Many medical students, residents and fellows (myself included) are currently travelling around the country in search of their dream residency, fellowship or that first job. I’ve talked about how you can save money and stress on your travels before. Today I want to address a different kind of money-saving topic – are interview expenses tax deductible?
Deduction for Job Search Expenses:
When it comes to questions about tax deductions, the best resource is the IRS itself – they’ve pretty much thought of every single detail and scenario when it comes to whether you can deduct an expense for tax purposes. You can learn the details by reading IRS Publication 529. But here are the CliffNotes:
You can deduct your job search expenses if:
- You itemize deductions instead of taking the standard deduction - somewhat a chicken-and-egg situation since you have to actually add up your itemized deductions first to decide whether or not you should claim it.
- You are looking for a new job in the same field.
- Your expenses exceed 2% of your adjusted gross income (AGI) – only the amount that exceeds the 2% is deductible.
- Your expenses fall into one of the defined categories, here are a few common to medical trainees:
- Resume & application costs – preparing and mailing your fancy CV, ERAS fees etc.
- Travel expenses – flights, hotel, mileage (53.5 cents/mile for 2017), 50% of meals etc.
- Agency & Ad expenses – if you paid someone else to find you a job. E.g. recruitment agency.
- Childcare – if you had to hire someone to look after your kids while you’re away.
You can NOT deduct your job search expenses if:
- You are looking for your FIRST job.
- You are looking for a new job in a different field.
- You had a substantial break between jobs – although “substantial” isn’t defined.
So let’s see how this applies to medical trainees:
Medical student applying for residency – unfortunately, none of your interview expenses are deductible because you are looking for your first job. As a silver lining, consider the fact that you can still deduct moving expenses if you end up having to move for residency. Read about the moving expense deduction HERE.
Residents applying for fellowship - you're in luck! You would qualify for the tax deduction. However, depending on how much your AGI is, the deduction can be quite small since only the amount over 2% of your AGI is deductible. Regardless, hang onto those receipts! Personally I'm logging all interview expenses using an excel spreadsheet.
Residents/Fellows applying for 1st job - same as residents applying for fellowship. Again, your deductible amount may differ but it doesn't hurt to check.
Keep in mind this deduction only applies if you itemize deductions, which means the number of residents who will benefit is likely going to be small - the standard deduction is probably going to be higher. But you should always check and go with the bigger tax deduction.
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