4 Steps to Understanding Tax Deductible Fertility Treatment Expenses

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Disclaimer: The information provided by this blog is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant.

Link to the original Resolve New England Blog Post

Ah… tax time. Some of us dread it, some of us fear it and most of us don’t completely understand it. But take heart things like fertility procedures, surgeries, ultrasound, medicines and even pregnancy tests may be tax deductible, if you qualify.

So what’s an infertility patient to do? If you have an accountant, by all means let them handle things! For the masses who prepare taxes on their own you must consider these four steps.

Taxes
Photo by Keiko Zoll.

Step 1: Add It Up.

First, figure out if you qualify for deductions. You can deduct only the amount of your medical expenses that is more than 7.5% of your Adjusted Gross Income (AGI). To do this add up all your medical expenses for 2011. (A list of deductible expenses can be found here at the IRS website.)

If you have been keeping track of expenses and saving bills and receipts you are ahead of the game. If not be ready to roll up your sleeves and dig a bit. If you didn’t save records you will have to rely on bank statements and canceled checks. If necessary, you can ask your healthcare providers to provide receipts for the items you paid for. You must do this for all medical expenses, even those not including fertility.

Step 2: Determine Income.

Figure out Your Adjusted Gross Income (AGI). Your AGI is your total income from taxable sources minus allowable deductions and can be found on form 1040 on your tax return.

Step 3: Do the Math.

You can deduct ONLY the amount of your medical expenses that is more than 7.5% of your Adjusted Gross Income (AGI). For example, if your AGI is $40,000 then 7.5% of that income is $3,000. If you paid medical expenses under $3,000.00, you cannot deduct any of your medical expenses because they are not more than 7.5% of your AGI. If you paid medical expenses of $3,500.00 only $500.00 of those expenses are tax deductible.

Step 4: Read the Fine Print.

As if it wasn’t complicated enough, the IRS does have lots of rules, restrictions and guidelines regarding what expenses, income levels, persons and situations qualify for medical deductions. You must have documentation such as receipts, mileage logs and medical records to back up any deductions you make. They spell it out clearly each year in IRS Publication 502 Medical and Dental Expenses.

Bottom line, like infertility treatment, deducting medical expenses can be confusing and is always unique to each person’s situation. It usually takes a good amount of time and energy and the help of a professional is the best way to go!

About Stephanie Fry
Stephanie Fry is a Board Member for the RESOLVE New England Board of Directors. She is also the author of The IVF Companion, a personalized guide to surviving and thriving during your IVF cycle. The IVF Companion offers a free IVF tax planner with each purchase now through April 15, 2012.

2 Comments

  1. Hello. I don’t know if you’ll be able to answer this questions, but thought I’d try. If someone wants to make a donation to our infertility treatment, if they paid the clinic directly, would they be able to write it off as a medical expense or would they actually have to be the patient to write it off? Thanks for any help you can give me!

    • Janna – I am not a tax adviser so I would first recommend that you consult with one if possible. My guess is that the person who makes the donation can put the donation on their tax return as a charitable donation although you may have to have your account at the clinic set up as a charitable one. I would also expect they wouldn’t be able to write it off as a medical expense since it isn’t medically related to them. Best thing to do is to contact a tax adviser.