Overlooked Tax Deductions for Medical Students

The decision to enroll in medical school requires a significant commitment on your part both financially and mentally. Since the financial cost of attending medical school can be quite expensive, it's even more important that you don't overlook any of the tax deductions available to you for those tax years you are in school. But since your medical program is so intensive leaving minimal spare time to work, you should always evaluate whether a tax filing is even necessary.


Medical Student Filings

Medical students are not treated any differently than other taxpayers by the IRS, but generally, full-time students find that filing a tax return is unnecessary while in school. This is because the IRS only requires students who are not dependents to file a tax return when their income is equal to or greater than the standard deduction for their filing status plus one exemption. In addition, the IRS doesn't require you to include any grants or scholarships you receive to attend medical school in taxable income if you only use the funds to pay tuition and fees and to purchase the books and medical equipment you need.


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Deducting Volunteer Costs

If you do file a tax return that reports a tax liability, the IRS allows you to reduce it with the costs you incur volunteering to provide medical services to those in need. However, to claim your expenses, you must elect to itemize on Schedule A, which is the only way to claim a charitable deduction. When you do, you can include the cost of any medications or equipment you use as well as your travel expenses such as car expenses. And if you travel long distance and purchase a train or airline ticket to get to the location, you can include those costs as well.


Student Loan Interest

Since medical school can be quite expensive, the IRS allows you to claim a deduction for the interest payments you make when you begin repaying your student loans. However, the IRS limits the deduction to those taxpayers with income below the threshold amount it fixes each tax year. Moreover, you must exclude the interest charges that accrue on loan funds you use for purposes other than school expenses such as tuition, books, equipment and room and board.


Lifetime Learning Credit

Medical students are eligible to claim the lifetime learning credit each year they enroll in school and report taxable income on a tax return. The credit will save you more tax than a deduction since the amount you qualify for reduces your tax bill on a dollar-for-dollar basis. To qualify, the IRS only requires that you pay for at least one course per year. Any year you claim the credit, the filing of a Form 8863 is necessary to report your school expenses, such as tuition and fees. You can also include the cost of books, supplies and equipment if you make direct payment to the school as a condition of enrollment.



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