With over four million Canadians moving homes each year, it’s no wonder many have questions about whether they can deduct their moving expenses from their income taxes. Whenever tax season rolls around, we could all use a little help to ensure that we claim all our eligible deductions correctly, new job, new location for the same job, self-employed, or not. If we’re lucky, these deductions may even result in a refund in our bank accounts from the Canada Revenue Agency.
Who is eligible to claim moving expenses deductions on their taxes?
Deemed and factual residents of Canada are eligible to claim tax deductible moving expenses on their taxes if they moved to work at, or run a business at a new location, or to attend a full-time post-secondary program in an accredited educational institution. This move must be at minimum 40 km closer to their new place of work or schooling. The 40 km distance also applies to those who have, or are moving to Canada from another country, for employment or education purposes. Qualifying students with temporary living expenses may also claim moving expenses against their scholarships, fellowships, bursaries, or research grants that are required to be claimed on their taxes as income. If you are eligible, ensure you complete form T1-M, Moving Expenses Deduction, while filing your taxes, which you will claim on line 21900 of your tax return.
What deductions can I claim?
Moving deductions generally fall under two categories
1) Transportation and storage costs
Claims for transportation and storage include packing expenses, movers, in-transit storage, and insurance for household items. Storage costs apply for 30 consecutive days after they are moved from a former residence to when they are delivered to a new one.
2) Travel expenses
Moving costs that can be claimed during a move include:
Other incidentals through reasonable efforts that may be claimed include a change of address on official documents, replacing drivers’ licenses, utility hookups and disconnection fees, and the cost of selling and/or buying a home (advertising, real estate fees, etc.); when moving to another country, you may not be eligible to claim moving expenses, you can get information about it by calling an international moving company, for example.
Can I carry forward moving expenses?
Depending on when you move and the nature of your work, the net moving expenses paid during the year of your move may be greater than the eligible net income earned at the new place of residence. If this is the case, you may be eligible to carry forward and deduct the unused portions of these expenses from future taxation years.
What documentation do I need to save?
While you don’t need to attach the T1-M when you file your taxes, remember to keep all receipts and supporting documentation (legal documents related to your moving expenses) should you be asked to support your deduction claims.
Should you have any other questions surrounding your employment income in relation to your tax return and moving expenses, contact Revenue Canada directly.