Research expenses and taxes (US Citizens and Residents)

[anthro7843]

Hi all, I know there are a lot of other conversations that have been held here over the years on taxes, but since I've read them all and couldn't find any useful answers (and many of them are outdated), I thought I would start a new thread. 

Is there any way for PhD students to deduct research expenses from their taxes?

The 'qualified education' expenses that we can deduct are extremely narrow, and include only tuition and books and some fees (Publication 970). However, there is a line that says that anything that is 'required for enrollment' is also tax deductible. Now, it's hard to imagine doing a PhD without doing research, so in my mind, research costs (at least software, supplies, some traveling expenses) are tax deductible. I would not be able to enroll if I wasn't carrying out research. Moreover, such expenses are required of all students in my degree track. 

Publication 970 states the following: [Qualified education expenses] For purposes of tax-free scholarships and fellowship grants, these are expenses for:

• Tuition and fees required to enroll at or attend an eligible educational institution; and

• Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.

Has anyone encountered any useful info on this topic?

[cardamoma]

This is a good question for a tax professional. Your definition of what is required for your program is a bit broad, and although all students are impacted by research costs they will not be the same for each student. Consider the fact that under that interpretation you could also expense mileage to/from school etc. 

One guideline some accountants use for expenses (for small businesses) is to generally expense what other professionals in your field are expensing. This is because if your expenses dramatically outstrip the expense amount of other people in your same position, it might flag closer scrutiny and an audit. If you feel you can justify the research expenses you could add them in, but be ready to defend them to an auditor, just in case.