=====================================================================
DEAR DOC-TALK
=====================================================================
From: Larry Pike-Nobile ([email protected])
Are moving expenses for the sole purpose of relocating to enroll in a
doctoral program considered tax deductable? The move this fall will be a
3000 mile trek to enroll in a program in which the student will be
working as a paid research/teaching assistant, i.e. just like relocating
for any other job, RIGHT?!? Or has the IRS, in their infinite wisdom,
decided that graduate school is a hobby, making this a non-deductable
expense?
=====================================================================
From: Marilyn Simon ([email protected])
Yes- It is considered educational expenses. If you will be getting paid
by the university, then it gets a bit hairy.
=====================================================================
From: [email protected] (Ethan Strauss)
I don't know about the law, but after I had moved across the country
in a U-haul, keeping a huge pile of recipts, it got to be tax time and I
hauled it all out. It turned out that the standard deductable was more than
if I had itemized all my moving expenses, and thus I could effectively
deduct nothing! Might be worth checking out before you worry about it.
=====================================================================
From: [email protected] (Jennifer Michael)
There's a book called Tax Guide for College Teachers that has answers to
this kind of question--I'd check the latest edition.
=====================================================================
From: Don Winiecki ([email protected])
Larry, when I moved from Oswego, NY to Lubbock, TX to pursue my EdD (I am
now 3 years older, greyer, thinner and ABD... 1 more year to go) I was
told that relocation expenses were valid only if the move was to maintain
my job.
The IRS essentially said "no" to your question. Of course, I am speaking
of an interpretation of 1992 code.
=====================================================================
From: Carla M Eastis ([email protected])
I deducted my moving expenses from the summer of 1994 (moved from
Louisiana to New Haven) BUT my situation may be different. I'm married
and filed a joint return, so it may have looked like we relocated for my
husband's job rather than because of me.
However, it sent up no red flags. And I wouldn't expect it to, as long
as you have income from the fall to report, as well as from January-August.
=====================================================================
From: Stone_D ([email protected])
For questions about taxes you can call 1-800-TAX-1040.Moving expenses of
this nature come under the category of deductible expenses.
My understanding of the tax law for this topic is that you must be employed
full time at your new place of employment (and a University setting is
considered a 'place of employment'). However full-time employment is
defined as 'working at least 40 hours a week' (as a research/teaching
assistant) and you MUST continue employment for at least 39 weeks after you
first arrive in your new destination. Going to school is NOT considered
employment, sorry! It does not necessarily matter that you did not have a
full time job at your original location, but it DOES matter that the hours
you work and the length of time you work at the new job meets the IRS
requirements. If you meet these hours and length of employment requirements
you MAY be able to deduct your moving expenses. To verify this answer you
should request 'Publication 17' from the 1-800 telephone number listed in
the first sentence. Good Luck!
=====================================================================
From: "Anne.Hoag" ([email protected])
When I researched this very questions three years ago, I learned that moving
expenses are deductible if you will remain in the same field of work. So, if
you came from a teaching or research situation, no problem. It's a stretch
otherwise.
=====================================================================
From: "Leila Belkora" ([email protected])
I claimed moving expenses for 1994 on both Federal and State Tax forms
and did not appear to get into trouble. I am a graduate student,
was being paid as a research assistant, and was moving from the place
where I had spent 3.5 years collecting data to my home institution.
I think the question of whether a graduate student is or is not an
employee is a murky one, and the less said about it to the IRS the better.
I mean, don't draw attention to it, just consider that your paycheck
is justification for considering yourself to be an employee, and go
from there.
=====================================================================
From: [email protected] (Mary Beth Melchior)
If you currently have a job, and you are moving to a new job (e.g., your
assistantship) there should be no problem deducting your moving expenses, as
I understand the rules. You use Form 3903, and the amount to be deducted is
then entered on line 24 of Form 1040, in the "Adjustments to Income"
section. You don't even have to itemize all your deductions to take this one!
We took the deduction this year, but unfortunately our car was totalled by
a truck (that didn't even stop!) during our 700 mile move, and that wasn't
deductible. So be careful--it's a jungle out there, and even income tax
deductions can only help so much!
=====================================================================
From: [email protected]
I will be entering a doctoral program in the fall. When my CPA did my
taxes this year I asked her if ANY of my educational expenses would be
deductible. She said, "No," as my education was just something I
wanted to do and not "work related." I hope you get better news elsewhere.
=====================================================================
From: Rick Jones ([email protected])
The last time I checked, you have to be employed in a full-time job for 9
of the 12 months after the move. So a TA job wouldn't count. On the
other hand, moving from a higher-paying job to a lower-paying job is
fine: so if, say, you're married, and your spouse works full-time at the
new location, the moving expenses can be deducted on that basis... even
if that full-time job is at McDonald's. The fact that no human being
on the planet would travel 3000 miles to do the job in question is
not a consideration for the IRS. On the other hand, there's a provision
which says that a job is full-time if a rational person would consider it so: a
37 hour a week job is full-time even if the company won't make it 40 so
they don't have to give you benefits. And you can change jobs, work as a
temp, whatever--as long as you're employed full-time.
=====================================================================
From: Cindy Nahrwold ([email protected])
Last July, I also made a major move to begin my doctoral studies,
assuming that since I had a job (a graduate assistantship), I could
deduct my moving expenses. Needless to say, I was shocked to find out
this last spring (when I took my taxes in to be prepared) that I couldn't
deduct anything. According to the H & R Block respresentative I met
with, an individual must be relocating to take on FULL-TIME employment; a
part-time job (such as a graduate assistantship) doesn't count.
=====================================================================
From: "Molly C. Wilkinson" ([email protected])
Go for it. It should be tax deductible as well as your school expenses.
