Can You Write Off IVF on Taxes as a Medical Expense?
Explore the tax implications of IVF expenses, including eligibility, deductions, and necessary documentation for potential write-offs.
Tax deductions for medical expenses can provide significant financial relief, especially when dealing with costly procedures like in vitro fertilization (IVF). IVF is a complex and expensive process that many individuals and couples pursue to start or expand their families. Understanding whether these costs can be written off on taxes as medical expenses is crucial for reducing the financial burden.
IRS Eligibility Criteria
Navigating IRS criteria for deducting IVF expenses requires understanding specific tax provisions. Medical expenses must primarily address a physical or mental defect or illness, and IVF, aimed at treating infertility, generally qualifies. However, only expenses exceeding 7.5% of your adjusted gross income (AGI) are deductible, so this threshold determines whether IVF costs can be written off.
The IRS defines deductible medical expenses as those directly tied to treatment. For IVF, this includes consultations, medications, and laboratory fees. Travel or lodging costs must be essential to the medical care to qualify. Distinguishing between necessary and non-essential expenses is key to maximizing deductions.
Distinguishing Qualified IVF Costs
Identifying deductible IVF expenses requires close adherence to IRS guidelines. Core components like egg retrieval, embryo transfer, and related consultations are typically deductible. Prescribed IVF medications also qualify, but over-the-counter supplements or non-prescription treatments do not.
Costs involving donor eggs or sperm may be deductible if they are integral to the IVF process. However, legal fees for acquiring donor material are usually not covered unless directly tied to the medical necessity of IVF. Maintaining clear records is essential to justify these expenses.
Itemizing Medical Deductions
To itemize medical deductions, calculate total medical expenses and determine whether they exceed the 7.5% AGI threshold. This involves adding all qualifying medical costs, including IVF, and comparing them to your AGI. IRS Publication 502 provides further guidance on what qualifies.
Once medical expenses surpass the threshold, they should be reported on Schedule A of Form 1040. Only the amount exceeding the threshold is deductible, so calculations must be precise. Tax preparation software can help ensure accuracy and compliance with IRS rules.
Documentation for Proof of Expenses
Accurate documentation is essential when itemizing IVF-related deductions. Keep a well-organized collection of receipts, invoices, and statements that detail each expense, including service descriptions, dates, and amounts paid. These records are critical for calculating deductions and for potential IRS audits.
Supporting documents from healthcare providers, such as letters detailing the diagnosis and treatment plan, can substantiate medical necessity. Bank or credit card statements may serve as supplementary proof, but they should align with physical receipts and invoices.
Insurance Reimbursements and Adjustments
Insurance reimbursements directly impact the deductibility of IVF expenses. Any portion covered by insurance cannot be included in deductible medical costs. For example, if total IVF expenses are $20,000 and insurance reimburses $5,000, only $15,000 is deductible.
Some insurance policies partially cover specific IVF components, so careful tracking of out-of-pocket expenses is necessary. Retroactive insurance reimbursements after filing taxes may require amending a tax return. Keeping detailed records of insurance communications, Explanation of Benefits (EOB) documents, and adjustments ensures compliance and avoids discrepancies.