Fertility Treatment Costs and Income Tax Savings

What’s Deductible? The Answer May Surprise You

Tax season is coming around again. As Benjamin Franklin said, “In this world nothing can be said to be certain, except death and taxes.” Did you know that the cost of your fertility treatments may be deductible on your federal income tax? It’s a fact. You can thank the IRS and our federal government for that.Many people may be able to take advantage of an IRS rule that allows medical expenses that exceed 10 percent of their adjusted gross income to be itemized and deducted from their federal income tax. In order to do this you must itemize your deductions—you can’t file the 1040 short form. But itemizing can result in significant tax savings. It might well be worth your while to check it out!

Get Your Records Together

Always save all your receipts for all medical treatment for yourself (and your spouse, if you are filing jointly,) not only your fertility treatment, because many kinds of medical treatment as well as fertility treatment qualify for the deduction. This includes co-payments and co-insurance, laboratory fees, prescription medications, fertility treatment fees that are paid out of pocket, such as IVF and other treatments not covered by your insurance, and even your travel expenses for trips related to your medical care. Consult your tax advisor and visit the IRS website http://www.irs.gov/publications/p502/ar02.html to see what qualifies. All of this counts toward meeting the 10 percent of your adjusted gross income which is the threshold for deduction, and the amount above that threshold will be your deduction.If you’re just starting fertility treatment, plan ahead for tax filing. In addition to keeping all your receipts, keep a log of your expenses. That way, if the IRS contacts you to explain why your medical expenses are higher than they were the year before, you have the records to back it up. Be sure to keep your records and receipts for seven years, since the IRS has the ability to request more information about your tax filing for that period.A new bill called the Family Act of 2013 has been introduced in the U.S. Senate and the House of Representatives. This bill would create a tax credit for the out-of-pocket costs associated with IVF and fertility preservation. It has not yet passed. For more information on how to contact your legislators and urge them to sponsor or support this bill, go to RESOLVE’s website, www.resolve.org

It’s Not Too Late to File Again

What if you had fertility treatments in the last tax year and did not itemize your deductions? You can file Form 1040X and revise your tax return to include your deductions. You must file within three years of that return’s date or within two years of when you paid, whichever comes later.

FSAs and HSAs Reduce Your Tax Burden

Your employer may offer flexible spending accounts (FSAs) or Health Savings Accounts (HSAs) which allow you to save a portion of your pay pre-tax in order to pay for medical expenses. Saving pre-tax reduces your taxable income. If your FSA or HSA is not large enough to cover the cost of your fertility treatments, you can still itemize the remaining costs which you cover out of pocket.

Making Fertility Treatment Affordable

Taking all the deductions you’re entitled to entails some extra work, but it’s a smart way to help cover the cost of fertility treatment. If you’re exploring fertility treatment, start your record-keeping now, and you’ll be prepared for the next tax season.