It’s that time of year again! Tax time. If you are wondering if you qualify for tax deductions based on your infertility treatment look no further—the following excerpt from the newly release book, The IVF Journal, has everything you need to figure out how to make deductions, if you qualify. We are thrilled to be sharing this exclusive excerpt, which includes free, downloadable worksheets.
To download the worksheets, click on the links in the HOW TO USE section of the blog. To see more IVF worksheets and learn more about The IVF Journal you can visit, www.theivfjournal.com.
The following is an excerpt** from chapter 6 of The IVF Journal, The Solution for Managing Practitioners, Tests, Medications, Appointments, Procedures, Finances, and the Emotional Aspects of Your Journey
FERTILITY TREATMENTS, INCLUDING IVF procedures, surgeries, ultrasounds, medicines, and even pregnancy tests may be tax deductible, but when tax time actually rolls around, many of us ignore the possibility of deducting fertility expenses. Some of us dread it; some of us fear it; most of us don’t completely understand it; but, because you may have a shot at getting some of your hard-earned money back, it is absolutely worth looking into.
As of 2013, the IRS rule is that you can deduct only the amount of your medical expenses that is more than 10% of your Adjusted Gross Income (AGI). Sound confusing? That’s because it is; but if you have kept records of your medical spending, and take things step by step, you can figure out in no time whether your IVF and other medical expenses can be deducted on your tax return and how to do it. If you have an accountant, by all means let them handle things, but for the general population who prepare taxes on their own, you must first figure out if you qualify for deductions and, if so, how much you can deduct. Here are the steps to take:
Step One: Read the Rules. As if medical deductions weren’t complicated enough, the IRS has a lot of rules, restrictions, and guidelines regarding what expenses, income levels, persons, and situations qualify for medical deductions. The good news is that they spell these rules out clearly each year in IRS Publication 502 “Medical and Dental Expenses.” This publication, which is frequently updated by the IRS, offers detailed information on what expenses, income levels, persons, and situations qualify for medical deductions. This information can be found at www.irs.gov/publications.
Step Two: Add It Up. Add up all of your qualified medical expenses for the year. Remember that you can include all of your medical expenses, not just those related to fertility treatment. 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 providers to provide receipts after the fact.
Step Three: Determine Your Income. Your Adjusted Gross Income (AGI) is your total income from taxable sources, minus allowable deductions such as student loan interest, education expenses, contributions to an IRA, or contributions to a health savings or flexible spending accounts. You must complete your main tax form 1040 to figure out your AGI. Only then can you determine if you’re eligible to make medical expense deductions.
Step Four: Do the Math. Once you know your total medical expenses and your AGI you can use the Tax Planner in this chapter to do the math which is relatively straightforward (though for most of us, a calculator helps!). The Worksheets in this chapter will walk you through the above steps; but, like infertility treatment, deducting medical expenses can be confusing, and is always unique to each person’s situation. It also takes a good amount of time, so the help of a professional is the best way to go! If you go it alone, here are a few more things to keep in mind:
• You must have documentation, such as receipts, mileage logs, and medical records to back up any deductions you make. Refer to www.IRS.gov or your accountant to help you determine what qualifies as appropriate documentation.
• Tax law and IRS publications are updated every year and are subject to change, so make sure you have the latest information when preparing taxes.
• Deducting medical expenses is not as straightforward as it may seem and IRS guidelines can be complicated. You can only deduct certain expenses and amounts in certain situations. For example, if you travel for your IVF treatment, you may be able to deduct the cost of lodging if all of the following requirements are met*:
*Qualification guidelines based on the 2012 IRS Publication 502 “Medical and Dental Expenses.”
1. The lodging is primarily for, and essential to, medical care.
2. The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital.
3. The lodging is not lavish or extravagant under the circumstances.
4. There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.
5. The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. You can include lodging for a person traveling with the person receiving the medical care.
Start by figuring out how much money you spent on IVF and infertility-related medical expenses by completing the IVF Expenses Worksheet. If you used the Cycle Pricing Worksheet and the Payment Tracking Log from Chapter 5 [of The IVF Journal] you are well on your way. If not, you will need to refer to old bills, receipts, canceled checks, credit card statements, and so on. Remember that the IVF Expenses Worksheet list only covers items commonly related to IVF and infertility treatment—if you have other medical expenses not listed on the IVF Expenses Worksheet or not related to IVF and infertility you will need to determine if those are deductible as well. IRS Publication 502, “Medical and Dental Expenses,” can help you determine all possible qualifying medical expenses.
Use the first box on the IVF Tax Planner Worksheet to figure out your total medical expenses by adding the amount of your IVF and infertility expenses to the amount of all your other qualifying medical expenses. Once you know your total medical expenses you can use the next two boxes to determine if you qualify for deductions, and if so, calculate how much you can deduct. The Tax Planner Worksheet will walk you through these steps. Remember, taxes are complicated, and even if you think you qualify, professional advice is still very helpful!
** US Tax Law has changed since the first printing of The IVF Journal. This blog and related downloads reflect the most current printed version of the book which shows an AGI Percentage of 10% which was raised from 7.5% in 2013.
Copyright © 2014 Stephanie Fry
Library of Congress Cataloging-in-Publication Data is available. ISBN: 978-1-57826-492-6
All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic or otherwise, without written permission from the publisher.
DISCLAIMER: This book does not give legal or medical advice. Always consult your doctor, lawyer, and other professionals. The ideas and suggestions contained in this book are not intended as a substitute for consulting with a physician. All matters regarding your health require medical supervision.