tax deductible expenses?

[hzma]

Hey everyone!

I was just wondering if any of you know if any of these massive expenses we've paid for interviews, traveling, and then moving into residency in July, is tax deductible. And if so, how should we file in order to get that advantage?

Thanks!

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[THP]

Medical school interviews, travel etc were not deductible according to my accountant, so I assume the same applies for residency. However, any moving expenses you incurr are so keep track of food, gas, lodge, moving vehicle, etc. expenses by saving your receipts. Your tax preparer can alway let you know a little better and it never hurts to ask.

 

[f_w]

Unless you have some serious income outside of your residency stipend(proceeds from your trust fund, stocks etc), the first year out you probably won't have much benefit from itemizing deductions. You only work 6 months out of that year, if your residency stipend is 42k, you only make 21k in the first 6 months. As taxes go by your annual income, you are going to pay hardly any taxes at all.

 

[f_w]

Unless you have some serious income outside of your residency stipend(proceeds from your trust fund, real estate, stocks etc), the first year out you probably won't have much benefit from itemizing deductions. You only work 6 months out of that year, if your residency stipend is 42k, you only make 21k in the second 6 months. As taxes go by your annual income, you are going to pay hardly any income tax at all.

 

[penguins]

med school interviews are different than residency interviews.
residency interviews are akin to have JOB interviews which are tax-deductable.

 

[ramonaquimby]

med school interviews are different than residency interviews.
residency interviews are akin to have JOB interviews which are tax-deductable.

i was just about to post the same thing! lol...residency is considered a "job" and applying to them is therefore part of "job search". i have a[nother] job right now, so i plan to deduct for suits, etc...

 

[DigableCat]

i was just about to post the same thing! lol...residency is considered a "job" and applying to them is therefore part of "job search". i have a[nother] job right now, so i plan to deduct for suits, etc...

*sigh*

residency interviews expenses are NOT job interviews and cannot be deducted...and suits are NOT deductible....

http://www.jamesdance.com/Pages/list_of_deductions.htm

Non-Deductible Expenses:
Clothing that is adaptable to everyday wear (this includes suits, evening wear, etc.).

 

[penguins]

Okay, your link says you can't deduct:
"Job hunting expenses if you’re looking for your first job, or changing professions."
Well, that sucks, guess I misunderstood our accountant or he misunderstood my question. Your link says it must be in the same line of work and not your first job. Residency is a job but it is definitely the first job in that field. I'll have to call him back.... all those reciepts saved for nothing!

 

[Blade28]

I think we go through this every year. I'm also bummed that interview expenses can't be deducted - all those saved receipts and email confirmations for flights/hotels/car rentals...

 

[GoPistons]

does a first year resident qualify for the lifetime learning credit?

 

[sepsis]

does a first year resident qualify for the lifetime learning credit?

No, becuase you are not paying tuition. The deduction is 20% and no more than 2K (last time I did it) of the total tuition you pay.

 

[GoPistons]

but you paid tuition for the second semester of 4th year of medical school in year 2005...

 

[group_theory]

One thing to consider ...

in the eyes of the federal government (especially the IRS), you're not starting a "job" when you start residency. You're still "training" (and thus the government is paying the institution $100k/yr for you to train). The fact that you're getting a stipend with benefits does not negate this position.

From a resident's perspective - it feels like a salaried job. You show up, you do work, you get benefits and paid vacation, you get a paycheck, you can contribute to retirement accounts, you file your taxes.

From the government's perspective, you're still in training and thus not actually employed.

(as with all things related to the government, this gets very very complicated. The important thing to remember is that if you claim your residency interviews as deduction, it's not SDN or its posters you must convince, it's the IRS and/or tax court that you must convince - and I'm sure getting a tax attorney or accountant experienced with legal procedures will cost you more than the deductions you claim)

 

[Snoopy]

but you paid tuition for the second semester of 4th year of medical school in year 2005...

That's correct. If you actually paid your tuition in the tax year you can take the credit. Example: If your school charged your tuition/used your loans in 12/05 you CANNOT take the credit. If they charged your tuition/used your loans in 1/06 you CAN take the credit.

 

[GoPistons]

did you do this? how do I make sure that I qualify? Do I have to call the IRS help line?

 

[mpp]

The school will send you a form that shows educational expenses paid for the previous year. Just do your taxes like it says in the book (or in TurboTax or however you do your taxes) and it will ask for the amount on that form when completing your tax credits section.

If you need to know if you qualify right now, find your last tuition bill and check the date. If the date is in 2005, then you should qualify when you file your taxes this April. This credit has been available since 1998 and is worth thousands (up to $2000 per year) even if you don't owe any taxes (it is a credit, not a deduction). You can file ammended returns to reclaim this credit for previous years.

 

[Methyldopa]

If you read through the tax manual that the IRS publishes (which I've done, God knows why!), job interviews are ONLY tax deductible if it is in a field that you are already a part of. Meaning you are already a doctor and are looking for another physician job.

A good example is a secretary who goes to law school part time, who applies for attorney positions; her job hunting is NOT tax deductible since it is in a NEW field.

You can only get a tax break if you already in the field and this is NOT your first job.

 

[cardiologydude]

How about if I apply for a fellowship position? Can I deduct this?

 

[NinerNiner999]

One thing to consider ...

in the eyes of the federal government (especially the IRS), you're not starting a "job" when you start residency. You're still "training" (and thus the government is paying the institution $100k/yr for you to train). The fact that you're getting a stipend with benefits does not negate this position.

This is completely wrong. You will complete a W-4 form for witholding and you will pay taxes, medicare, social security, and FICA. In the eyes of the government you DO have a job - no different than any job out there. The fact that the government supplements your job with a stipend has no bearing on your individual tax status.

Now for loan calculations and such, there is a grey area.

 

[toxic-megacolon]

This debate is pointless. If you claim the lifelong learning credit, and your 2007 tuition, you'll pay zero in federal taxes. You don't need to claim anything else (travel expenses, etc.) You can't pay less than zero dollars in taxes!

 

[group_theory]

http://www.residentandstaff.com/article.php?s=RSP/2006/09&p=5

an interesting link (not endorsing it, take it with a grain of salt, and when in doubt, always seek the advice of a trained professional)

 

[dpmd]

The IRS.gov website is a good place to check before doing something on the advice of others (you are the one who has to pay if they are wrong).

From the website
http://www.irs.gov/publications/p529/ar02.html#d0e999
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.

Moving expenses
Who Can Deduct Moving Expenses
You can deduct your moving expenses if you meet all three of the following requirements.

Your move is closely related to the start of work.

You meet the distance test.

You meet the time test.

This publication http://www.irs.gov/publications/p521/ar02.html#d0e220 describes those tests more clearly, but the gist is that if you move 50 miles or more away from where you live within one year of starting a new job where you will work full time for at least 39 weeks, then you can deduct certain expenses.

Read carefully before you act to avoid getting into trouble.

 

[NinerNiner999]

Read carefully before you act to avaid getting into trouble.

HAH! Is this a funny phonetic freudian slip or what!