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Residency Interviewing - Income tax deductible?

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Hellboy

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Does anyone know if you could deduct interviewing costs (plane tickets, hotels, etc.) as job search expenses on the income tax? Considering how much I've spent it could potentially be a sweet deal but not sure if that's legit... thoughts?
 

highball

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I asked a tax lawyer and a CPA and the short answer is NO. Since you do not currently have a job, you are not technically looking for a new job in the same area of work which is required for the deduction. You can deduct some sales tax from plane tickets/suits, etc. But the entire bill is not tax deductible.
 

odieoh

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I was able to deduct those expenses this year, but only because I wasn't coming straight out of school. If you are hunting for your first job out of school you can't deduct. I did a research fellowship last year in which i had did some clinical activities, so my intern year this year isn't my first year out of school, so I deducted.
 

mackie

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odieoh said:
I was able to deduct those expenses this year, but only because I wasn't coming straight out of school. If you are hunting for your first job out of school you can't deduct. I did a research fellowship last year in which i had did some clinical activities, so my intern year this year isn't my first year out of school, so I deducted.


Hmmm . . . good question. I also worked in the lab for a year before starting residency, and while it involved medical research, it wasn't clinical--ie, I didn't have any direct patient contact during this year. Does this still count?
 

CameronFrye

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Hellboy said:
Does anyone know if you could deduct interviewing costs (plane tickets, hotels, etc.) as job search expenses on the income tax? Considering how much I've spent it could potentially be a sweet deal but not sure if that's legit... thoughts?


Most interns will not have to pay any taxes that first year anyway.
 

edmadison

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mackie said:
Hmmm . . . good question. I also worked in the lab for a year before starting residency, and while it involved medical research, it wasn't clinical--ie, I didn't have any direct patient contact during this year. Does this still count?

Actually neither of you can deduct you job search expenses. The tax code does not permit deducting these when the job is in a new occupation. There is no question that "physician" is a different occupation from from doing research (unless you are employed as a researcher rather than a resident).

Ed
 

Plastikos

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That all may be true about not technically being able to do it, but residents at every place i interviewed at said they did it.
 

Methyldopa

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yeah, you can deduct just about anything you want really, but if you deduct incorrectly and the IRS audits you, you're kind of in trouble.

Indeed you CANNOT deduct and should not.
 
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14022

Plastikos said:
That all may be true about not technically being able to do it, but residents at every place i interviewed at said they did it.

This stupid topic has been discussed so many times, it is starting to become really annoying. Anyone can deduct for anything they choose. You can deduct for donating your car if you only own a bike, you can deduct for child support even though you are a virgin, and you can deduct for travel expenses for residency when the tax code does not permit it. But if you get audited and are asked to prove your deduction, your life will be such a pain in the butt for the next several years that you will end up regretting it. Personally, I don't think it is worth it to save a few bucks at the end of the year. Your income will only be about $20,000, which should put you close to the lowest tax bracket anyways.
 

gutonc

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edmadison said:
Actually neither of you can deduct you job search expenses. The tax code does not permit deducting these when the job is in a new occupation. There is no question that "physician" is a different occupation from from doing research (unless you are employed as a researcher rather than a resident).

Ed

There is a legal loophole for a very small number of us. A classmate of mine ran this by his father who is a tax attorney and who said it would be defensible. If you are MD/PhD and are applying for one of the research pathway type residencies out there, you can make the argument that you're getting a new job of the same type and can deduct the expenses.

Of course, the overall number of people to whom this applies is so minimal that it's hardly worth mentioning. But I mentioned it anyway.

BE
 

Gregg

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And if you deduct tuition for spring (up to $2,000 tax credit) you probably won't owe much if anything on the $20k you earn.
 

ekydrd

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Gregg said:
And if you deduct tuition for spring (up to $2,000 tax credit) you probably won't owe much if anything on the $20k you earn.

This is totally true. I got back all the fed taxes I paid because I claimed moving expenses and tuition for last year. Nice chunk o' change.
 

Methyldopa

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Gregg said:
And if you deduct tuition for spring (up to $2,000 tax credit) you probably won't owe much if anything on the $20k you earn.


Actually it's a $4,000 deduction (if your AGI is <$65k). This would most likely be the only deduction you can make for that year.
 

CameronFrye

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Methyldopa said:
Actually it's a $4,000 deduction (if your AGI is <$65k). This would most likely be the only deduction you can make for that year.


Gregg was referring to the Lifetime Learning Credit, which is a credit and not a deduction. The current maximum for the credit is $2000. That credit should be enough to prevent most interns from having to pay any taxes that first year out.
 

Methyldopa

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CameronFrye said:
Gregg was referring to the Lifetime Learning Credit, which is a credit and not a deduction. The current maximum for the credit is $2000. That credit should be enough to prevent most interns from having to pay any taxes that first year out.


I was talking about a Tuition and Fees deduction. You can only claim one of those, either a Life time credit or a Tuition and Fees deduction (which is the better option in my opinion since you can deduct more!).
 

CameronFrye

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Methyldopa said:
I was talking about a Tuition and Fees deduction. You can only claim one of those, either a Life time credit or a Tuition and Fees deduction (which is the better option in my opinion since you can deduct more!).


A $2000 credit is much much much better than a $4000 deduction.
 

CameronFrye

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To elaborate:

A $4000 deduction for an intern will reduce your tax bill by $600 (since you'll only make roughly 21,000 the year you graduate, you'll be in the 15% tax bracket).

A $2000 credit will reduce your tax bill by $2000.
 

Methyldopa

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CameronFrye said:
To elaborate:

A $4000 deduction for an intern will reduce your tax bill by $600 (since you'll only make roughly 21,000 the year you graduate, you'll be in the 15% tax bracket).

A $2000 credit will reduce your tax bill by $2000.


Thanks good to know!
 

edmadison

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brooklyneric said:
There is a legal loophole for a very small number of us. A classmate of mine ran this by his father who is a tax attorney and who said it would be defensible. If you are MD/PhD and are applying for one of the research pathway type residencies out there, you can make the argument that you're getting a new job of the same type and can deduct the expenses.

Of course, the overall number of people to whom this applies is so minimal that it's hardly worth mentioning. But I mentioned it anyway.

BE

This would be a reasonable argument if you weren't doing clinical medicine. If you are doing a 6 year GS residency with one year of research (PGY-4?) then this won't fly. The law says "occupation", if you look in other parts of the tax code, the distinction is pretty clear. Still, the odds of getting audited are pretty low.

Finally, everyone should remember that the LLC gives you a 20% credit on up to $10,000. Thus, you only get the full $2,000 if you paid 10K or more.
 

bubalus

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Here's something else to think about. The laws are clear about the first job thing and job search expenses. However, what if you're going into a specialty that requires a prelim year. You're actually interviewing for your second job also, and those expenses, in theory, should be deductible.
 
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