Tax benefits for residents?

[Purulent DC]

I'm an intern and didn't file income taxes for the past 4 years because I had no income, so I'm a little out of touch. So my question is: are there any tax breaks that are specifically for the resident? I just checked out the salliemae web page and learned that my hefty student loans & interest don't offer me any sort of tax break. Does anyone know otherwise or have any tips before I just mail in my 1040EZ?

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[doc05]

interest paid on your student loans are tax-deductible. I also suspect you can take an education credit for your final semester in med school (the one that coincides with your first calendar year earning income).

you can also have a few kids as they will be a deduction for the next 18-22 years.

 

[EctopicFetus]

Yeah your loan interest is deductible assuming you and your spouse make under 130 or so. Also, if you havent paid your interest off then you cant deduct it. Use TurboTax.. it is cheap and easy to use..

 

[the citizen]

Moving expenses are deductible as well if you meet the criteria.

Kids are great come tax time...the problem is that they cost a wee bit more than the deductions/credits. Aim to have your kids on Dec 31 for at least one year of savings.

 

[Blade28]

What are the criteria for moving expense? When I move, I'll have to ship my car, ship a few boxes, buy new furniture, etc...do all those count?

 

[EctopicFetus]

First let me say I am no tax advisor but according to my understanding 2 other things count.. Moving expenses do not include buying new furniture (nice try) but shipping your car and moving boxes etc do count.

One other thing that you can usually deduct is the cost of finding a job (which in the case of interns) includes flying to your interviews, hotels, reasonable meal expenses (see the IRS code for this) and ERAS. That should help offset the tax bill a little bit expecially if you have a spouse who is earning some decent pay.

 

[southerndoc]

Generally you must move more than a certain distance (100 miles I believe) and must be employed for more than 8 months out of the year. For this reason, most medical students do not qualify because we do not graduate until May or June.

 

[sk678]

hey guys,

do you think i s hould just file my taxes myself or you think a professional or possibley even someone who specializes in taxes for medical people to file it for me? any other deductions i should know about?

thanx

 

[doc05]

hey guys,

do you think i s hould just file my taxes myself or you think a professional or possibley even someone who specializes in taxes for medical people to file it for me? any other deductions i should know about?

thanx

?? if you're the typical medical student/resident, your taxes won't be complicated. You should be able to finish your return in ~30-60 minutes.

 

[Mutterkuchen]

Do yourself a favor and buy a copy of TurboTax. Seriously, if you feel that you are clueless, you probably are and you stand to lose a lot of money! So shell out the 20-40 dollars TurboTax costs. DONT DO THE 1040EZ, unless none of the following apply to you:

Things that get you money are:
Education tax credit (for the 1/2 year that you were a student). I personally get $2000 tax credit based on my very high tuition.

Student loan interest paid, including your capitalized interest on your unsubsidized Stafford loans. You may have not made a payment yet on your loans, but the amount that is capitalized (which usually happens right after your grace period ends) iis tax deductible this year!

Moving expense deduction--if you moved more than 50 miles for residency (travel to new place of residence, moving your stuff, storage of your stuff)

Job hunting expenses are probably NOT deductible, since it is your first job as a doctor.


I am not a tax attorney or a tax expert, except that I have encountered these issues in my own taxes. I strongly advise, at least for this first year, to have your taxes done by a professional, or to just buy TurboTax, which can handle these situations. It literally could mean thousands of dollars dollars to you, if any of the situations above apply to you.

 

[Blade28]

One other thing that you can usually deduct is the cost of finding a job (which in the case of interns) includes flying to your interviews, hotels, reasonable meal expenses (see the IRS code for this) and ERAS. That should help offset the tax bill a little bit expecially if you have a spouse who is earning some decent pay.

Hmmm...I've always wondered about this. I've heard different opinions on this matter - whether interview expenses (airfare, rental cars, hotel rooms, etc.) during January and February can count as deductible items. That would help me out A LOT.

