One of the most common questions that Edmonton bookkeeping gets is whether people can claim moving expenses on their personal taxes. Many people try to minimize as match as they can in taxes. Because they want to minimize the amount of money that they owe to the government at the end of the year.
Therefore, if people have moved either for work or another reason. They often keep all their receipts in case they can claim any of these moving expenses at the end of the year. And while moving expenses are deductible. There are several things that people need to keep into consideration. That will help them figure out if they can claim their expenses or not.
There are three different considerations that people need to satisfy in order to claim their moving expenses on their taxes. The first one is that they must be moving at least 40 km closer to their work. This does not mean that the move in its entirety is 40 km. But they have to actually be getting closer to their job.
Therefore, if people want to ensure that they can claim their moving expenses, they should make sure that their new home is going to be at least 40 km closer. However, they also must need to have sold their previous residence. In order to qualify.
Canada revenue agency will make an exception. If people can provide documentation that they did try to make a reasonable effort to sell their home. But were unable to do so.
However, they also need to ensure that they are moving from one place in Canada to another place in Canada. Therefore, if people are moving from the United States, or any other country into this one. They are not going to be eligible for claiming their moving expenses.
And finally, people need to ensure that they were not previously reimbursed for their moving expenses. Whether it was from an employer or even their own corporation.
And while there is a maximum amount that a person can claim on moving expenses. Edmonton bookkeeping says it is limited on the amount of income that they are going to be earning. And so it is best to keep all receipts. And then let their bookkeeper calculate what maximum amount of moving expenses they will be able to claim.
Their Edmonton bookkeeping company will also let them know if it is most advantageous for them to use the moving expenses in the year that they moved. Or if they should claim the expenses in the next year. Because Canada revenue agency allows them to carry forward their expenses of moving into the following year.
The reason why this is advantageous is because if the move cause them to report less than a full year of income. They may be able to claim more expenses because of their higher income in the future year.
Knowing what moving expenses they can claim, and how much they can claim. Will help people ensure that they can claim the maximum amount on their personal taxes. So that they can minimize the amount they owe the government.
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Many Canadians tried to claim as many personal expenses as possible on their personal taxes says Edmonton bookkeeping. Because the already paying so much in taxes to the government.
In fact, according to the Fraser Institute, the average Canadian pays approximately 43% of their entire income in a variety of taxes in the country. Including things like CPP and EI, GST, and fuel taxes just to name a few.
People are going to be able to claim their moving expenses for the entire family, and not have it be limited to just themselves. As long as the entire family moved with them, they can claim everyone’s moving expenses. Each means food, as well as accommodations can be used.
In fact, there may be some surprising expenses that people are allowed to clean. Which is why they should keep all of the receipts that they can. And then let their Edmonton bookkeeping company figure out what they are allowed to claim, and how much they can claim in total.
For example, people may not realize that if they had to hire a real estate broker to sell their old residence. They are going to be able to claim their commission amount as well as all legal fees and registration fees associated with the sale of their house. Many people are not aware of this, and do not include these costs in with their moving expenses.
Some other surprising costs might include things like utility connections and disconnections. From leaving their old residence, and then coming into their new house. This is part of their incidental costs. Other incidental costs that they can claim include things like if they have to get new documents in order to reflect their new address. Such as a driver’s license for example. And they can also claim things like a vehicle permits if they require one in their new location.
It is very important however that people keep their receipts. Because Canada revenue agency may ask to see some of those receipts in the future. Even if their Edmonton bookkeeping company has recommended that the use a simplified method of claiming their moving expenses.
This simplified method allows people to claim on moving cost per person at seventeen dollars per person per day. Plus a food allowance at fifty-one dollars per day. And then claim travel on a per kilometer basis of forty-eight point five cents per kilometer.
Even if people have used this simplified method. If Canada revenue agency wants to prove that they actually incurred those costs. Then they should have their receipts so that they can prove that they actually did incur the costs. Whether they have calculated specifically their amounts. Or used the simplified method to calculate.
Keeping receipts, however, does not mean people need to have the physical receipt. They can scan the receipts into a digital format. And that would be adequate for the Canada revenue agency.