Moving Expenses Can Mean Tax Breaks
Moving expenses are generally deductible for any taxpayer who moves more than 40 km to attend full time at a post-secondary educational institution, or take a job, including a summer job planting trees, camp counselling or anything else. The same rules apply for someone who moves at least 40 km closer to a new job or self-employment position.
Fine print – your deduction is limited to the amount of employment or self-employment income you earn at the new location, or for students, the taxable portion of bursaries, scholarships, fellowships, certain prizes and research grants, to the extent claimed on the tax return. However, excess undeducted expenses can be carried forward and deducted against those types of income in future years.
CRA form T1-M (moving Expenses Deduction) says, “You can deduct reasonable amounts that you paid for moving yourself, your family, and your household effects” to take on employment, self-employment or attend school full-time.
Eligible expenses include packing, transportation, moving and storage of goods, vehicle and travel expenses and accommodation, including up to 15 days for meals and hotel at the new location. These can be claimed in detail or using the “simplified” method. In all cases, keep your receipts and a diary.
The costs of cancelling a lease at the old residence and all costs of selling a house can be claimed, including utility hook-ups and the like, and up to $5,000 of costs incurred to maintain the old residence until it sells (as long as it is not being rented out or held until the market improves).
There are other miscellaneous deductions allowed, but also a long list of ineligible expenses. Go to: www.cra-arc.gc.ca/E/pbg/tf/t1-m for more detail.
If your student is moving, remember that only the student can deduct moving expenses. These cannot be transferred to a parent’s return (even if the parent is paying the expenses) unless the parent also meets the moving criteria.
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David Christianson is a fee-only financial planner and investment counsel with Wellington West Total Wealth Management Inc. His column, ‘Dollars & Sense’ appears Fridays in the Winnipeg Free Press.