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Your guide to deducting moving expenses

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calculating expenses

That moving is expensive, it a fact everyone is familiar with. Whether you have moved before, or not it is something you should prepare for. And that is why many are looking for different ways for deducting moving expenses in order to go through this project as cheaper as possible. And while it is not the easiest thing to become eligible for tax deduction, there are still ways how to manage it. It is just, you will need to be a good candidate for this type of deduction.

Understanding the expenses

Perhaps this might sound a bit strange at first. But not many people really know what they will have to pay for once they decide for relocation. Hence, figuring out the moving costs will be of a great help. It will allow you to prepare yourself and your budget for the upcoming costs. This means that there won’t be much space for unexpected costs. So, put everything on a paper. List all the services that will be necessary. Also, list the distance between the homes you are moving from and to. After that, you can begin with a more thorough budget planning.

Deducting moving expenses will help with the budget
Get ready for moving expenses

Deducting moving expenses – how to do it?

We already mentioned that there are certain criteria based on which you are judged whether you are a good enough candidate for writing off your tax expenses or not. However, a person must be aware of limitations when it comes to deducting moving expenses. And so, those who wish to claim the right for deductions have to meet the conditions. Several tests will evaluate if your particular case is the one which should be taken into consideration. Passing these tests is almost as equally important as finding the best moving company to help you move in an efficient and quick way.

Test #1 – The move has to be related to work

In order to earn the right for deducting moving expenses, your move must be connected to the start of work. But here we have to be more precise and say that while you may not be moving because of work, the first workday must be within one year of your relocation to that new address. And in this situation, it is less important what kind of a job is it. It is all the same if you found a completely new job, or if it is your old one. Or if you are fresh off college and found yourself the first job. Also, you are in the game if you are the one who is starting a business.

An office space
Moving for a job

So, time and place need to be in a close connection to the start of work. The distance from the house you are moving to, to the location of your job must be less than it was in the previous home. And when we say ‘home’ we mean the place of your permanent residence. Every other real estate you own, such as a weekend house is not taken into consideration.

Test #2 – Meeting the distance requirements

One of the items of the test a person who moves needs to pass is the distance. A general norm is that the distance of your new job location should be at least 50 miles further from the old home. When calculating the distance what you should do is take the shortest route as the official one. Therefore, subtract the number of miles your old house is away from the new job and the number of miles your old house is from the old job. If it is less than 50 miles then, unfortunately, you are not a candidate for deducting moving expenses. On the other hand, if you are moving long distance, which long distance movers Ontario can greatly help you with to make it less complicated, then this distance should not be that big of a problem.

Test #3 – Meeting the time requirements

This test consists of two parts:

  • In one, you must be an employee with a full-time work hour for at least 39 weeks in a year of your move.
  • Being a self-employed worker who has been working for at least 39 weeks in a year of the move. But you also have to have at least 78 weeks in a two year period following the move.

But in case you have two jobs – one as an employee and the other as a self-employed, then your main place of work should be taken for calculations. Now, we do not say all of these calculations are easy to do. But, if you are looking for scratching off these expenses it is a process you need to go through. If you figure that you won’t be able to do it on your own, it is perfectly fine to ask someone more experienced for help.

Exceptions to the rules

Everything you’ve read so far is some standard procedures that everyone is required to pass. However, there are some exceptions which can still help you qualify for a deduction of moving expenses. For example:

  • If you are a retiree who was working outside of the country but wishes to move back after the retirement, then you have the right to apply.
  • Active military members are also in this group if they are permanently moving back to the country.
  • Those who survived their spouses who worked outside of the country but are moving back to the country after the death of the spouse.

When these situations appear it is important to start to begin with the relocation process. Of course, you will need enough packing materials and a couple of helping hands to get done with it as soon as possible. Moving Boxes Hamilton Ontario can provide you with every kind of a moving box you will ever need, and you can rest assured that your belongings will stay safe inside them.

worldwide relocation is easier with quality moving boxes
Make long-distance or worldwide relocation easier with quality moving boxes

Although the whole process may not be so simple, if you meet the requirements then there should not be too many problems. On the other hand, in case you have any doubts or confusions regarding deducting moving expenses, then we suggest you get informed by a tax specialist as soon as possible.