Who Can Claim Moving Expenses?Brian Jang ON September 9, 2019
Some people love to move and see it as a grand adventure, especially a long-distance move. Other people hate it, and any time they are forced to uproot from their home, they swear it is the last time. Either way, moving can be draining—physically, emotionally, and financially. Fortunately for some, there may be a tax break available.
If you are a taxpayer and are moving for the sake of full-time post-secondary education, or for employment, you may qualify for a tax deduction. You may also be eligible if you are physically impaired and moving to a location with greater accessibility. This deduction is intended to help with your moving expenses.
A full-time post-secondary student moving a minimum of 40 km closer to their institution of learning may deduct eligible expenses from specific taxable income, including scholarships and bursaries, fellowships, grants for research, and certain academic prizes.
Students working to pay their way through school, and whose residence is at least 40 km from the workplace, can deduct eligible moving expenses from their earned income if they choose to move closer to their workplace. The types of work that is eligible includes summer work, running a business, and co-op employment. This deduction can be claimed at the beginning of each academic period.
Co-op students can claim the cost of moving back after a work period.
Moving for work can be a difficult decision, and often require careful consideration and planning, especially for larger families. When determining your claim for a tax deduction, keep the following in mind:
- If your employer provides a moving allowance or relocation package that you declare as income, you can only deduct eligible expenses that are not covered in the package.
- If your new home is a minimum of 40 km closer to your new job or business, you may deduct the eligible moving expenses from your new income.
- If the expenses are greater than your new income, the extra expenses can be carried forward for future tax years.
When thinking of the cost of moving, the first thing that comes to mind is usually the cost of the movers themselves, but there are several other costs that may be deducted. Some of those costs include:
- Travel expenses. The cost of travel for yourself and household members may be deducted. These costs include vehicles expenses, food, and accommodation.
- Transportation and storage costs. This is the transportation of household items. It includes packing, hauling, the movers, in-transit storage, and insurance.
- Temporary living expenses. You may need to find temporary housing, whether near the new home or the old one. The cost of these accommodations and meals for up to 15 days may be deducted.
- Cancelling your old lease. This applies to the period following your departure. Any rental payments for the period during which you still lived at your old residence is not included, nor is any period before the lease was cancelled, even if you were no longer living at the residence.
- Cost of maintaining your old home, once vacant. The maximum amount that can be claimed is $5,000. This is for the period following your move, during which time you made reasonable efforts to sell your home. It can cover such things as property taxes, interest, insurance premiums, and the cost of heating and utilities.
- Miscellaneous costs. These are assorted costs related to the move, such as changing your address on legal documents, utility hook-ups and disconnections, and replacing your driver’s license.
Moving can be a great adventure, a difficult trial, or anything in between, but regardless of your feelings on the matter, at least you know that you have a means to minimize your expenses.
- Registering for the GST Retroactively
- Which Canadian Business Structure is Right for You?
- The Gig Economy in 2020: Tips for Saving Taxes
- How the Government is Helping Seniors During the COVID-19 Pandemic
- The True Costs of Everyday Expenses