 

[surg]

FYI: In general people applying for internships cannot deduct job search expenses because it is their first job in that field. If you had previously worked in that field then it is deductible (i.e. you did a prelim somewhere then re-applied for a categorical somewhere). Also this is only deductible as a miscellaneous expense on Schedule A which would mean that you are itemizing. Unless you own a home in medical school, it is unlikely that most interns and medical students would itemize their first year.


Relocation expenses on the other hand are deductible so long as you meet the distance criteria of 50 miles move (i.e. you can't move across town and deduct that!) AND expect to work at least 39 weeks of the next 12 months after you move. This can go into the next year but you still take the deduction in the year that you move. File form 3903
See http://www.irs.gov/taxtopics/tc455.html

 

[beriberi]

You can use turbotax free if you use the link from www.irs.gov. The government finds it cheaper to pay turbotax then to write its own software.

 

[Blade28]

Very nice...I just have to find more items to deduct now...student loan interest, health care costs, donations, etc.

 

[NinerNiner999]

Generally you must move more than a certain distance (100 miles I believe) and must be employed for more than 8 months out of the year. For this reason, most medical students do not qualify because we do not graduate until May or June.

You do not have to actually "work" eight months of the calender year in that case - you just need a signed contract verifying full time employment year round.

 

[EctopicFetus]

Here is a quote from the IRS website.
Job Search Expenses
You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You CANNOT deduct these expenses if:

You are looking for a job in a new occupation,

There was a substantial break between the ending of your last job and your looking for a new one, or

You are looking for a job for the first time.


If you did research (for pay in college or med school) this could count. I would consult with a tax advisor but.....

Also as far as travel...

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 cannot 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 may choose to use the standard mileage rate to figure your car expenses. The standard mileage rate for 2004 is 37½ cents per mile. See Publication 463 for more information on travel and car expenses.

I hope this help... But like someone one here said I would (and do) use TurboTax, it makes this whole process quick and easy.

BTW I cant find the free link from the IRS site...Can you post the actual link or tell me where it is on the page?

 

[NinerNiner999]

Personally, I deducted over $6000 in moving expenses (including travel for interviews, airfare, gas, lodging, truck rental, boxes, trailers, gas for truck - basically anything necessary for the move). I just got a fat refund check yesterday...

 

[beriberi]

here you go....

http://www.irs.gov/app/freeFile/jsp/index.jsp?

 

[clc17]

We can deduct capitalized interest on unsubsidized student loans??? What form does that require? Hmm, got my refund months ago...but never deducted those. Did it require itemization?

Also, deducting interview expenses is illegal 1. its considered educational...yes you are still a student. 2. its your first time applying for a job as a doctor. Just in case you care. Your tax documents are signed with some oath..penalty of perjury... Pray you don't get audited.

Now about that interest deduction.....

 

[Blade28]

Personally, I deducted over $6000 in moving expenses (including travel for interviews, airfare, gas, lodging, truck rental, boxes, trailers, gas for truck - basically anything necessary for the move). I just got a fat refund check yesterday...

Damn, I'd love to be able to deduct moving expenses, if they include the interview trail.

 

[NinerNiner999]

We can deduct capitalized interest on unsubsidized student loans??? What form does that require? Hmm, got my refund months ago...but never deducted those. Did it require itemization?

Also, deducting interview expenses is illegal 1. its considered educational...yes you are still a student. 2. its your first time applying for a job as a doctor. Just in case you care. Your tax documents are signed with some oath..penalty of perjury... Pray you don't get audited.

Now about that interest deduction.....

Job-Related Expenses include out-of-pocket money spent traveling for job search, and can be included in moving expenses. This expense is not educational - it is necessary to become gainfully EMPLOYED. I kept my receipts and verified everything with Quicken. It is all legitimate - no audit here in case YOU care. BTW - I am well aware of my signed oath so I'm not quite sure what you are suggesting about perjury.

Plus, since I take it you are not a tax accountant, most loan companies include a year-to-date interest paid with each statement. Just keep the one from December. Capitalized interest should also show on a similar statement...

 

[Blade28]

Shoot, I was keeping receipts of everything during the interview trail (only for January), but then threw them away when I heard they couldn't be used as a deductible item. Can I just find the online receipts/order confirmations/email receipts and use those, in case of an audit?

