Moving can be stressful, but the financial side does not have to be. Many taxpayers are unaware they can claim moving expenses on their taxes, which can significantly reduce your taxable income. Understanding the eligibility, allowable costs, and how to properly document your move can save you money and make tax season easier.
In this guide, we’ll explore when and how you can claim moving expenses, examples of deductible costs, and provide a helpful FAQ and table to simplify the process.
Who Can Claim Moving Expenses?
Not everyone qualifies to claim moving expenses. The Canada Revenue Agency (CRA) allows taxpayers to deduct moving costs if the relocation meets certain criteria:
- New Job or Work Location: You moved to start a new job or business, or to work at a new location for your current employer.
- Distance Requirement: Your new home must be at least 40 kilometers closer to your new workplace than your old home was.
- Full-Year Students: Students who move for post-secondary education may also qualify if they meet the distance requirement.
Example: Sarah moved 50 kilometers closer to her new office. She is eligible to claim moving expenses because her relocation meets the distance and employment criteria.
What Expenses Are Deductible?
You can claim moving expenses for a wide range of costs related to your relocation. These include:
| Deductible Expense | Description |
|---|---|
| Transportation and storage | Costs of moving your furniture, boxes, and personal items, including hiring a moving company or renting a truck. |
| Travel expenses | Gas, meals, and lodging while traveling to your new home. |
| Temporary storage | Costs to store your belongings for up to 30 days after moving. |
| Selling old home | Legal fees and real estate commissions directly related to selling your previous residence. |
| Buying a new home | Legal fees, land transfer taxes, and other closing costs. |
| Utilities connection/disconnection | Fees to disconnect or reconnect essential services like electricity, water, and gas. |
Example: John spent $1,200 on a moving company, $300 on meals during his move, and $200 for temporary storage. He can claim moving expenses totaling $1,700 on his tax return.
How to Calculate Your Deduction
When claiming moving expenses, only include costs directly related to your move. Keep receipts, invoices, and contracts to provide proof if needed.
- Add all eligible moving expenses.
- Subtract any reimbursements you received from your employer.
- Enter the net amount on your tax return using the appropriate CRA form.
Example: Emma’s employer reimbursed $500 for her move. Her total deductible expenses were $2,500. She can claim moving expenses of $2,000 after subtracting the reimbursement.
Common Mistakes to Avoid
Many taxpayers make errors when trying to claim moving expenses. Avoid these pitfalls:
- Including personal expenses unrelated to the move, such as decorating your new home.
- Forgetting to subtract employer reimbursements.
- Misreporting travel distances, which may disqualify your deduction.
- Not keeping receipts or proper documentation.
Tips to Maximize Your Deduction
- Keep Detailed Records: Save all receipts, bills, and contracts related to your move.
- Track Travel Costs: Record kilometers traveled if driving, or keep airfare and lodging receipts.
- Separate Eligible and Ineligible Costs: Only include costs that qualify under tax rules.
- Claim Employer Reimbursements Carefully: Ensure you don’t double-claim expenses reimbursed by your employer.
Example: When Alex moved for a new job, he tracked all gas receipts, moving company invoices, and temporary storage fees. By keeping organized records, he maximized the moving expenses he could claim.
FAQ
Q1: Can I claim moving expenses if I move to a new city in the same company?
Yes, if your new location is at least 40 kilometers closer to your work and meets CRA criteria, you can claim moving expenses.
Q2: Are meals deductible during a move?
Yes, meals can be included but only while traveling to your new home. They should be reasonable and documented.
Q3: Can students claim moving expenses?
Full-time post-secondary students who move for school may qualify if they meet the distance requirements.
Q4: What happens if my employer reimburses my moving costs?
You must subtract any reimbursements from your deductible moving expenses to avoid overclaiming.
Q5: Are temporary storage costs deductible?
Yes, storage costs for up to 30 days after moving can be included.
Practical Examples
- Example 1: Moving for a New Job
Mark moved 45 kilometers closer to his new office. He paid $1,000 for moving services, $250 for temporary storage, and $150 for meals. His employer reimbursed $500. Mark can claim moving expenses of $900 ($1,400 total costs – $500 reimbursement). - Example 2: Moving for Education
Lisa relocated to attend university, 50 kilometers from her previous home. She paid $800 for moving services and $200 for meals. She can claim moving expenses totaling $1,000. - Example 3: Selling and Buying Homes
Robert sold his old home and purchased a new one closer to work. Legal fees and commissions on selling were $3,000. Moving company charges were $1,500. Total deductible moving expenses: $4,500.
How to File Your Moving Expenses
- Complete the CRA form for moving expenses.
- Include all eligible costs and subtract reimbursements.
- Attach supporting documents if requested.
- Submit the form with your income tax return.
