tax deduction question

[gobears2007]

hi guys,

i was wondering if there is any way one can deduct the huge expense of med school applications on this year's taxes. anyone have any idea about this? thanks!

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[Doctor Bagel]

I think this is more of a finance than financial aid issue, so I'm going to move it over there. You might want to search the finance forum because I remember seeing this question before.

 

[Twitch]

hi guys,

i was wondering if there is any way one can deduct the huge expense of med school applications on this year's taxes. anyone have any idea about this? thanks!

No

 

[AndyFromMDTAXES]

Here are the basics for deducting your education expenses. Anytime you do something that qualifies you for a new trade or business, the costs incurred are NOT deductible. Whenever you do something that improves your skills in your current trade or business, those costs are deductible.

Since going to med school qualifies you to practice as a physician, none of the costs associated with applying to med school and attending med school are tax deductible. Down the road, if you decide to pursue an MPH once you're a practicing physician, those costs would be tax deductible.

 

[gobears2007]

Here are the basics for deducting your education expenses. Anytime you do something that qualifies you for a new trade or business, the costs incurred are NOT deductible. Whenever you do something that improves your skills in your current trade or business, those costs are deductible.

Since going to med school qualifies you to practice as a physician, none of the costs associated with applying to med school and attending med school are tax deductible. Down the road, if you decide to pursue an MPH once you're a practicing physician, those costs would be tax deductible.

i see. so you cannot even deduct the costs of tuition/fees like you could in undergrad? wow. thanks guys!

 

[Sol Rosenberg]

i see. so you cannot even deduct the costs of tuition/fees like you could in undergrad? wow. thanks guys!

Sure you can deduct tuition and fees, but that's not what you asked.

 

[AndyFromMDTAXES]

I thought you were asking if you could claim these costs as a professional expenses. You can claim the cost of tuition, books, and required fees as either the Lifetime Learning Tax Credit which is limited to the first $10k spent each year, or the Tuition and Fees Deduction limited to the first $4k you spend. Both of these tax breaks have income limitations as well.

If you have some time, go to www.IRS.gov, and download their Publication 970, Tax Benefits for Education. You will probably find answers to many of your questions about the tax breaks available to you during Med School.

 

[gobears2007]

I thought you were asking if you could claim these costs as a professional expenses. You can claim the cost of tuition, books, and required fees as either the Lifetime Learning Tax Credit which is limited to the first $10k spent each year, or the Tuition and Fees Deduction limited to the first $4k you spend. Both of these tax breaks have income limitations as well.

If you have some time, go to www.IRS.gov, and download their Publication 970, Tax Benefits for Education. You will probably find answers to many of your questions about the tax breaks available to you during Med School.

i'm sorry, i should have been more clear. i WAS asking about whether or not i can deduct application fees as some sort of educational expense on my taxes. however, when i read your response, i interpreted the quote "none of the costs associated with applying to med school and attending med school are tax deductible" as you meaning the costs associated with attending such as tuition and fees. i understand that you said the application fees are not deductible, but i thought you also meant that as a med student, one cannot deduct tuition and fees as well (i.e. costs of attending med school). i obviously interpreted wrong! i'll check out that website, thanks!

 

[Stroganoff]

I read through most of Publication 970 (thanks for the link), and my question is on the definition of "paid." If student loans "pay" the balance of tuition and fees, will that be applicable to the Hope/Lifetime Learning/Tuition Deduction? Or do we have to actually "pay" those amounts out of earned income or out of our pockets?

2007 was the first year I filed as an independent (no tax burden), but for some reason I couldn't claim the Hope, Lifetime Learning, or the Deduction (TaxCut gave me a $0 on that). Maybe because I already had no tax burden, but I'd like to be able to try out the Lifetime Learning Credit for 2008 since my income will be higher. This might be a "wait and see" thing.

 

[TMP-SMX]

Yeah the wording is a bit unclear on the publication. I'm assuming my parents should be able to claim the deduction of $4000 for my tuition since I took out student loans and I am their dependent.

From Pub 970

Paid with borrowed funds. You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. You use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account.

So if you had more than $4000 in tuition you should be able to reduce your taxable income by $4000.

 

[Twitch]

I read through most of Publication 970 (thanks for the link), and my question is on the definition of "paid." If student loans "pay" the balance of tuition and fees, will that be applicable to the Hope/Lifetime Learning/Tuition Deduction? Or do we have to actually "pay" those amounts out of earned income or out of our pockets?

2007 was the first year I filed as an independent (no tax burden), but for some reason I couldn't claim the Hope, Lifetime Learning, or the Deduction (TaxCut gave me a $0 on that). Maybe because I already had no tax burden, but I'd like to be able to try out the Lifetime Learning Credit for 2008 since my income will be higher. This might be a "wait and see" thing.

I used my student loans to pay for my tuition but I got the $2000 limit for the learning credit. However, our household income was such that we're in non zero tax bracket. It helps if you're married and your spouse works. Even if you're a single med student you can create taxable income without working full time.

 

[uli8]

Whenever you do something that improves your skills in your current trade or business, those costs are deductible.

Since going to med school qualifies you to practice as a physician, none of the costs associated with applying to med school and attending med school are tax deductible. Down the road, if you decide to pursue an MPH once you're a practicing physician, those costs would be tax deductible.

Hi,
What if you are an international student? I have a degree in my home country equivalent to DMD or DDS, but I have to go to school for another 2 years in US to have the right to practice. Is it considered a new trade or bussiness or just "upgrade"?
Thank you.