I am currently a 4th year medical student graduating in May and moving to Iowa for residency. I have heard that the application, travel and interview expenses for residency are tax deductible. Is this information correct, or are these expenses only deductible if you are already employed in the field searching for another job.

Thanks for your help!

Zip Code: StephenSNewton@earthlink.net

My understanding of the rules is that these types of expenses are only deductible once you've established yourself in a trade or business. So the costs you incur in connection with obtaining a first job generally aren't deductible.

First year doctors can claim a few deductions, however. Moving expenses incurred in connection with moving from your home to your new place of business are deductible, as long as you move more than 50 miles. Allowable costs include shipping your household items and traveling to the new city.

You might also be eligible for the "Lifetime Learning Credit" which lets you claim a tax credit equal to 20% of the first $10,000 you spent on tuition, books, and fees during the calendar year. By claiming this tax credit, you would increase your refund next year by up to $2,000!!

Good luck with your medical career.

Zip Code: cpa@mdtaxes.com

Page 226 Pub 17 2005:

"Student activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the expenses must be paid to the institution as a condition of enrollment or attendance"

Example 2, same page:

"...Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution."

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