cost for match and 1040 deduction

[weldon]

I have been doing research in a hospital lab after I got my MD & PhD. Last years, I applied for 2007 match and will hopefully be matched. I wonder if I can deduct the cost for match (ERAS Fees, travel and lodging for interview) in my 1040.

Is ther anyone there who has filed 1040 and deducted cost for match?

Thanks

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[Winged Scapula]

Not tax deductible. Only if you are changing jobs - med school to residency doesn't count.

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

as well as numerous other threads in this forum with the same information (which seems to get asked and confused every year).

 

[Stimulate]

Not tax deductible. Only if you are changing jobs - med school to residency doesn't count.

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

as well as numerous other threads in this forum with the same information (which seems to get asked and confused every year).

I find this interesting because my CPA allowed these deductions under the category "job search". Really these are valid job-seeking expenses as you have no option but to pay them (they are NOT educational so they may not fall under the job related expenses category where say your stethoscope would go, but job search seems reasonable.). Maybe I have a more aggressive CPA and perhaps I will end up in prison. You can also deduct credential verification services...i.e. FCVS...and state licensure costs...as well by the way (at least according to my CPA).

 

[Faebinder]

So what's the consensus here? What if you hire a service for the match to fix up your CV/PS/Paperwork etc and help during the scramble? Sounds like job expenses to me. What about the move from one state to another when you match?

 

[weldon]

Thanks Stimulate, I think you are right. As both postdoctoral research and residency are health care related job, the cost for match is related to job search. So, it tax deductible.

 

[Winged Scapula]

I think as long as you can back it up by having a CPA or other firm do your taxes, then go ahead and claim it. But the general consensus from others seems to be that residency is not considered a "job" like others and therefore, expenses related to it are not tax deductible. Nor is the move because medical school to residency is not "changing jobs" because its not really a job, but rather education. Whatever...everyone seems to have a different story/explanation.

I never bothered because I always did the 1040-EZ as a resident and now as a fellow, I don't have any job search related expenses and they have all been paid for.

 

[edmadison]

We've discussed this every year since I've been on the board.

First, expenses related to obtaining your residency (at least the first one) are not deductible. To quote publication 529: "You cannot deduct these [job search expenses] expenses if: 1. You are looking for a job in a new occupation." Since "physician" is a new occupation and med school graduates have not done this job before, they are out of luck. A "related" job is not sufficient.

Next, fees associated with initial licensure in a profession are not deductible. To quote publication 17: "You cannot deduct professional accreditation fees such as the following: 3. Medical and dental license fees paid to get initial licensing." Thus you cannot deduct USMLE fees, Kaplan fees, first license fees or related expenses.

Third, moving expenses can be deducted when starting a new job, even for those fresh out of school, as long as you meet the other requirements of the deduction (which most of you will).

Finally, the original poster worked for a year after having a MD/PhD. It could be argued that this was a job in his given occupation and, therefore, residency search expenses are deductible (not that this is necessarily my legal advice). His case is not the typical one for those seeking residency, however.

Although confusing to the layperson, this is very basic stuff for a tax professional (CPA or attorney). I suggest you start looking for a new "expert". There's a difference aggressive and wrong. You can see my rant about this in a threat from two years ago:

http://forums.studentdoctor.net/showthread.php?t=219518

Ed

 

[Stimulate]

My CPA disagreed with "Ed" on this one.

Ed, I think you are splitting hairs here. I see your point about staying within the same occupation, however, as a medical student you are not employed. You are basically like a college graduate moving somewhere to start their new job.

Next, regarding fees for "initial licensure". You are attributing examination fees that are usually required to graduate medical school and automatically categorizing them as initial licensure fees. I submit to you that USMLE Steps 1, and 2 can easily be deducted because these are not leading to immediate (within that tax year) licensure but rather fulfilling educational requirements and/or residency application requirements. No different than CME if you look at it that way. Next, my initial licensure fee was $35 dollars for a training certificate. My subsequent application for permanent licensure was over $1000/dollars and was deducted on my 1040.

For others on the board keep in mind that whether residents are employees or students is currently the subject of active litigation with regards to witholding taxes. If as residents we are students, why are we paying witholding taxes on our "stipend".

I highly doubt that the IRS is going to audit and penalize someone for these "gray area" issues and I recommend using a CPA to diversify your risk and find more potential deductions (student loan interest, moving expenses, stethoscopes, etc.).

 

[Faebinder]

What if I were WORKING in the lab for research (yes getting a regular pay check) and applied for the match.

Now do I qualify as changing jobs?