Tax Q: Saving Receipts during MS-4 and PGY-1

.

bananaman said:

For the vast majority of current MS-4's and soon-to-be PGY-1's, should we even be saving receipts for tax deduction purposes in 2007?

We will only be receiving 6 months of salary from July = about $20,000. With the $5000 standard deduction, we have $15,000 of taxable income for 2007.

That means, we pay $755 (10%) + 1120 (15%) = only about $1900 in taxes for 2007.

Click to expand...

Receipts? To deduct what? Interview expenses for your first job (residency) are not deductible. Licensing expenses including USMLE fees and board prep fees are not deductible. Educational expenses as a resident, but not a med student (such as text books) are deductible, but must comprise at least 2% of your income.

Essentially, if you don't own a house or live in a very high tax area (NYC) then you likely won't benefit from itemizing. Don't forget, that your lifetime learning credit, tuition tax credit, tuition interest deduction are all above the line -- thus you needn't itemize to receive these.

Ed

don't forget about moving expenses, if you're employed prior to starting residency and move for residency, you can certainly get away with deducting a hefty chunk of the cost of moving (which can be quite helpful and eliminate most of what taxes you'd be paying!)

Colinator said:

don't forget about moving expenses, if you're employed prior to starting residency and move for residency, you can certainly get away with deducting a hefty chunk of the cost of moving (which can be quite helpful and eliminate most of what taxes you'd be paying!)

Click to expand...

I didn't think you had to be employed to deduct moving expenses. In fact, I thought I read in the IRS forms an example of moving expenses as a college student.

edmadison said:

Receipts? To deduct what? Interview expenses for your first job (residency) are not deductible. Licensing expenses including USMLE fees and board prep fees are not deductible. Educational expenses as a resident, but not a med student (such as text books) are deductible, but must comprise at least 2% of your income.

Essentially, if you don't own a house or live in a very high tax area (NYC) then you likely won't benefit from itemizing. Don't forget, that your lifetime learning credit, tuition tax credit, tuition interest deduction are all above the line -- thus you needn't itemize to receive these.

Ed

Click to expand...

I was told by a friend (a surgery attending) that we could deduct anything related to travelling for interviews (airfare, hotels, gas, etc.) as long as it was purchased after jan.1. Is he wrong?

dmbkappasig1 said:

I was told by a friend (a surgery attending) that we could deduct anything related to travelling for interviews (airfare, hotels, gas, etc.) as long as it was purchased after jan.1. Is he wrong?

Click to expand...

Yes he's 100% wrong if its for your residency interviews fresh out of med school you can not deduct them. Follow the discussion link that the previous poster had -- its all on there. You can deduct the moving expenses -- I forgot about those.

Ed

edmadison said:

Yes he's 100% wrong if its for your residency interviews fresh out of med school you can not deduct them. Follow the discussion link that the previous poster had -- its all on there. You can deduct the moving expenses -- I forgot about those.

Ed

Click to expand...

Residency is not looking for your first job or changing professions. So the moving expenses are not deductible.


But then again, I'm sure many of you will continue to deduct whatever you want. No one really wants to hear the truth.

I'm just waiting for that unfortunate CNN article that talks about some poor attending who has been called up for fradulent tax filing from 5 yrs ago when he was a resident because he was trying to save a few hundred dollars. I'm actually surprised we haven't seen it yet.

I know residents(and attendings) that thought it was ok to take a cruise and while on it do some bullcrap internet teleconference and then try to write the whole thing off as an educational expense.

And we thought congressmen were shady...

Our surgery grand rounds speaker said that it's all deductible. Interviews, board prep, pda's , etc.

You can put whatever you want on a tax form, you just run the risk of getting bent over during an audit.

The IRS.gov website is a good place to check before doing something on the advice of others (you are the one who has to pay if they are wrong).

From the website
http://www.irs.gov/publications/p529/ar02.html#d0e999
Job Search Expenses
You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You cannot deduct these expenses if:

You are looking for a job in a new occupation,

There was a substantial break between the ending of your last job and your looking for a new one, or

You are looking for a job for the first time.

Moving expenses
Who Can Deduct Moving Expenses
You can deduct your moving expenses if you meet all three of the following requirements.

Your move is closely related to the start of work.

You meet the distance test.

You meet the time test.

This publication http://www.irs.gov/publications/p521/ar02.html#d0e220 describes those tests more clearly, but the gist is that if you move 50 miles or more away from where you live within one year of starting a new job where you will work full time for at least 39 weeks, then you can deduct certain expenses.

Read carefully before you act to avoid getting into trouble. Unless I am reading this very wrong, we can't deduct expenses for looking for a residency position, but once we get one we can deduct the moving expenses (maybe adding in the cost of the interview travel by saying it was part of you searching for a home in that area, but that is kinda shady). Once you are in residency, you should be able to deduct certain things as job expenses (like lcensing fees and union dues). But again, check the IRS site and make sure.

tanqueray84 said:

Our surgery grand rounds speaker said that it's all deductible. Interviews, board prep, pda's , etc.

Click to expand...

Who was this speaker? An attorney? Accountant? Sorry to say, but interview expenses for residency are not deductible, board prep not deductible. PDAs? maybe, but they are unreembursed employment expenses or educational expenses (textbooks, computer, PDA) and there is a 2% floor on the the deductions. Further, there are special rules about electronic equipment. Last year, I dedicded the measly amount I would have been able to deduct was not worth the trouble of making the claim (and I am an attorney!).

Finally, moving expenses are deductible whether or not it is your first job

Back to the OP, the IRS changed the rules for sales tax deductions for 06. You can deduct EITHER your state income tax OR your sales taxes. This was done to allow residents in states without income tax to benefit from a deduction. It was actually previously allowed then removed. But, if you qualify the lifetime learning credit, you won't pay federal taxes on 1/2 year of intern pay.