As we head towards warmer season, more people will be moving this summer. Whether you’re moving into a new place or you recently purchased a new property, it’s certainly an exciting time. However as you know moving can be quite expensive and stressful, considering you need to pay for moving services, legal fees, changing utility accounts and finding storage, they add up quickly.
Luckily for Canadians under certain categories, you may be eligible for a tax break! Let’s find out if you fit into one of these categories below:
First and foremost, before you even considering writing off your moving expenses, just do a simple calculation whether you’re moving AT LEAST 40km closer to your work or school. Here is a sample calculation:
- Calculate the distance between your old home to your work or school (if you got a new job recently, use the new job address)
- Calculate the distance between your new home to your work or school
- Use the distance from #2 and subtract the distance in #1, if the result is more than 40km you are eligible to deduct moving expenses.
Once you gone through this 40km rule and you realized the new home that you established is more than 40km closer to your new place of work or business than your previous home was. Then you should continue to read on and find out which category of moving you are eligible for the tax break.
Moving to Work
If you have recently got a new job and requires relocation, then you maybe eligible to deduct your moving expenses from the income earned through your new employment or business. Yes! You are right! See what moving expense can be deducted.
Here’s some accounting hacks that you need to know if you’re moving for work:
- If your new work income is less than your expenses, make sure you carry the extra expenses forward to your future tax year, so you can claim the whole thing.
- If you received a moving allowance package from your new employer, you can actually declare the allowance as income, so you can deduct moving eligible expense.
Moving for Students
If you’re a student and working part/full time during your school year, you can deduct eligible moving expense if the distance you’re moving is at least 40km closer to your work place.
Same conditions applies as the moving for work category above, but eligible work includes co-op, summer job or even running a business.
Students can claim their deduction for moving at their beginning of each academic period. The nice thing is for co-op students, they can also claim expenses when they move back home after their work term has ended.
Even if you’re not in your work-term, you are still eligible if you moved to take courses as a full time student who is enrolled in a post-secondary program at a university, college or other educational institution. You are only qualify to deduct eligible moving expenses from the part of your scholarships, fellowships, bursaries, certain prizes, and research grants that is required to be included in your income.
Here’s another accounting hack for students: always apply bursaries if you’re not the high performance students that receives scholarships!
Moving can be stressful and expensive, but this article should give you a better understanding of whether you are eligible to deduct moving expenses. We highly recommend to keep all your receipts, invoices and supporting documents for all expenses for seven years. The Canadian Revenue Agency will ask for them if you were chosen to be audited for that tax year.
For those who are moving to or from Canada, or between locations outside of Canada. But for now, please visit the CRA website for more details.