Starting a family is expensive, but don't leave money on the table! Many people don't realize that there are fertility and pregnancy expenses that are tax-deductible. Let's take a look at what you need to know.
First, what is a tax deduction?
A tax deduction is an expense that you can deduct from your taxable income by lowering the amount of tax you owe. The IRS allows you to deduct certain expenses (such as medical bills) to make sure you don't pay taxes on the income you've already spent, invested, or lost. A tax credit, on the other hand, is intended to reduce the amount of taxes owed.
Can You Deduct Fertility Treatments on your tax return?
Yes! You can deduct the following unreimbursed medical expenses that exceed (in combination with other eligible medical expenses) 7.5% of your Adjusted Gross Income (AGI) from your tax return.
Which fertility expenses are deductible?
Increased fertility, such as in vitro fertilization (including the temporary storage of eggs or sperm) and surgery to reverse a previous surgery that prevented a person from having children, is deductible.
Here are some fertility-related medical expenses that can be deducted from taxes:
Acupuncture is considered an eligible medical expense.
Any medication related to infertility
Birth control (ironically, most of us start IVF cycles with birth control)
Conferences on infertility: Under the IRS, you can deduct amounts paid for admission and transportation to a medical conference if the medical conference is for a chronic illness, spouse, or dependent.
Fertility treatments including IUI, IVF, embryo/egg/sperm storage, lab fees, and any other procedures required due to infertility
Pregnancy tests can be added; be sure to include the cost in the deductions.
Supplements: These can include the cost of supplements and vitamins if a doctor recommends them as a treatment for a specific medical condition diagnosed by a doctor.
Surgery to reverse a vasectomy
The health insurance premiums you paid for health insurance policies (and if you are self-employed and have net income per year, you may be eligible for the health insurance deduction for self-employed workers)
Therapy: Visits to psychologists and psychiatrists are deductible. It is not clear if any unlicensed consultants or therapists are included, so consult a tax professional to be sure.
Congress may add or remove deductions and credits each year, so it is important to confirm eligibility for the items listed below before filing your taxes.
What expenses are deductible?
Pregnancy (and childbirth) is expensive! If you are pregnant, your medical bills will cover more than 7.5% of your income, which means you will have to deduct a significant amount of your income tax. Remember that you have to pay these costs out of pocket. If your insurance plan covers an expense, you cannot deduct it. If your insurance plan covers some of your expenses, you can deduct the only amount you had to pay.
Let's take a look at some of these qualified expenses:
Medical examinations, laboratory work, and other medical tests
Labor and delivery costs, both in a hospital and in a delivery center.
Breastfeeding supplies, including the cost of pumps and consumables to support breastfeeding.
Health insurance premiums you paid for health insurance policies (and if you are self-employed and have net income per year, you may be eligible for the Medicare deduction for self-employed workers)
Breast pumps and consumables. Breastfeeding Aid - Does not include excess bottles.
Contraceptive pills. A doctor must prescribe it.
Courses on childbirth, newborn care, and breastfeeding, given in or by a hospital
Health information plan: Amounts paid to a plan that stores medical information in a database
Hospital services: The cost of hospital care in a hospital or similar institution, including the room and the table.
Laboratory costs
Pregnancy test kit
To qualify for pregnancy-related tax deductions, you will need to keep accurate records and receipts for your health expenses, such as receipts for medical appointments, necessary medical equipment, hospital visits, and medications.
Tax-deductible expenses per quarter
Medical expenses in the first trimester: general medical examination, blood tests, urine tests, etc.: these costs can be reduced because they are considered to be preventive due to physical deformities or illness of the parents and the child.
Medical expenses in the second trimester: ultrasounds, serum tests, amniocentesis, etc.: these are also deductible because they are considered preventive.
Medical expenses in the third trimester: consult the hospital services above, including administration of drugs or surgery.
What expenses are not deductible?
Childcare if you are not working: Unfortunately, the IRS only allows you to deduct child care expenses if you are working or looking for a job. There may be an exception to this rule if your doctor orders you to look after children because of a medical problem or if you are recovering.
Diapers: You cannot include the amount you pay for diapers or diaper services in your medical bills unless they are needed to mitigate the effects of a particular illness.
Foreign income: You cannot include the cost of a prescription drug brought in (or ordered and shipped) from another country in your medical expenses. You can only include the cost of a legally imported drug.
Maternity clothes
New 3D ultrasounds that a doctor did not prescribe
Supplements taken to maintain normal health and not intended for health care.
FOR MORE INFORMATION ON HOW DANIEL P. VIGILANTE, CPA & PROFIT CONSULTANTS CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
THANKS FOR VISITING.
Daniel P Vigilante CPA and Profit Consultants