If your client mentions a child leaving for college, take this opportunity to see if the student qualifies for the moving expense credit on their taxes. Students attending school away from home, whether in Canada or abroad, may be able to deduct eligible moving expenses from their reported income when they file their taxes.
Students must satisfy several eligibility rules to qualify:
- Attend a college, university, or other educational institution in a program at a postsecondary school level, inside or outside of Canada
- Be a full-time student, or taking at least 60% of the normal course load
- The new home must be at least 40 kilometres closer to school than the old home
- The new home must be where the student normally resides, as detailed on Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status
Students who qualify for this credit may be able to deduct eligible moving expenses such as:
- Transportation and travel costs
- Movers, moving vehicles, and moving costs
- Utility connection and reconnection charges
Students can only deduct these expenses from scholarships, fellowships, bursaries, study grants, and artists’ project grants or awards they must report as income. Students who work may deduct expenses from the reported income earned at their new location.
For example, say a student moves from Sherbrooke to Montreal to attend McGill full time. They land a paid internship that they plan on using to support themselves during the academic term. They can deduct moving expenses from the income earned as an intern since they moved over 40 kilometres closer to school, attend full-time, and have earned income at the new location.
If the student moves from a parents’ home in Montreal to an apartment closer to school, doesn’t work, or attends part-time, they’re ineligible for the credit since they haven’t moved 40 kilometres closer to school, don’t have income from which to deduct moving expenses, and aren’t a full-time student. Also, if the student earns income only after moving home for the summer, they can’t deduct expenses from this income since it’s not earned at the new location.
These rules are a little tricky in their wording, so be sure the student who plans on taking the credit fully understands them. Use Form T1-M, Moving Expenses Deduction to help the student claim this credit.