If you ask, you may be told no. I have tried both ways and have deducted
moving expenses as well as my school tuition, books, gas for conferences,
etc. One CPA said no and one said yes, and the IRS said nothing (which
was the best of all)
=====================================================================
From: [email protected] (Christine Gray)
In relation to the tax query on this list, can one deduct a room in
"one's" house if it is used only for dissertating--reading, writing,
computing, printing, etc.? How about all of the expenses involved in
graduation--gown ($600!!!), announcements, dissertation binders, copying,
etc.? christine
=====================================================================
Probably the most important idea regarding IRS deductions is that
you can only deduct items from *related* income that you've already
received--that is, if you have declared income on your tax statement,
you can deduct expenses you've had that relate only to your earning
that income. You can't deduct schooling expenses from income you
got working part-time in an office or bank, for instance.
In 1994 we published an article called, "What's Taxable, What's
Not" in Dissertation News No. 3-1994, which I'll reproduce below.
Remember, the tax law changes every year, so always check with a tax
accountant before you make any important deductions. -dt
================================================================
"You probably know you can't deduct interest on a student loan from your
income taxes--but did you realize you may have to report awards you receive
from scholarships, fellowships, and grants (known in federalese as
"qualified scholarships")? The key is whether or not you receive a 1099 form
from the grantor showing the value of your award.
If you don't get a 1099, you don't have to account for the award. If you
do, it'll be considered taxable income unless you attach a statement to your
form 1040 declaring what portion of the award is nontaxable and excludable
from your gross income. The IRS recommends that grantors give recipients of
awards a list of what's deductible, but if you don't get the list, you have
to determine it yourself.
The federal code states that if you're a degree candidate, taking
classes or conducting research, these are the things that aren't, and are,
taxable--
Non-Taxable Things You CAN Exclude From Your Gross Income
1. Tuition. Amounts from a "qualified scholarship" designated for
tuition and fees in a degree program at a university or institution.
2. Educational expenses. Anything you pay for "related educational
expenses," that is, for books, supplies, equipment, and fees that are
required in your degree courses, as long as the money is earmarked by your
grantor for such purposes.
3. Research expenses, including clerical help, travel costs, and
incidental expenses, provided they're allowed by your award.
4. Services and accommodations. If you receive any free "contributed
services and accommodations," such as room, board, laundry services,
parking, etc., you may exclude these amounts from your gross income.
Taxable Things You CANNOT Exclude From Your Gross Income
1. Stipends, living allowances, room and board, etc. If you pay for
these items out of your award, they are always taxable income.
2. Tuition, expenses, etc., paid with money earmarked for other
purposes. If your grantor specifies your award be used in particular ways,
you cannot deduct any expenditure contrary to those specifications.
3. Educational and training allowances for veterans. These aren't
considered "qualified scholarships," and are not excludable.
4. Compensation for employment. Payment for past, present, or future
employment, or for services under the supervision of the grantor.
5. Pay for services for your grantor. Compensation for study or research
"primarily for the benefit of the grantor."
6. Payment for teaching or research. You may not exclude payment for
teaching, research, or other services performed as a condition for receiving
a scholarship.
One caution: Before you take any action, check with a tax accountant.
And remember, these rules relate to federal taxes only. Each state's tax
laws vary, so you must check out what is and isn't taxable in your own
state. And that's another bucket of eels.
=====================================================================
From: Christine Ng ([email protected])
I'm not sure this is correct. If you don't get a 1099, it only means
that your school has not reported your fellowship to IRS, but all
fellowships are in fact subject to taxation. So, if you don't
report your fellowship, you probably won't get into trouble this
year but if something happens and you get audited for some reason,
you may have to pay back the taxes. At least, this is what our
school tells the fellowship holders here.
=====================================================================
From: [email protected] (Iona Mara-Drita)
My impression is that school costs are deductible only if the degree is
strongly tied to employment (i.e., a police officer who has to take
masters courses in corrections or something in order to get a promotion).
However, you could deduct your moving expenses if you get a job on campus
that is at least 50%-time. So I think that some non-deductible "school"
expenses can legitimately be deducted as professional expenses.
Someone mentioned the costs of graduating: Since you'll need the gown to
fulfill your obligation to attend graduations when you become a professor,
I see no reason you can't deduct the gown if you're starting a job in
that calendar year. Some of the other costs associated with graduating
are also associated with finding a job (photocopying, attending a conference
and going to the 'how to find a job' seminar), and can be deducted.
=====================================================================
From: Elizabeth Johnston ([email protected])
I had a question about the tax info. I received a training grant from
the NIH at the time that they still had a payback agreement. If I didn't
work in science for two years, the money had to be paid back to the NIH.
I paid taxes on it but I was later told that because of the payback
agreement, it is treated more like a loan and is not taxable. Do you
have any more info?
=====================================================================
From: "Anthony (Tony) Sheppard" ([email protected])
I just reported a fellowship amount for which I did not have a
1099 or 1042-S or anything in lieu of either. The IRS returned my
return demanding some such proof. It is like squeezing blood out
of a stone to get the school to produce anything it does not want
to. Now they are nit-picking about the correct way to do it under
the law, forgetting that the required thing was to supply the
1042-S three months ago! If you have a fellowship, the school or
whoever should supply support paperwork. If they don't, they are in
the wrong, but it will come back to haunt you. Many schools are
still very slack about some of this paperwork and are only just
beginning to react to some hefty fines the IRS threw around a couple
of years ago to schools not complying with the tax code. Good luck!
=====================================================================
Copyright 1994, Association for Support of Graduate Students.
Unauthorized reproduction of survey results is forbidden by
federal copyright laws.
To join ASGS and/or NAGPS,
or to order any ASGS product
or written document,
click here for the ASGS Order Form
Return to ASGS home page.