Residency Tax Deductible Stuff!?
Started by clement
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Expenses to obtain your residency-not deductible since it is your first job in a new field
Things that are deductible even if you don't itemize
Moving expenses-deductible if your new job is 50 miles away from where you were living prior to starting (so where you lived for school for most people)
Student loan interest-if you pay any
Tuition and fees deduction-for interns who paid part of their tuition and fees for spring after Dec 31 (lots of schools have a due date before this and loans fund accordingly-screwing everyone out of this deduction)
Things that are deductible if you itemize (but have to exceed a percentage of your income and may not be worth it to itemize if you don't have many other deductions-such as mortgage interest)
Licensing fees
Books
Uniforms (if it is stuff that can't be worn outside of work-buying more dress clothes won't count)
Dues for organizations (like your specialty board, union if you have one, subspecialty organizations, etc
Travel (but not for your regular commute to work, this is for stuff like conferences or if you have away rotations that your program doesn't pay mileage and per diem for)
Gas isn't going to be deductible if you are just talking about going from your house to the hospital. If you go to multiple hospitals in one day though (or multiple sites) you can deduct the mileage between those sites
Things that are deductible even if you don't itemize
Moving expenses-deductible if your new job is 50 miles away from where you were living prior to starting (so where you lived for school for most people)
Student loan interest-if you pay any
Tuition and fees deduction-for interns who paid part of their tuition and fees for spring after Dec 31 (lots of schools have a due date before this and loans fund accordingly-screwing everyone out of this deduction)
Things that are deductible if you itemize (but have to exceed a percentage of your income and may not be worth it to itemize if you don't have many other deductions-such as mortgage interest)
Licensing fees
Books
Uniforms (if it is stuff that can't be worn outside of work-buying more dress clothes won't count)
Dues for organizations (like your specialty board, union if you have one, subspecialty organizations, etc
Travel (but not for your regular commute to work, this is for stuff like conferences or if you have away rotations that your program doesn't pay mileage and per diem for)
Gas isn't going to be deductible if you are just talking about going from your house to the hospital. If you go to multiple hospitals in one day though (or multiple sites) you can deduct the mileage between those sites
The issue here is that itemized deductions are unlikely to exceed the standard deduction for a resident. So in essence, nothing is deductible (for most residents). Sorry.
Even if you have enough "business expenses" you need to be a business owner, not an employee (as residents are.) So unless you've got time to run a business on the side (such as moonlighting), not much to deduct there.
The good news is you don't make much money as a resident either. So you really don't pay much in tax anyway. Your biggest tax will be social security, which you can't get out of no matter how many deductions you can accrue.
Consider this:
A married resident with 2 children makes $45K a year. His standard deduction is $11,600. He gets 4 exemptions worth another $14,800. He now has a taxable income of $18,500. Tax due is 1934. Child tax credit is $2000. Tax bill? You GET $66 from the government. This resident wouldn't even be paying taxes without ANY deductions. Even if you're single with no dependents you're still only looking at paying $5050. Compare that to the tax bill of a single attending making $200,000 of ~ $50,000. That, of course, doesn't count state taxes or payroll taxes, which could add up to another $30K.
My point is that residency isn't the time to be worried about decreasing your tax bill by a couple of bucks. The single best thing you could do to lower your tax bill would be to get married and/or have a kid. Whether that'll increase your after-tax after-expense income, of course, is another question entirely.
Even if you have enough "business expenses" you need to be a business owner, not an employee (as residents are.) So unless you've got time to run a business on the side (such as moonlighting), not much to deduct there.
The good news is you don't make much money as a resident either. So you really don't pay much in tax anyway. Your biggest tax will be social security, which you can't get out of no matter how many deductions you can accrue.
Consider this:
A married resident with 2 children makes $45K a year. His standard deduction is $11,600. He gets 4 exemptions worth another $14,800. He now has a taxable income of $18,500. Tax due is 1934. Child tax credit is $2000. Tax bill? You GET $66 from the government. This resident wouldn't even be paying taxes without ANY deductions. Even if you're single with no dependents you're still only looking at paying $5050. Compare that to the tax bill of a single attending making $200,000 of ~ $50,000. That, of course, doesn't count state taxes or payroll taxes, which could add up to another $30K.
My point is that residency isn't the time to be worried about decreasing your tax bill by a couple of bucks. The single best thing you could do to lower your tax bill would be to get married and/or have a kid. Whether that'll increase your after-tax after-expense income, of course, is another question entirely.
