Medical Residents & Fellows 2021 Tax Tips (For the 2020 Tax Year)

Congratulations on completing your medical degree! As you embark on your medical residency journey, it’s crucial to be aware of the various tax credits and deductions available to you. This article aims to simplify the tax season for medical residents and fellows by offering insights into these benefits. Key Tax Tips for Medical Residents 2021:
- Special Offer: From March 1 to March 31, 2021, PGY1 and PGY2 medical residents can avail tax return preparation for a discounted price of $249.99 (originally $299.99). The package includes a checklist to optimize tax deductions, T1 income tax return preparation, and year-round support for any queries.
- Travel Expenses: If your residency requires you to travel for conferences, meetings, or other job-related activities, especially under the Rural Ontario Medical Program (ROMP), you can typically deduct associated expenses. This includes costs for meals, lodging, and transportation, provided the travel necessitates an overnight stay or rest.
- Moving Expenses: If you’ve relocated to start your residency or post-residency practice and the new location is at least 40 kilometers closer to your workplace, you can deduct moving expenses. This encompasses transportation, accommodation, meals, packing, shipping, lease cancellation fees, utility connection/disconnection fees, and home buying/selling costs.
- Home Office Deductions (COVID-19 Impact): Due to the pandemic, many activities shifted online. If you worked remotely for over 50% of the time for at least four consecutive weeks in 2020, you’re eligible for a home office expenses deduction. There are two methods to claim this: the Temporary flat rate method and the Detailed method.
- Professional Dues: Expenses for professional societies are deductible, provided they maintain a registered professional status. This includes fees for malpractice insurance, memberships to organizations like CMA, OMA, CMPA, CPSO, and union dues to PARO. Costs for professional journals, trade magazines, and medical license renewals are also deductible.
- Invest in a TFSA: During your residency, consider investing in a Tax-Free Savings Account (TFSA) as your income is likely to rise post-residency. The 2021 TFSA limit is $6,000, but you can make catch-up contributions if you didn’t maximize your contributions in previous years.
- Job-Related Expenses: Deduct costs for supplies and tools directly used in your employment, such as scrubs, office supplies, medical tools (e.g., stethoscope).
- Form T2200 – Conditions of Employment: To deduct work expenses, medical residents need Form T2200, obtainable from your post-graduate medical portal, payroll office, or supervisor.
- Other Deductions: Don’t forget to claim credits for charitable donations, tuition, child care, mortgage, property tax, student loan interest, fees, and the first-time home buyers’ tax credit.