Discover a silver lining that comes from moving for school or work from The Tax Letter.
Find out if you qualify for this tax benefit
My eldest daughter is moving into her first apartment off-campus with her university friends. We started our list of what she will need for her new place, which will obviously involve a visit to IKEA.
As part of our list, we also had to think about what else we need to organize, such as the actual costs of moving: Do we need a moving truck? Movers? Time off of work to actually help her move?
I thought we would never need to worry about this after our last move to our home, but I forgot about my kids and the fact that this will be the first of many moves for her (and, who are we kidding, me too, as her mom).
At least I reminded myself of the silver lining of any move: taxes. Now, you may not immediately see the link between the two. But happily there is. Did you know that there are actual tax deductions available when you move out of town for work or school? So if your kids are moving away for school, or if you find yourself having to pack up and move due to changes at work, then read on so you can also fully embrace the silver lining with moving.
Generally, a deduction for moving expenses is potentially available in most situations where you move to a new work location (even if you stay with the same employer) or if you move to attend a post-secondary institution on a full-time basis. If you are moving for work or business, the deductions can only be used to offset the income earned for the year from employment at the new work location, or from carrying on business at the new work location.
There are similar limitations on the deductions for students, although deductions may be claimed if the student moves to take a job (this includes a summer job) such that it qualifies as a move to a new work location. If the student is claiming the expenses as a result of a move to attend a post-secondary school full-time, the deductions can only be taken against taxable scholarships and research grants.
The move must be considered an “eligible relocation,” which means as follows:
a. the move is to enable you to carry on a business or be employed in the new work location, or, in the case of a student, relates to full-time attendance at the post-secondary level;
b. You ordinarily resided in your old home and will ordinarily reside in your new home;
c. Generally, both the old home and new home are in Canada (unless you are absent from Canada, but still a tax resident); and
d. the move must bring you at least 40 kilometres closer to your new place of work or school.
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This is an edited version of an article that was originally published for subscribers in the August 2022, issue of The Taxletter. You can profit from the award-winning advice subscribers receive regularly in The Taxletter.
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The TaxLetter •2/7/23 •