How to Claim Moving Expenses on Your Tax Return

Introduction

Moving can be expensive, but in some cases, the cost of relocation may be deductible on your tax return. If you moved for work, to start a new business, or to attend post-secondary education full-time, you might be eligible to deduct reasonable moving expenses. The tax rules vary depending on your jurisdiction, but in general, these deductions can significantly reduce taxable income.

This article outlines who qualifies for moving expense deductions, what expenses can be claimed, and how to report them properly on your tax return.

1. Who Can Deduct Moving Expenses?

To qualify for a moving expense deduction, the move must meet certain conditions:

• Relocation for Work or Business: The move must be directly related to starting a new job, transferring to a different location, or opening a business.
• Full-Time Students: In some cases, students attending a post-secondary institution on a full-time basis may also claim moving expenses.
• Minimum Distance Requirement: The new home must be at least 40 kilometers closer to the new workplace or school than the old residence.

2. What Moving Expenses Can Be Claimed?

Eligible moving expenses typically include:

• Transportation and Storage Costs: Fees for hiring movers, renting a truck, or storing household items.
• Travel Expenses: Includes fuel, meals, and accommodations for the move.
• Temporary Living Expenses: If necessary, temporary lodging near the new job or school.
• Lease Cancellation Fees: If moving required breaking a lease early, those costs may be deductible.
• Costs of Selling or Buying a Home: Includes real estate commissions, legal fees, and mortgage penalties for early repayment.
• Utility Hookups and Disconnections: Fees for transferring services to the new home.

3. What Moving Expenses Cannot Be Claimed?

Some expenses are not deductible, including:

• The cost of renovating or repairing a home to prepare it for sale.
• Any loss on the sale of a previous home.
• Expenses reimbursed by an employer (unless the reimbursement was included in taxable income).

4. How to Report Moving Expenses on Your Tax Return

• Complete the required moving expense form (depending on your tax jurisdiction) and attach it to your tax return.
• Keep all receipts and records in case of an audit.
• If the deduction exceeds your income for the year, you may be able to carry forward the unused portion to claim in future years.

Conclusion

Claiming moving expenses can provide a valuable tax break for those relocating for work, business, or education. However, strict rules apply regarding eligibility and what expenses qualify. Proper documentation and planning can help maximize deductions and ensure compliance. 

Tax Partners can assist individuals in claiming moving expenses correctly, ensuring they maximize their tax savings while staying compliant with tax laws.

This article is written for educational purposes.

Should you have any inquiries, please do not hesitate to contact us at (905) 836-8755, via email at [email protected], or by visiting our website at www.taxpartners.ca.

Tax Partners has been operational since 1981 and is recognized as one of the leading tax and accounting firms in North America. Contact us today for a FREE initial consultation appointment.