Owning a business
  • Summer employment

If you are a co-op student and have to move back to where you originally lived after the work period, you can apply for deductions for the move back.

Full-Time Post-Secondary Students Moving for Education

Students often live very far from the universities they gain acceptance to. Here the 40-kilometre rule comes into play again. If you are a full-time student who is moving at least 40 kilometres to attend a post-secondary institution, you can deduct moving expenses from taxable income. This taxable income includes:

  • Scholarships
  • Bursaries
  • Fellowships
  • Grants for research
  • Select academic prizes

Moving to Pursue Employment

Moving for employment is no rare occurrence for Canadians. Whether the economy is booming or in a recession, Canadians move across Canada in the pursuit of better employment. This process involves careful and meticulous planning, and this is especially true when children and/or pets are involved in the equation. Keep these factors in mind when you are pursuing your tax deduction for moving expenses claim. Here are the following ways you can claim your moving expenses:

  • You can deduct permissible moving expenses from the income earned from your new employment if you are moving at least 40 kilometres closer to the new workplace
  • If your moving expenses outweighs the income in the present tax year, you can elect to carry the additional expenses to a future tax year
  • If your employer has provided you with a moving package or an allowance for your move, you can only deduct permitted expenses that the package or allowance was not able to cover, unless you declare it as income

The 40 Kilometre Rule

As we mentioned earlier, the 40-kilometre rule comes into play whenever you’re looking to claim moving expenses. Whether you’re moving in the pursuit of education or employment, or both, here is how you can calculate if your move qualifies for a deduction:

  1. Calculate distance “X” by finding the distance between your old home and your work place/post-secondary institution
  2. Calculate distance “Y” by finding the distance between your new home and your work place/post-secondary institution
  3. Subtract distance “Y” from distance “X.” If the distance is greater than 40 kilometres you are eligible for a tax deduction for moving expenses

What Can You Deduct?

Moving is not just the cost of hiring movers, cleaners and/or a realtor. There is a wide range of costs involved with moving that can be deducted. These costs include:

  • Travel Costs
    • This includes fuel, food and accommodation for yourself and members of your family moving with you
  • Temporary living
    • If you are in-between houses until you gain access to your new residence, and you have to pay for the temporary housing, you can have the expenses and food deducted for up to 15 days
  • Storage and Transportation
    • Any household items being transported or stored including boats and trailers
    • The costs covered include:
      • Packing
      • Moving
      • Insurance
      • Transit
  • Cost of cancelling the lease on your home
    • This does not include rental payments for any time before the cancellation of your lease
  • Costs of maintaining your old home
    • This applies if your old home is vacant and covers up to $5,000
    • This is only eligible for during a period where you made a reasonable effort to achieve the sale of your old home
    • Specific deductibles include:
      • Property tax
      • Interest
      • Heating and utility expenses
      • Insurance premiums
  • Incidental costs
    • Changing address on all your legal documents
    • Hooking up and/or disconnecting utilities
    • Replacing your driver’s license and/or non-commercial vehicle permits

An important yet undermined aspect of claiming your tax deductibles for moving is keeping all receipts related to your move. It is recommended you keep these receipts for up to seven years after your move. You will need these receipts to present to Canada Revenue Agency if they decide to have you audited. You can check the CRA website for more info here.

Looking to move closer to your school or workplace? Give us a call at 403-402-7992 after all, it is tax deductible! If you are planning a move check out our blog post for some tips to stress free moving.

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