The cost of fertility treatment, for many couples experiencing infertility, can be daunting, making their dreams of parenthood seem far out of reach. At the Center of Reproductive Medicine (CORM), we want all our patients to feel confident about their ability to grow their families, regardless of their financial situation or insurance coverage. Our experienced, caring fertility specialists are always happy to work closely with patients, helping them choose the correct and affordable fertility program that meets their individual reproductive medicine needs. Over and above insurance coverage and financial plans, there are additional savings that may be available through tax deductions.
This is the time of year when most people are thinking about taxes – waiting for W-2 wage statements and 1099 forms, scurrying to get receipts and documents together, making appointments with accountants and tax consultants and so on, in order to minimize their tax bill and maximize their potential refunds. You know the drill and the April 15th deadline. Did you know, however, that there is an IRS rule that allows folks to itemize and deduct medical expenses that exceed 10% of their adjusted gross income from their annual income tax bill? Many infertility patients may be able take advantage of this important medical deduction. For patients paying out-of-pocket for fertility treatment, itemizing medical deductions can result in a significant refund of the money paid for the necessary treatments. While the cost of fertility treatments may be very intimidating, treatment is actually more affordable than couples imagine, once they realize that they are paying with pre-tax dollars and may be eligible for a tax refund.
To make the most of the tax deductions allowed by the IRS for medical expenses, consider these tips:
Save All Medical-Related Receipts
Save each and every one of your medical invoices and receipts, including the ones you think you won’t need, because infertility treatments are just part of the amount that may be deductible. Often, patients are surprised to learn the various types of expenses that may qualify as a medical deduction. Of course, you should consult your tax advisor for specific guidance on your individual circumstances, but here is a list of expenses that you may be surprised to know are deductible:
- Co-payments/Co-insurance
- Fertility treatment fees that are paid out-of-pocket
- Laboratory fees
- Prescription medications
- Travel expenses for trips related to medical care including mileage, tolls, parking, hotels, and meals
As the IRS rules may change from year-to-year, be sure to check the IRS website for the most thorough and up-to-date information on medical expense deductions.
Keep A Detailed Log of Expenses
There is always the possibility that your tax return will be chosen to go through an IRS audit. Keeping a detailed record of when each expense occurred is important in the event you are contacted to validate your specific deductions. The actual IRS form used to itemize deductions does not provide a place to explain why medical expenses are higher than average or more than usual. Therefore, if you are contacted by the IRS, detailed records may be needed to back-up your deductions. The more accurate and detailed your records, the better prepared you will be to provide the necessary information to an IRS auditor.
Health Savings Accounts &Amp; Flexible Spending Accounts
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) provide additional choices for patients to pay for out-of-pocket medical expenses with pre-tax dollars. Employers who offer FSA/HSA plans allow employees to save a portion of their pay in a special account specifically earmarked for medical expenses. The money that is saved in these accounts is not taxed. If the money saved in an HSA or FSA account is not large enough to cover all of the medical expenses in a given year, the remainder can still be itemized as deductions.
If you are currently undergoing treatment, have already completed your treatment or you are just in the process of researching treatment, the IRS’s rule on deducting medical expenses can help you. Itemizing medical deductions or using an FSA account will require some diligence, attention to detail, and possibly some extra paperwork, but it may save you thousands of dollars in taxes in the long run.
Keep All of Your Records for Seven Years
The IRS has the authority to request supporting documentation for your tax returns for up to 7 years after you file them. Keeping your receipts and detailed records during this period of time will allow you to provide the necessary documentation if, and when, it is requested.
Forget to Itemize Medical Expenses Last Year? It’s Not Too Late!
If you had fertility treatment expenses last year and failed to deduct them, you can file IRS form 1040X to amend previous tax returns to include these medical deductions. Form 1040X must be filed within three years from the date of your original return or within two years from the date you paid the tax, whichever is later.
It is important to remember, however, that each patient’s circumstances are unique. Consult with your personal tax advisor to determine how the medical deduction rules may apply specifically to you.
Using these tips, along with the suggested and affordable programs outlined by a fertility specialist at CORM, can put infertility treatment costs within your reach. Now is the time to maximize your tax deductions to minimize your tax bills. Your dreams of parenthood can become a reality!