residency relocation expenses

DigableCat said:

http://forums.studentdoctor.net/showthread.php?t=253099

The question comes up every year or so.

Ultimately, it comes down to...

Residency: Real Job or Training Program?

http://www.jamesdance.com/deductions.htm[/QUOTE

The issue which is usually debated is about the deductibility of interviews, which are not deductible. The issue about moving expenses has not come up as often. The website that you cite is only a regurgitation of publication 17 from the IRS by one CPA. It doesn't say anything about an IRS regulation or ruling as to whether a position as a resident counts as a "job" or not (at least not as far as I could find).

Whether or not residents are students or employees is hotly debated and depends on the subject area. Recently, the NLRB determined that residents are employees under the National Labor Relations Act and may unionize as opposed to students, who cannot. Some hospitals have been claiming that residents are students and thus FICA need not be withheld from their stipends (courts seem to buy this argument). Unfortunately, in other areas, residents are clearly employees (e.g. for liability issues). Just because you are treated as a student in one setting, does not mean you are a student in every setting.

I simply cannot find an authoritative source for this one. I would love more information from DigableCat on the issue.

Ed

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DigableCat said:

You don't have to explain to me.

You have to explain to the IRS.

And ignorance of the tax law will not be an excuse.

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c.bear said:

I plan on calling the IRS on Monday and asking. We need to be able to come up with a straight answer on this.

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Moving expenses
• Airfare/car rental during your apartment search ($200-$400)
• Charitable donations of items you do not bring with you ($400-$800)
• Gasoline during your move (eg, $200, including the car/van you drive for your move)
• Interviewing expenses for your new job: airfare, hotels ($100-$400)
• Moving van ($400-$600, depending on distance)

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Moving expenses

If you had to move more than 50 miles from your medical school to the teaching hospital, you may qualify for a deduction. You must have established a home where your medical school is located and have worked as a resident for at least 39 weeks one year after moving. You can deduct the cost of moving your household goods and personal effects to the new residence, plus the cost of travel (9 cents per mile and lodging while en route) to the new location.

This is not an itemized deduction, but a deduction from your income. As a result, this deduction will always reduce your tax.

If you have moved and have not claimed a deduction, you have three years to file for a refund. For example, claims for deductions of moving expenses in 1992 must be filed by April 15, 1996. A refund request requires filing Form 1040X.

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DigableCat said:

If you are knowingly making the decision that isn't quite kosher because YOU believe you are right and you should get what you are owed, then it is trying to rip off the government.

I just hope when you are finally in practice, your billing and coding department are trained to use a bit more discretion however.

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Example 3. (i) Employee E is employed by University V to provide patient care services at a teaching hospital that is an unincorporated division of V. These services are performed as part of a medical residency program in a medical specialty sponsored by V. The residency program in which E participates is accredited by the Accreditation Counsel for Graduate Medical Education. Upon completion of the program, E will receive a certificate of completion, and be eligible to sit for an examination required to be certified by a recognized organization in the medical specialty. E regularly performs services more than 40 hours per week. E's patient care services require knowledge of an advanced type in the field of medicine, and are predominantly intellectual and varied in character. Further, although E is subject to supervision, E's services require the consistent exercise of discretion and judgment regarding the treatment of patients. In addition, E receives vacation, sick leave, and paid holiday benefits; and salary deferral benefits under an arrangement described in section 403(b). E is a first-year resident, and thus is not eligible to be licensed to practice medicine under the laws of the state in which E performs services.

(ii) In this example, E is employed by V, a school, college, or university within the meaning of paragraph (c) of this section. However, because of E's hours worked, professional employee status, and employee benefits, E has the status of a career employee within the meaning of paragraph (d)(3)(ii) of this section. Thus, E's services are not incident to and for the purpose of pursuing a course of study. Accordingly, E's services are not excepted from employment under section 3121(b)(10).

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Student FICA and FUTA Exception
This final regulation provides guidance on the student services exception from Federal Insurance Contributions Act (FICA) and Federal Unemployment Tax Act (FUTA) taxes. The final regulations provide guidance on whether an employer is considered a "school, college, or university," and whether an employee is considered a "student" for purposes of the student exception from FICA and FUTA taxes. Schools, colleged, and universities, and employers with employees who are medical residents are affected by this proposed regulation. The final regulation is applicable for services performed on or after April 1, 2005. The final regulation is issued in conjunction with Revenue Procedure 2005-11, I.R.B. 2005-2 (January 10, 2005), modifying and superseding Rev. Proc. 98-16, 1998-1 C.B. 403.
TD 9167. Published December 21, 2004.

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The standards contained in this revenue procedure do not apply to employees who are postdoctoral students, postdoctoral fellows, medical residents, or medical interns because the services performed by these employees cannot be assumed to be incident to and for the purpose of pursuing a course of study. The employment activities of these individuals overlap with the activities arguably comprising a course of study, and thus it is not appropriate to apply the standards of this revenue procedure to these individuals.

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DigableCat said:

START A NEW JOB.

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DigableCat said:

http://www.irs.gov/taxtopics/tc455.html


Quote:
Topic 455 - Moving Expenses

If you moved because of a change in your job location or because you started a new job, you may be able to deduct your moving expenses if your move is closely related to the start of work. To qualify for the moving expense deduction, you must meet both the distance and the time tests, unless you are a member of the armed forces and your move was due to a permanent change of station.
Please tell me what job a medical student had before starting residency?

This is your FIRST JOB. You did not CHANGE JOBS or START A NEW JOB.

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DigableCat said:

I never said AAMC and NLRB said you couldn't claim moving expenses. I said they state that you are a student. And thereby, should not be able to claim moving expenses.

Reading the codes gave me headache. And it doesn't matter to me anyway, as I'm far beyond claiming med school--->residency expenses. But, if you what you found tends to support your position that you should be considered employees and therefore should be able to write off your moving expenses...then so be it.

A word of caution however in itemizing: You need to spend more than what your "standard deduction" is to make it financially feasible.

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EM_Rebuilder said:

Right or wrong, I am deducting everything...

All my travel for this year for interviews, my two trips for away rotations, my trip to find a home, and finally my trip to move...


Had I not been seeking gainful employment (residency IS a Job, otherwise there would be NO taxes... no brainer) then I would have not incurred ANY of these exspenses... therefore, all of these will be deducted from my tax statements.. airfare, rent cars, fuel, eats, and hotels.

I'll do it, then fight it if there is an audit...

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edmadison said:

As I noted above, you cannot necessarily extrapolate that residents are employees in every context just because the IRS says they are for FICA purposes, it doesn't always work that way. I so agree, however, that as for the moving expenses we all have a good faith argument that they are deductible. I did it when I moved.

HOWEVER, interview expenses are clearly not deductible as residency is our first job in a new occupation. The text of the regulation and various publications (e.g. 17) leave no room for doubt.

Ed

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