Hi, everyone, it's Claire from FertilitySpace.
And today we're going to be talking about how to deduct your IVF expenses
on your taxes.
Something to know
right off the bat is that this only works
if your medical expenses were uninsured,
so that means you didn't have insurance coverage for your IVF.
So if you've been paying for IVF out of pocket,
then those are the type of expenses that would be eligible
to be deducted on your taxes. If you had insurance coverage,
it was already covered by insurance, so it can't be deducted on your taxes.
So how much of your IVF costs can you actually deduct on your taxes?
You can write off uninsured medical expenses, such as IVF
that exceed 7.5% of your adjusted gross income.
So let's say you're filing single and your adjusted
gross income is $65,000 per year.
So 7.5% of that would be $4,975.
So when you're going through IVF, that first roughly $5,000,
you can't write off on your taxes.
But then any amount of money you pay toward an IVF cycle
after that amount, you can deduct on your taxes.
So anything that exceeds that 7.5% or in this example
that $4,795. Any amount after that, you can deduct.
And the same rule applies if you're married filing jointly,
you just use your adjusted gross income, get 7.5% of that,
and then you'll know what threshold you have to hit before
you can start deducting expenses for IVF on your taxes.
OK, so how do you calculate your IVF deduction amount for your taxes?
We went through it just now, but let's kind of break it down
and I'll show you the calculations and you can do it step by step.
So first, you need to know how to calculate 7.5% of your adjusted
gross income.
So you know what that threshold is going to be.
We'll use an example of someone who's married filing jointly.
The most recent statistics we could find for what the adjusted gross
income of someone married filing jointly would be on
average was $120,000.
So we'll use $120,000 as the adjusted gross income in our example.
But if your adjusted gross
income is different, just swap in whatever your number is.
OK, so first, let's calculate that 7.5%.
So you would do $120,000 times 0.075.
And in this case, it would be $9,000.
So that first $9,000 you pay
towards IVF expenses you can't write off, but any amount
you pay after $9,000, you can start to deduct on your taxes.
So let's calculate what you actually could write off.
Now that we know what your threshold is. Let's say you did an IVF cycle
and then maybe even a frozen embryo transfer as well.
Many of you know that could easily come out to $25,000.
So if you do $25,000 - $9,000,
that leaves $16,000 that you would be able
to deduct on your taxes. If you're not a big fan of doing math,
we did create an IVF deduction tool,
just a simple tool to let you plug in some numbers and get an idea of what
your deduction size might look like, depending on what your income is
and how much you spent on IVF in a given tax year.
OK, so can you actually deduct your IVF expenses on your taxes?
Are you eligible?
The IRS actually has a tool on their website
where you can answer a couple of simple questions
and a little questionnaire, and it will tell you whether
your medical expenses are eligible
for a deduction on your taxes.
So we'll leave the link below just so you guys can go there and check out
the tool.
They're going to ask questions like what year the expenses were paid?
Who paid the expenses?
Who was the treatment for? That was paid for.
Who actually underwent the treatment?
Your adjusted gross income and your filing status.
And then they'll let you know
whether your IVF expenses are eligible for deduction.
A little tip.
They're going to ask you what type of medical treatment
you're trying to deduct, but you won't see IVF listed there.
It actually falls under a Fertility Enhancement Expense.
So that's what you're going to select if you're
trying to deduct IVF on your medical expenses.
Something really important to know is that if you're looking
to write off your IVF expenses on your taxes,
you can only do so if you're going to be itemizing your deductions as opposed
to taking the standard deduction. You have to do a little bit of math
and then compare what amount your standard deduction looks like
and what about your itemized deduction looks like and whichever one is larger.
That's the deduction you want to take
because you're
going to get the biggest return if you're able to write off
a larger amount on your taxes.
The standard deduction amount for the 2021 tax year for people filing
single is $12,550 and for people
married filing jointly, it's $25,100.
So you'll want to compare your itemized deduction
to those standard deduction amounts and see which one is larger.
Itemized deductions also let you include
other sorts of deductions that you might want to add in,
like mortgage interest, or you can deduct real property taxes
paid on your home. So that could sometimes, along
with the IVF expenses, bump up your itemized deduction to being higher
than what your standard deduction might be for that tax year.
Which fertility treatment
costs are eligible medical expenses for deduction on your taxes?
OK, so I'm just going to read you what the IRS has written
on their website about what falls under the Fertility Enhancement Expense.
Just, you can get an idea, but you can read it on their website as well.
They said you can include in medical expenses,
the cost of the following procedures performed on yourself, your spouse,
or your dependent to overcome an inability to have children.
Procedures such as in vitro fertilization,
(including temporary storage of eggs or sperm). Surgery,
including an operation to reverse prior surgery
that prevented the person operated on from having children.
So that's great. It's pretty broad.
You can essentially write off things that fall under your IVF cycle.
You can write off temporary storage of eggs or sperm, which is nice
because that can be $600 a year just to store
sperm at a fertility clinic and then procedures as well.
So it sounds like you can also write off if you essentially had to get
a vasectomy reversed, or perhaps if you had your tubes tied
and you were going to get a surgery done to try to reverse that.
In addition to IVF, other eligible medical expenses are prescribed
medications, acupuncture, surgery that is not considered cosmetic,
birth control pills, and pregnancy tests.
To help you get an idea,
a rough idea of whether deducting your expenses itemized and writing
off your IVF versus taking the standard deduction makes sense for you,
we built a little tool.
It's a really simple spreadsheet where you can plug in your numbers
and see a change, and you'll be able to really quickly
see whether you have enough uninsured medical expenses from doing IVF,
where the itemized deduction makes sense,
or whether you should just stick with the standard deduction.
It's a really simple tool and you want to still speak with a tax professional
to make sure that you're not missing anything that you can add to an
itemized deduction to kind of bump it up above what the standard would be.
But it's a good way to start just to get an idea of whether you're
getting close to the point where you might want to consider itemizing
and writing off your IVF expenses versus taking the standard.
So feel free to check that out.
All right.
And we do have one final tax tip that we spoke with an accountant
about when we had her look over the blog post because this
is in a blog format as well.
If it's easier for you to read these sorts of things.
You can just head to our website.
We'll leave the link below and you can read this is a blog format
and look over how to do the calculations again.
So we spoke with Barbra Schreihans, who is a tax accountant in Arizona,
and she gave us another tip that could be helpful for some of you.
So Barbara wrote, "If you are a business owner,
you may be able to set up an accountable plan
which would reimburse you for medical expenses.
This essentially would make your IVF and other related treatments
a business deduction and could save you thousands of dollars in taxes."
OK, so I hope that some of you are able to take advantage
of this tax write off for IVF.
I'm not sure if most people end up where it still works out,
where the standard deduction is going to give them a better return,
or whether there are cases when an itemized deductions
and deducting their IVF expenses is going to give them a really good return.
So let me know, because I'm really curious to see, like
if it ever actually works out for anybody.
Last thing,
because a lot of you are looking to deduct IVF expenses on your taxes,
I'm assuming that some of you have been working with your clinic for a while.
We would love if you would leave your clinic a review on FertilitySpace.
We have almost all the clinics in the United States listed on there.
We ask about the doctor, the clinic,
the nurses, everything, and it really helps
other people in the future find a good doctor for them.