We are rapidly approaching the most anxiety-inducing time of the year again. No, we’re not talking about your birthday or Valentine’s Day, daylight savings or even final exams for all the dedicated students out there. We’re talking about tax time; that time of year when we scramble to add up all the receipts haphazardly thrown into a shoe box in the hopes that the government will owe you and not you owing the government.
In that light, it’s natural to ask are moving expenses tax-deductible. Any way to get the money you’ve already spent to work harder for you at this time of year is entirely rational. And the answer to that question is… it depends.
If you have moved to be closer to your place of employment, it is possible to claim your moving expenses as a tax deduction. There is a qualifier, however – your new home must be at least 40 kilometres closer to your place of work than your prior location. Moving from Barrie to be closer to your downtown Toronto Bay Street office? Good call, that’s tax-deductible. Moving from Mimico to be closer to your Bay Street office? Sorry, you’re out of luck. However, the fact remains that if you want to move or even have to move, don’t base your decision on whether the move is tax-deductible or not; a move should always be about enjoying a greater quality of life.
What types of moving expenses can you claim?
If you qualify to claim moving expenses, you’ll be delighted to learn that there are a lot of things you can claim against your income. Eligible moving expenses include transportation costs such as all the mileage you put on your car, the cost of hiring movers to haul all your stuff to your new address, plus any packing expenses, insurance and any storage costs. In addition to claiming the mileage you put on your car, you can also claim personal expenses related to the move such as meals, rental/hotel accommodations (up to a maximum of 25 days) and any additional vehicle expenses incurred.
You can also claim a number of expenses incidental to your move: changing your address on any legal documents, replacing your driver’s licence and vehicle permits, even any utility hookups/disconnections incurred.
Did you incur any expenses when cancelling the lease of your old residence? You can claim that. Did you shell out money to maintain an old residence while it stood vacant after your move? You can claim that, too, up to a maximum of $5,000. Plus, if you purchased or sold a property as part of the move, you can deduct the selling costs such as legal fees, real estate commissions, mortgage penalties and even advertising.
How much can I deduct for moving expenses?
If you were put in a position in 2021 where you were compelled to move 40 kilometres or more closer to work, there are some relatively generous deductions you can make to help soften the blow. There is no limit to how much you can deduct for the expenses listed above, but be honest about the costs incurred and make sure to keep all your receipts on file just in case.
Meal and vehicle expenses can be calculated using either the detailed method or the simplified method. If you choose to use the detailed method to calculate meal and vehicle expenses, make sure to keep all your receipts and claim the exact amount that you spent. For mileage, it would also help to keep a driver’s log detailing your fuel costs and the number of kilometres travelled, and the dates and times. If you choose to use the simplified method for meal expenses, simply claim a flat rate per person; while you do not need to keep detailed receipts, the CRA may still ask you to provide some proof of expenses. If you’d also like to use the simplified method to claim vehicle expenses, simply multiply the number of kilometres by the cents/km rate relative to the province or territory where your move began.
When and how can you claim moving expenses in Canada?
Are you ready to claim those moving expenses? The best time to act is now. This year’s tax filing deadline is May 2, 2022, for individuals and June 15, 2022, for anyone who is self-employed. If you don’t file your tax return in time, this may result in you having to fork over an intimidating variety of interest payments, fees and/or penalties. Just like when you’re getting ready to move, our advice is not to procrastinate, plan well and your preparedness will be rewarded with a smoother and stress-free tax season.
To claim your moving expenses, the most sure-handed and sure-headed thing to do is to hire a professional accountant; they will know better than anyone how to claim moving expenses in Canada. If you’re determined to do your taxes yourself, you can claim your moving expenses on Line 21900 on your income tax form. Whatever your approach, remember that the best and most stress-free way to manage your next move is to hire the experienced professionals at Rent-a-Son. Contact us for a complimentary quote today.