 

[EctopicFetus]

If you charged it on your credit card you can then use it. If you paid cash you are SOL.

 

[edmadison]

From IRS publication 529:

Job Search Expenses

You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You cannot deduct these expenses if:

1. You are looking for a job in a new occupation,
2. There was a substantial break between the ending of your last job and your looking for a new one, or
3. You are looking for a job for the first time.

I think it speaks for itself.

Ed

 

[Blade28]

If you charged it on your credit card you can then use it. If you paid cash you are SOL.

Thankfully, paid for everything by credit card.

 

[edmadison]

Thankfully, paid for everything by credit card.

Note my previous post -- Those expenses are not deductable.

Ed

 

[clc17]

you are looking for a job in a new occupation....unless all of you were doctors before??????

 

[clc17]

friend who is a CPA, he didn't do my taxes,but I called to ask specifically about this. residents have spoken about this year after year after year. not deductible. sorry. also, the moving expenses will certainly be deductible, but only if you itemize, which may be beneficial for a few people...but is NOT for most. For us, married filing jointly has a standard deduction of 9700 (i think, i can't remember exactly), and moving didn't cost us that much.

 

[Whodathunkit]

No one seems to want to care about the law or when they talk to an INFORMED TAX ADVISOR that those expenses ARE NOT DEDUCTIBLE. I've also spoken with a KNOWLEDGEABLE TAX PREPARER, and he has told me the same thing.


Just because you(or your friends) do it anyway and don't get caught doesn't mean it's legal. Take your chances if you want. But when the reaper comes to play...ignorance will not work for you.

 

[nimbexkitten]

As above, moving expenses are deductible, payments made to your student loans are deductible and interview expenses are not...Was a former CPA in my other life!!!

Happy Tax season!!

 

[NinerNiner999]

friend who is a CPA, he didn't do my taxes,but I called to ask specifically about this. residents have spoken about this year after year after year. not deductible. sorry. also, the moving expenses will certainly be deductible, but only if you itemize, which may be beneficial for a few people...but is NOT for most. For us, married filing jointly has a standard deduction of 9700 (i think, i can't remember exactly), and moving didn't cost us that much.

Ahh, but planning visits after the match, coordinating movers, travel for moving and relocation (housing search) etc are all considered "moving expenses" related to a new job, which ARE fully deductible.

 

[Blade28]

I ran a few hypothetical scenarios in this year's edition of TurboTax, and even claiming $5000 worth of expenses during the interview trail only gives you a couple extra hundred bucks as a refund. Maybe not worth it.

 

[Chimera]

Is capitalized loan interest deductible, even if you are not making payments? ie. Economic Hardship Deferment

I know that interest that accrues on the loan is not deductible if you aren't making payments, but what about the one time capitalization that occurs when you consolidate?

 

[EctopicFetus]

Chimera as far as I know it isnt deductible. The only thing that is deductible is interest paid on your student loans that yr.

hope this helps.
Ectopic

 

[edmadison]

Is capitalized loan interest deductible, even if you are not making payments? ie. Economic Hardship Deferment

I know that interest that accrues on the loan is not deductible if you aren't making payments, but what about the one time capitalization that occurs when you consolidate?

I believe that capitalization of interest is deductable -- I'll look that one up for you.

Ed

 

[impetigo]

Just in case some people don't know about it, the Earned Income Credit is available to those who worked part time during med school (making less than about $12,000/yr) or have a dependent child during residency and make less than about $32,000/yr if single (and more if married). It got me $205 back this year in addition to my complete return of fed income tax. ;-)
(yes, you can get more back than you paid in taxes in this case!)

And remember not to pay when you file online, plenty of free options online.

👍

 

[fuegofrio17]

Question regarding the Lifetime Learning Credit: I'm currently a fourth year attending my last semester of medical school in the spring of 2005. But, my tuition for this semester was due around December 15th of 2004. So I technically paid for the tuition for this semester during 2004 although the the tuition was for school in 2005.

My question is, for next year's tax return, can I claim the LLC for this final semester of tuition or is it not applicable since payments were made in December 2004?

Thanks for any help.