Canadians typically want to be able to claim as many expenses on their personal taxes says Edmonton bookkeeping. So that they can keep their payable taxes as low as possible. This is because the average Canadian pays a significant amount of their income in taxes.
In fact, according to the Fraser Institute, Canadians on average pay 43% of their entire income on a variety of taxes including income taxes, fuel taxes, GST as well as things like CPP and EI. While the pay 43% of their entire income on taxes, only 37% of the remaining amount goes towards basic necessities such as their shelter, food, and clothing.
This is so important, that anyone who has moved within the last year often wants to know if they can claim their moving expenses on their personal tax return. And while yes, the answer to that question is that moving expenses can be claimed. Not every single expense can be claimed. As well as there is a maximum amount that people can claim.
And ultimately, Edmonton bookkeeping says that people who want to claim their moving expenses need to be able to meet three basic criteria in order to be able to do so.
The criteria that they have to meet include ensuring that they are moving from 1 Residence in Canada to another. It does not matter if it is in the same city, the same province, or in completely different provinces. As long as someone is not moving from outside of Canada from anywhere to within Canada. And then claiming those moving expenses.
The second eligibility requirement that they must meet in order to be able to claim their moving expenses on their tax returns. Is that they need to ensure that they are not getting reimbursed through another method. Whether it is their corporation that they are getting reimbursed by. Or not getting reimbursed from an employer. Can meet the second eligibility requirements.
And finally, people must ensure that they are moving at least 40 km closer to their place of work. This does not mean that the entire distance of their move must be 40 km. But they actually have to be getting 40 km closer. In order to meet the third eligibility requirement. And there is a caveat to that says Edmonton bookkeeping. That people need to ensure that their previous residence is sold in order to meet that requirement.
However, the Canada revenue agency has made a concession to that requirement. Saying that if a person can prove that they made a reasonable attempt to sell their residence. And was unable to. They can meet the third eligibility requirement.
Only after a person has ensured that they are able to claim their moving expenses. Will they be able to start calculating which expenses they can count, and having an Edmonton bookkeeping company help them figure out how much they can claim.
Once they do this, they will be able to claim their moving expenses on their tax return. And do what they can to minimize the taxes that they have to pay.
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Understanding how to calculate the moving expenses on their personal taxes can be complex, which is why people should hire and Edmonton bookkeeping company to do that for them.
In fact, not only can an expert help them figure out which moving expenses they can claim. But they can help them ensure that they get the maximum amount that they can claim in one year. And that they can carry forward additional expenses into the next year.
This is one of the reasons why it pays to have an expert. Helping them with their taxes. It can also be very complex for a person to understand which of the expenses that they incurred during the entire experience of moving. Making it important to hire an expert to help them figure out which expenses count. And which ones do not.
For example, many people understand that they can claim the traveling expenses that they incurred. Such as their fuel, their meals, and accommodations. For them as well as their family. But they might not know that they can claim things such as vehicle maintenance during the journey, such as taking their vehicle to a garage to get something fixed. Or replacing attire for example.
Another expense that many people may not understand is claimable. Is a temporary living expense. Which is staying in a motel or hotel, or even an air B&B if they had to vacate their house before they were ready to start their journey. Or if when they got to their new location, their new home was not ready for possession.
Another expense that many people may not realize is claimable. Is hiring people to actually do the packing, and move their belongings from their home into their moving truck. They can even get that insurance that they pay to protect their belongings on the route. As well as things like lease cancellation insurance.
If they got their belongings to their new location. But their home was not ready to take possession. And they needed to pay for a storage unit. The storage unit is also claimable as a moving expense. Therefore, all of the expenses that people incurred during the entire experience should be capped. So that the Edmonton bookkeeping company the higher can help figure which ones are claimable.
It is very important however that people are keeping all of the receipts that they have received along the way. Because Canada revenue agency may ask them to supply those receipts especially if they get audited.
And while people might opt for doing the simplified method, which calculates an amount per person per day, plus a cost of food allowance per day. And a cost per kilometer. Even if they use that simplified method. They still need to keep their receipts. So that they can justify that amount to Canada revenue agency if they are audited.
By understanding that they can claim moving expenses. And to let their Edmonton bookkeeping company help them out with that. Can help people minimize their taxes by claiming is much as they can on their personal tax return.