One assumption that many people make according to Edmonton bookkeeping. Is that if they moved in the past year. Especially if they moved for their work. That they will be able to claim their moving expenses on their personal taxes.
While this is a popular assumption, it is wrong. Because there are several requirements that CRA has set out to help people determine if they are eligible to claim their moving expenses.
The first requirement is that they need to have moved at least 40 km closer to their work. This does not mean that the total amount of kilometers moved is 40 km. But that they are actually that amount closer to their work. And whether they moved because they got a new job, a promotion. Or simply because they wanted to be closer to their job. They need to ensure that it is at least 40 km closer in able to be able to claim it.
Another requirement is that it must be a domestic move. It does not necessarily need to be in the same city or province. But it needs to be within Canada to meet the requirements of the Canada revenue agency.
Also, people need to ensure that they are not getting reimbursed from another source. In order to be able to claim their moving expenses on their personal taxes. If they are, they cannot claim those expenses.
And finally, they need to either have sold their home if they owned it. Or be able to provide documentation showing that they made a reasonable effort to sell their home before they moved.
As long as they can fulfill all of these requirements. It does not matter if they moved for business purposes or not. They will be able to claim those moving expenses on their personal taxes.
However, there is a maximum amount that people can claim. In this is related to the net income they earn within that year. Therefore, if they are not claiming a full year of income. Whether it is because they were out of work for a portion of the year.
Or they may have taken time off in order to facilitate that move. It may be more advantageous for them to claim those moving expenses in the next year. Since Canada revenue agency allows people to carry forward their moving expenses one year.
In order to figure out what is most advantageous. People should hire and Edmonton bookkeeping company. To look at all of their expenses. And help them make the best determination of what is most beneficial to them.
They might even decide that claiming some of their moving expenses in the current year. Then claiming the rest in the next year can maximize those expenses. Allowing them to receive the best tax benefit that they can get.
Because of how complex this issue is. It is going to be very beneficial for people to hire and Edmonton bookkeeping company to help them sort through this. So that they do not end up making mistakes that might cost them on their tax return.
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One of the most common questions that Edmonton bookkeeping gets asked if have moved in the past year. Whether they can claim their moving expenses on their personal taxes. The reason why is because this can help people minimize the amount of taxes they have to pay the government at the end of the year. Because the average Canadian pays so much already.
In fact, the Fraser Institute did a study and found that the average Canadian pays approximately 43% of their income in a variety of taxes. This is more than just income taxes, CPP, and EI. But a mixture of all of the other taxes they pay including things like GST and fuel tax just to name a few.
By comparison, only 37% of the remaining amount is spent on a person’s basic necessities like food, clothing, and shelter. Showing exactly what the cost of taxes is in Canada.
And while people are able to claim their moving expenses. As long as they have met the requirements set out by the Canada revenue agency. There may be surprises when it comes to what they can claim. And what amount if any is on those moving expenses.
For example, many people are aware of the travel expenses that can be claimed. Such as the cost of gas, meals, and accommodations. But they might not be aware of additional travel expenses that are claimable. Such as increased insurance, new tires, and oil changes for example.
And while many people are aware that accommodations are claimable during their actual move. They may not realize that they can claim up to fifteen days of temporary living expenses. These expenses might stem from needing to be out of their home so that their packers can pack everything up and into the moving van. And then allow cleaners to clean that home.
In that will acquire people to be out of the home, but not ready to start traveling yet. Requiring temporary living expenses. However, they should be aware of. That these temporary living expenses have a maximum of fifteen days that can be claimed.
The best course of action would be for people to keep all of the receipts that are associated with their moving expenses. And then letting their Edmonton bookkeeping company figure out which ones they can claim, and which ones they cannot.
Even if people are using the simplified method allowed by the Canada revenue agency. Which allows an allowance per person, plus a daily maximum for meals. As well as a cost per kilometer traveled.
Even with this simplified method. If Canada revenue agency would like to see receipts. People need to ensure that they have enough receipts to equal the amount that they have claimed.
This can be a complex issue. And by hiring and Edmonton bookkeeping company. Can help ensure that people are claiming is much as they possibly can on their taxes. So they can get the best tax benefits available to them.