Can I claim my moving expenses on my Canadian Tax Return?

Question

I recently moved from the US to Canada (June 2007) because I accepted a job in Ontario. My husband is Canadian. I just received a letter saying they want to see my receipts (no big deal), but it also said I had to be a resident while living outside of Canada in order to claim. I thought if I accepted a job here I could claim expenses to move here. I am currently on a work visa, and had all my paper work in order before I entered the country. Should I be able to claim my expenses?

Answer 1

Yes, you have to be a factual cdn resident or deemed cdn resident before you can claim the moving expenses TO Canada.  Please see below for a detailed discussion:

You can deduct eligible moving expenses from employment or self-employment income you earn at your new location if you move and establish a new home to be employed or carry on a business.

Generally, your move must be from one place in Canada to another place in Canada.

http://www.cra-arc.gc.ca/tax/individuals...

Provided you met all other conditions and requirements, you can claim eligible expenses for a move to Canada if you are a full-time student (including a co-operative student) or a factual or deemed resident.

Factual residents

You may be a factual resident of Canada for tax purposes if you keep residential ties with Canada while living abroad.

·The term factual resident means that although you're not in Canada, you're still considered a resident of Canada for income tax purposes.

If you also establish residential ties in a country with which Canada has a tax treaty and you're considered to be a resident of that country for the purposes of the tax treaty, you may be considered a deemed non-resident of Canada for tax purposes.

Deemed residents

You may be a deemed resident of Canada for tax purposes if you've severed residential ties with Canada and you're a:

·member of the Canadian Forces at any time in the tax year;

·member of the Canadian Forces overseas school staff and you choose to file an income tax return as a deemed resident of Canada (if you left Canada during the tax year, please read the section for overseas school staff);

·federal or provincial government employee, and you either lived in Canada just before being posted abroad or you received a representation allowance during the tax year;

·person working under a Canadian International Development Agency (CIDA) assistance program and you were a resident of Canada at any time during the three-month period just before you began your duties abroad;

·dependent child of someone who falls into one of the categories described above and your net income in 2007 was not more than $9,600 ($8,839 in 2006, $8,648 in 2005; $8,012 in 2004; $7,756 in 2003; $7,634 in 2002; $7,412 in 2001; $7,231 for 2000);

·person who, under a tax treaty, is exempt from tax in your new country of residence on 90% or more of your income from all sources because of your relationship to a resident -- including a deemed resident -- of Canada.

http://www.cra-arc.gc.ca/tax/nonresident...

ADDITIONAL COMMENTS RE YOUR ADDITIONAL QUESTION.

It appears that u may claim the moving expenses on your US tax return, as the IRS taxes based on US citizenship while Canada taxes based on residency.  In other words, as a US citizen, you be liable to pay US taxes after moving to Canada, and therefore you may be eligible to claim the moving expenses to a job in Canada.  Pls see reference below:

To deduct allowable expenses for a move outside the United States, you must be a United States citizen or resident alien who moves to the area of a new place of work outside the United States and its possessions. You must meet the requirements under Who Can Deduct Moving Expenses, which states in summary: You can deduct your allowable moving expenses if your move is closely related to the start of work. You also must meet the distance test and the time test.

Deductible expenses. If your move is to a location outside the United States and its possessions, you can deduct the following expenses.

· The cost of moving household goods and personal effects from your former home to your new home.

· The cost of traveling (including lodging) from your former home to your new home.

· The cost of moving household goods and personal effects to and from storage.

· The cost of storing household goods and personal effects while you are at the new job location.

http://www.unclefed.com/IRS-Forms/2001/H...

http://www.unclefed.com/TaxHelpArchives/...