Moving can be a stressful experience, and it’s even more daunting when it comes to tax season. If you’re planning on moving to a new location, whether it’s for work or personal reasons, it’s important to understand how the Canada Revenue Agency (CRA) treats moving expenses. In this blog post, we’ll cover everything you need to know about CRA moving expenses, including what they are, which expenses are eligible, and how to claim them on your tax return.
What are CRA Moving Expenses?
CRA moving expenses refer to the costs associated with relocating to a new residence in Canada, whether you’re moving for work or personal reasons. These expenses can be deducted on your tax return, which can help you save money come tax season.
Which Expenses Are Eligible?
Not all moving expenses are eligible for tax deductions, and it’s important to understand which expenses you can and cannot claim. Eligible expenses include:
- Transportation costs – this includes the cost of moving your personal belongings to your new residence, such as hiring a moving company or renting a truck.
- Travel expenses – if you need to travel a significant distance to reach your new residence, you may be able to claim expenses related to food, lodging, and transportation.
- Temporary living expenses – if you need to stay in a temporary location before moving into your new residence, you may be able to claim expenses related to food and lodging.
- Cost of selling your old residence – if you’re selling your old residence to move, you may be able to claim expenses related to real estate commissions, legal fees, and advertising costs.
- Cost of cancelling a lease – if you’re breaking a lease to move, you may be able to claim expenses related to penalties and fees.
It’s important to note that there are limitations to the amount you can claim for each type of expense. For example, the cost of transportation is limited to the actual cost of moving your belongings, and travel expenses are limited to the cost of the most direct route to your new residence.
How to Claim CRA Moving Expenses
To claim CRA moving expenses, you’ll need to complete Form T1-M, which is the “Moving Expenses Deduction” form. This form will ask you to provide details about your move, including the date you moved, your old and new addresses, and the reason for your move. You’ll also need to provide receipts and other documentation to support your claim.
It’s important to keep accurate records of all moving expenses, including receipts, invoices, and other documents. This will make it easier to complete your tax return and ensure that you’re claiming all eligible expenses.
Conclusion
If you’re planning on moving to a new residence in Canada, it’s important to understand how CRA moving expenses work. By knowing which expenses are eligible and how to claim them on your tax return, you can save money come tax season. If you need help navigating the complex world of tax deductions, consider reaching out to a professional accounting service like JTT Accounting. Our experienced team can help you understand your options and ensure that you’re maximizing your tax savings.