A dad from Kamloops, B.C., got in touch recently to ask if I could get the word out about a tax break available to young adults moving to another city for a job.
“I know you write lots of articles and do podcasts directed at young people,” he wrote. “Sometimes they just need real specific practical advice about one or two things that can really help them right now. Would you please do an article for young people about the moving expense income tax deduction?”
Thanks for a timely idea. Some of this year’s crop of college and university students will in the months ahead be moving to take jobs in other cities. By saving receipts for the expenses they incur, they can lower the amount of income tax they owe on their next tax return.
Anyone can claim a deduction for moving and relocation costs if their new home is at least 40 kilometres closer to their new job than their previous location. Eligible moving costs include actual moving expenses and transportation, a chartered professional accountant (CPA). For example, the cost of movers or packing supplies and the cost of renting a truck. Gas expenses can be claimed as well if you move yourself, as can the cost of hotels and meals from the trip to the new location.
Same goes for the cost of a flight to the new city, and the cost of having a car shipped to a new location. “Anything that relates to the move itself,” Mr. Leve said.
If you’re planning to deduct meal and vehicle expenses, you have two ways to make the claim. One is the detailed method, where you claim expenses according to your receipts, and the other is a simplified method where you claim a flat rate for meals and kilometres travelled.
Moving costs must be deducted against income from the new job, Mr. Leve added. If you move late in the calendar year, you can claim the expenses against your income from your new job in the following year.
Homeowners who move for another job can deduct the cost of real estate commissions and legal fees for selling their home, and legal fees on the purchase of a new home, Mr. Leve said. Two things that cannot be claimed: Costs incurred if you travel for a job interview, and costs from a visit to a city to find a home.
The dad who wrote me about moving expense deductions said his son graduated last year and had to move to another city for his first job. With his dad’s help, the son dramatically increased his tax refund for 2022.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
The credit cards favoured by credit card experts
The CreditCardGenius website shows what cards its staff carry, and why. A few cards you likely haven’t heard of are mentioned here.
The hacker’s hit parade
Five Google searches that put you at risk of being scammed. “Free credit report” tops the list.
When one spouse makes more than the other
A Reddit discussion on how couples should arrange their finances when one partner makes more than the other.
Alberta’s cheap housing advantage
I wonder how long until we see a provincial or federal election where housing policy is a pivotal issue. Here’s a look at how housing policy is playing out in the Alberta election currently under way. Housing is cheaper in Alberta than Ontario and B.C., but the advantage is fading.
Ask Rob
Q: My question is on the First Home Savings Account. As a parent of a 6-year-old, can I use this account (opened in her name) to invest for her first home?
A: The tax-free FHSA is open to people aged 18 and up, so this family would not be able to use it. Also, an FHSA is designed to remain open for just 15 years. One alternative would be to set up an in-trust investment account for the daughter and then start transferring securities or cash in the account to an FHSA later on. There is a maximum $8,000 contribution limit per year for FHSAs, to a lifetime maximum of $40,000.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
A comparison of fees for money transfers to people in other countries.
The money-free zone
The indie-folk band Uniform Motion put out an album about 12 years ago with a song I keep listening to called There is No Way There is No Way. Uniform Motion has a new song out this year called Whatever That Is and it captures the same perfect combination of sadness and powerful musicianship.
From the Twitterverse
Ramit Sethi, host of the Netfix show How to Get Rich, plays a little game called Did I Waste Money or Not?
In case you missed these Globe and Mail personal finance-related stories
- Tips to ensure your cottage can pass to the next generation
- Can Maurice and Fiona afford to spend their winters in Palm Springs?
- If you retire early, should you start CPP pension immediately to avoid dilution?
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be child-free or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You’re not bad at money – you’re suffering from money shame • Retirement might look different for Gen Z and millennials. Here’s how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home down payment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
