Residency application expenses taxes

[Ray D. Ayshun]

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Can expenses for residency interviews be deducted as job expenses, educational expenses, etc?

 

[Raryn]

Can expenses for residency interviews be deducted as job expenses, educational expenses, etc?

Could probably put it down as job search expenses but of course

1) You have to make income in the same year you incur the expense. Which would mean any expenses before January wouldn't really do much because you don't make money M3-M4
2) The chance itemizing brings you above the standard deduction is minor. Even then, you will only earn ~$25k in the calendar year you start residency and may qualify for various education credits, so your tax burden for that year is pretty much zero.

 

[Ray D. Ayshun]

Sorry, forgot to include i'm an md/phd, so getting stipend of around 27k. Unfortunately, interviewing, away rotations, and step 2's, knocked around 10-12k off of that.

 

[235009]

If you read the rules for the deduction you'll find that residency search/interviews don't count

 

[Ray D. Ayshun]

Just read the rules for job search deductions, which are possible if you are looking for a new job in your present occupation. As an MDPhD student, could I not argue that my current job is about to lay me off, so I'm presently searching for a new job in the same occupation, "medicine?"

 

[dpmd]

You don't have to be getting laid off to qualify. You don't actually have to get the new job to qualify. The real question is whether it qualifies as a job in a new occupation. I don't think you meet that standard of it being the same occupation when going from your PhD stipend to a residency position as an MD, but it only really matters if the auditor from the IRS agrees (and that is only if you get audited). So, you have to decide if it is worth the risk.

 

[235009]

Just read the rules for job search deductions, which are possible if you are looking for a new job in your present occupation. As an MDPhD student, could I not argue that my current job is about to lay me off, so I'm presently searching for a new job in the same occupation, "medicine?"

No

Also there's no chance your expenses for residency search are going to exceed the standard deduction

 

[dabeags]

Sorry, forgot to include i'm an md/phd, so getting stipend of around 27k. Unfortunately, interviewing, away rotations, and step 2's, knocked around 10-12k off of that.

My wife is an MD/PhD so she receives a stipend too. We did not deduct her interview expenses because as noted here, they don't really fit. However, I did subtract her Step 2 CS/CK fees from her stipend income as they are required by her school for graduation.

 

[link2swim06]

You CAN deduct ALL the cost associated with moving to your new job. You can claim these without even itemizing (meaning everyone can claim these). Keep receipts for the moving truck, gas, boxes, packing materials, etc. etc. (Assuming you are moving at least 50 miles.)

Also if your tuition was paid after jan 1st of this year you will qualify for the educational credit.

With the above deduction and tax credit you will get back the vast majority of your federal tax withheld from july-december of your intern year. That's near 2-3K coming back to you. Also you might get back from state tax if any withheld for that.

 

[mvenus929]

Agreed with above. I don't think you can deduct residency application/interview costs, but you can definitely claim moving expenses associated with moving to your new job, IF your program does not give you a relocation stipend (mine did, and it was much more than I actually spent moving since I just moved across the state).

 

[jthedestroyr]

Agreed with above. I don't think you can deduct residency application/interview costs, but you can definitely claim moving expenses associated with moving to your new job, IF your program does not give you a relocation stipend (mine did, and it was much more than I actually spent moving since I just moved across the state).

If you read the help information in turbo tax (honestly felt it was worth the $, specially if you invest in stocks like I do), it states very plainly you CAN deduct any costs associated with relocating for a job if the job is >500-100 miles (cant remember exactly) from current location. This includes any travel costs (air,taxi, hotel, dry cleaning for suites and even any costs associated with interview IE printing resumes etc BUT NOT FOOD). Pretty much can deduct almost everything associated with the "job hunt," just not food. It also says you can not deduct undergraduate/graduate/post graduate application fees. I would assume the IRS considers residency application as post graduate level study hence not allowed to deduct residency application fees.

I'm not an accountant, so you might want to clear with whoever does your taxes, but this is how I filed.


Lastly, what meat tornado said about with deductions is completely correct. I'm on the east coast, but I interviewed at a few west coast/midwest places. I flew a fair amount of bit, but even after keeping track of ALL my costs which were fairly significant, it still wasn't even close to the standard deduction the IRS gave me. You get a pretty nice standard deduction if you're married FYI.

 

[link2swim06]

If you read the help information in turbo tax (honestly felt it was worth the $, specially if you invest in stocks like I do), it states very plainly you CAN deduct any costs associated with relocating for a job if the job is >500-100 miles (cant remember exactly) from current location. This includes any travel costs (air,taxi, hotel, dry cleaning for suites and even any costs associated with interview IE printing resumes etc BUT NOT FOOD). Pretty much can deduct almost everything associated with the "job hunt," just not food. It also says you can not deduct undergraduate/graduate/post graduate application fees. I would assume the IRS considers residency application as post graduate level study hence not allowed to deduct residency application fees.

I'm not an accountant, so you might want to clear with whoever does your taxes, but this is how I filed.


Lastly, what meat tornado said about with deductions is completely correct. I'm on the east coast, but I interviewed at a few west coast/midwest places. I flew a fair amount of bit, but even after keeping track of ALL my costs which were fairly significant, it still wasn't even close to the standard deduction the IRS gave me. You get a pretty nice standard deduction if you're married FYI.

The IRS ABSOLUTELY does not consider residency "post-graduate study." This has already gone to court as residents argued that they are students and not employees. The IRS won in court and it is legal history that resident are employees not students. Hence why we have to pay income tax as residents.

But you cannot deduct the job search expenses because it's a new occupation.

Regardless, for the reasons I stated above, you should be getting most of your income tax back for other reasons. So it's pretty much a moot point.

 

[WinslowPringle]

So, what about interview expense deduction from a PGY-1 surgery prelim applying to categorical PGY-1 or 2 surgery or an IM prelim applying for categorical non-IM. As mentioned, in most cases it wouldn't be incredibly beneficial - but hypothetically speaking, would it be acceptable? (http://www.irs.gov/uac/Job-Search-Expenses-Can-be-Tax-Deductible)

 

[gutonc]

Probably. Again, unless you have significant non-work income or other deductible expenses, the likelihood that you'll run up anything on your job search alone that exceeds the standard deduction is small (but not 0).

And remember (not specifically you, but in general) that tax deduction != tax credit. It's not like you get all that money back, you just get to deduct it from the income that's ultimately subject to federal income tax.