DeadCactus

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Can a resident who is moonlighting in a 1099 position deduct fellowship interview costs (flight, suit, hotel, etc) as a business expense from the 1099 income?
 

em1234

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Can a resident who is moonlighting in a 1099 position deduct fellowship interview costs (flight, suit, hotel, etc) as a business expense from the 1099 income?
my accountant would say yes to the flight, hotel, rental car...but not the suit.
 
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Dr.McNinja

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Travel, secondary housing, etc is ok for interviews. Food can be, but it's iffy. If you're feeding someone else then it's entertaining expenses. If you're just eating, then no. Everybody eats, regardless of whether they're interviewing or not.
 
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DeadCactus

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Cool, thank you. Trying to use as much of the 1099 moonlighting income as possible for tax deductible stuff.
 

Boatswain2PA

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Travel, secondary housing, etc is ok for interviews. Food can be, but it's iffy. If you're feeding someone else then it's entertaining expenses. If you're just eating, then no. Everybody eats, regardless of whether they're interviewing or not.
But eating while traveling is much more expensive than eating while at home. Travel meals are deductible according to my CPA (and quickbooks has a "travel meals" category).

Unfortunately the tax laws are so complicated that what is/is not deductible is realistically only determined when you are audited.
 

The White Coat Investor

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Unfortunately the tax laws are so complicated that what is/is not deductible is realistically only determined when you are audited.
Give me a break. This stuff isn't that bad. The IRS publishes publications that explain all these rules. Sometimes there is a judgement call, but as long as you're reasonable at worst you'll have to pay that back in an audit with penalties and interest. Try these IRS resources that answer all your questions. You'll probably learn something else useful while you're in there.

Job Search Expenses May be Deductible | Internal Revenue Service

https://www.irs.gov/pub/irs-pdf/p463.pdf

You can deduct the cost of meals in either of the following situations.

It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business.

The meal is business-related entertainment. Business-related entertainment is discussed in chapter 2.

The following discussion deals only with meals that aren’t business-related entertainment. Lavish or extravagant. You can’t deduct expenses for meals that are lavish or extravagant. An expense isn’t considered lavish or extravagant if it is reasonable based on the facts and circumstances. Expenses won’t be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts.

50% limit on meals. You can figure your meals expense using either of the following methods. Actual cost. The standard meal allowance. Both of these methods are explained below. But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. If you aren’t reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans.


So your business travel meals are 50% deductible. Was that so complicated? It makes sense, right? You have to eat whether you travel or not, so the whole thing shouldn't be deductible. But they do cost more, so you should be able to deduct something. How much? Well, 50%. That's the rule. Not that complicated.

Now, what about interview expenses. What is the rule? Well, it depends on what you're really doing. If you're in business for yourself and looking for additional clients, those expenses are deductible as a schedule C business expense. i.e. a 1099 guy looking for a 1099 job. If you're an employee looking for a new employee job, those expenses are deductible on Schedule A but subject to a 2% of income floor.

Travel and transportation expenses. If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. Even if you can't deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area. You can choose to use the standard mileage rate to figure your car expenses. The 2016 rate for business use of a vehicle is 54 cents per mile. See Pub. 463 for more information on travel and car expenses

I think that probably applies to your situation. So flight- definitely. Hotel, definitely. Suit? Hmmmm...probably not. Bear in mind that while it is deductible, it may not save you any tax dollars. For example, if your standard deduction is higher than your itemized deductions or if your total of "2% floor deductions" is less than 2%. Chances are good this isn't going to save you much money in taxes.
 

Boatswain2PA

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While I haven't been audited, I have several friends who own different types of companies that have. Was talking to one last week, he owns a masonry business that does several million a year. He said he's had auditors who asked for a few receipts and was good, and he's had an auditor that basically used any reason he could find to disallow expenses. His opinion is that much of it depends on the auditor.

My personal, and extensive, experience with government bureaucrats is the same...it depends on who you get.
 

Restart13

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What are other reasonable expenses that you can deduct as a resident that moonlights? Can you deduct home office, portion of phone, car, etc? Assuming you're pulling in an extra $12-15k a year as a resident with 1099.
 
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