Moving can be an exciting yet overwhelming journey, especially when you think about the financial side of things. If you’ve recently relocated for work or to kickstart a new business, you could be in for some valuable tax deductions! Understanding how to claim CRA moving expenses is essential for maximizing your tax refund in 2025. Let’s explore the claiming rules for both self-employed individuals and employees, highlighting the key points you need to keep in mind.
Moving Expense Claiming as a Self-Employed Individual or Contractor
If you are self-employed or engaged in business as a contractor, then you can claim many moving expenses. Here is what you need to know:
- Work-Related Move: Your move has to be for starting a new business or to a new location for your existing business.
- Distance Requirement: Your new home should be at least 40 kilometers closer to your new work location than your old home.
Eligible Moving Expenses:
- Transportation Costs: This includes engaging the services of a moving company or renting a truck for transporting your belongings.
- Travel Expenses: You are allowed to deduct expenses associated with the use of a vehicle while moving, meals, and lodging.
- Temporary Living Expenses: If you need temporary housing while waiting for your new home (up to 15 days), you can deduct these expenses.
- Storage Costs: If you have to store your things temporarily, those expenses are deductible as well.
- Business-Related Expenses: You can also include any expenses related to establishing your new business location.
How to Calculate Your Deduction
- Keep Records: It is in your best interest to keep all your receipts, invoices, and a logbook of your travel and expenses.
- Use Form T2125: File your moving expenses on this form when you file your tax return. Don't forget to subtract any reimbursement received from clients or employers you might have received.
Claiming Moving Expenses as an Employee
If you are an employee who has relocated for a job, you can claim some of your moving expenses as well. Here's how: Basic Eligibility
- Work-Related Move: The move has to be either for starting a new job or, if already employed, for being closer to your workplace.
- Distance Requirement: The new home must be at least 40 kilometers closer to your place of work than the old home.
Eligible Moving Expenses:
- Transportation and Storage: Expenses incurred to move your household effects and storage charges.
- Travel Allowances: Includes all expenses of transportation, food, and hotel when you go to your new place of residence.
- Temporary Living Expenses: You may be given temporary accommodation expenses up to a maximum of 15 days where necessary.
- Selling and Buying Costs: Legal fees and real estate commissions of the sale of your old house and purchase of a new one.
How You Are To Calculate Your Claim
- Use Form T777: This is the form designed specifically for employees claiming moving expenses. Fill it with all your eligible expenses with all supporting documents at hand.
- Detailed Records: It will be important for the employee to have detailed records of every single expense, just as self-employed workers, so as not to create conflict.
Important Points to Be Noted
- Distance Requirement: The 40-kilometer rule is usually enforced quite strictly, so just make sure you've obeyed it before you go ahead and file any of your expenses.
- Ineligible Expenses: Some expenses, such as trip expenses to hunt houses or lease cancellation fees, can't be deducted.
- Document, Document, Document: Keep all your records in order; that will be your best ally, especially when the CRA decides to take a closer look at your claims.
- Consult a tax professional: If ever in doubt as to what you can claim or how to maximize your refund, never hesitate to contact a tax professional for individual advice.
Moving does not have to be an economic burden. Knowing the rules of the CRA in claiming moving expenses, whether you are self-employed or an employee, you will face tax season with no fear at all. Keep records, know what you are allowed to claim, and do not be afraid to ask for professional help where needed. With the right attitude, you can benefit most from your moving expenses and maybe even increase your tax refund in 2025. Good luck with your move!
