Moving is a very expensive thing to do. It’s not something you would do on a regular basis, but you’ll do it at least once in your life. And you will probably need to save a quite some time for such project. Especially if you plan to purchase a new house or apartment. So, when the time comes, you will be more than happy to know how you can save during the move. There are several ways to do that. The first is making a smart choice when hiring long distance moving companies Canada. But it is most certainly not the only one. You’ll be happy to hear that there is an option of the tax deduction for moving expenses in Canada. Here we will give you information and tips on how to apply for such.
There are many things you can do yourself instead of paying for services such as packing and cleaning. Not to mention that you can get extra money by organizing a garage sale prior to moving. It is a great way to declutter your home, get rid of items you do not need anymore am earn some money. In order to save during packing process, find free moving boxes and ask friends to help you with packing. As you can see, proper planning is essential for relocation. If you plan every detail, you will be able to relocate on a budget and without any stress.
Who can apply for the tax deduction for moving expenses
In order to apply for the tax deduction for moving expenses, you must be a Canadian. Each and every resident of Canada can apply for such deduction after the move. And it doesn’t matter if you are moving because you are starting new job position, or just want to change your everyday surroundings. What is important is that you are changing your permanent residence address. That means if you are moving temporarily and not changing your address, you can not benefit from the tax deduction for moving expenses.
Additionally, if your new place is at least 40 kilometers closer to your work than your current home, you are eligible for this deduction. This refers to:
- The person who is relocating from one place in Canada to another place within Canadian borders
- Individuals who are coming from abroad to live and work in Canada. If this is the case, make sure you hire the best international movers in Canada.
- People who are moving from Canada to a new working location outside of the country
- In some specific cases, for people whose entire move is happening outside of Canada
But, the tax deduction for moving expenses is not meant only for working people. Full-time students can also deduct moving expenses from their scholarships, grants, and studentships.
Which expenses are eligible for deduction
Important to realize is that you can’t deduct every single expense. Some things you will need to cover in whole. But we will talk about such things later. Now we’ll go through expenses you can include in the tax deduction for moving expenses.
Good news is that you can deduct the biggest expenses of your relocation. Thus, transportation of your belongings is eligible for the tax deduction. Additionally, if you are using a storage service during the move, you will be able to lower those expenses as well. And all travel costs are in this group. Speaking about travel costs, all vehicle, accommodation and meal expenses are part of this item. That means you can count on the return for all these costs for you and your family. And not just during the move. Temporary living expenses, for first 15 days, are also eligible.
In the second group of eligible expenses for the tax deduction are costs of changing your new address on legal documents, driver’s license and other permits. But that is not all. If you didn’t manage to sell your old place, interest, taxes, insurance, and utility bills are also in this group. There are some other items such as advertising of your old place, legal fees and notary costs that you can deduct if you are selling your old home after your relocation.
Expenses that are not eligible for the tax deduction
As soon as you go through this article, you’ll see that list of items you can include in your tax deduction application is not that big. As a matter a fact, you most probably didn’t count on any of these items anyway. Here are such expenses:
- Home redecoration or renovation
- Money lost on home selling
- Mail-forwarding service costs
- Home cleaning
- Travel expenses before or after the move
How to apply
All you need to do in order to apply for the tax deduction is to calculate your moving expenses and to claim that figure on line 219 of T1 return. To be sure that you have covered everything, use T1-M Moving Expenses Deduction form. You do not need to attach any additional documentation to your T1 return. But, if the Canada Reveny Agency requests receipts or documentation as a proof, be sure to have those. That is why you should store all receipts in a safe place and give them to CRA if necessary. It is as simple as that. In some cases, you will get your money without any other activities. But even if you need to send more documentation or explain something to the CRA officer, you can be sure that every single dollar which belongs to you, will be in your pocket as soon as possible.
As you can see, a list of eligible items for the tax deduction for moving expenses is quite big. After you move, you will be able to get a significant amount of money. Make sure you spend that money well. If you do not have another idea, you can decorate your home office on a tight budget.