Fertility Treatment and Income Taxes

What’s Deductible and How to Take Advantage of It

If you’re thinking about fertility treatment or have already had it, you should be aware that many of the costs may be deductible as medical expenses on your federal income taxes. According to an IRS rule, medical expenses that exceed 10 percent of your adjusted gross income may be itemized and deducted from your annual taxes. IRS Publication 502 includes treatment for fertility enhancement and specifically mentions IVF, including temporary storage of eggs or sperm, and surgery, including an operation to reverse prior surgery that prevented the person operated on from having children. Expenses which were not covered by insurance and for which you paid out of pocket may be itemized.Other medical costs in addition to fertility treatments may be deductible as well, such as insurance co-pays, costs of other treatments that you paid out of pocket, prescription medications, lab fees, and even your travel expenses if your fertility center is not close by. Always consult your tax professional or, if you do your own taxes, you can check the IRS website and email or call with questions.

Itemize to Save on Taxes

In order to deduct these expenses, you must itemize your deductions, which means you must file a form 1040 (the long form) and Schedule A. This is more of a hassle than the 1040-EZ, which uses the standard deduction and doesn’t allow you to itemize. But if your medical expenses have been significant, more than 10 percent of your adjusted gross income, the tax savings if you do the long form and itemize may be significant, too.

Save Your Receipts and Keep a Log

You will need a record of your expenses in order to calculate your deduction. Saving your invoices and receipts for all your medical treatment, including fertility treatment, gives you the data to figure it out. Some credit cards will send you a year-end statement with summaries and details of spending, which may be helpful if you paid for treatment with a credit card.If you know you’re starting fertility treatment, it’s good to keep a log of what you spent and when. This not only helps you easily calculate your expenses for deduction, but also is a record of what you spent if the IRS should question the deduction. Always keep your supporting documents for your tax returns for seven years after you file. The IRS can request them for up to seven years.

It’s Not Too Late to File

What if you didn’t itemize your fertility expenses in the past, and now you realize you could have saved on your taxes? It’s not too late. You can file IRS Form 1040X to amend your return, within three years after filing or two years from the date of paying the tax, whichever is later.

Plan Ahead to Save on Taxes

Another way to save in the future is to set up a Flexible Spending Account (FSA) or Health Spending Account (HSA) through your employer. These accounts let you save for out-of-pocket medical expenses and pay for them with pre-tax dollars, which decreases your taxable income. If your FSA or HSA is not big enough to cover all your out-of-pocket medical costs, you can itemize the ones it doesn’t cover. So the good news is, if you are planning on IVF or other fertility treatment, you can take actions to reduce your taxes—which is more money in your pocket.