Friday, January 28, 2011

Deducting IVF Costs on Your Tax Return

I knew in the back of my head we could do this, but it literally just dawned on me yesterday that we would have enough medical expenses for 2010 to actually take a hefty deduction on our return this year. As soon as our 2010 prep software was installed at work, I started throwing in our numbers because I like to get our returns filed as early as possible (if we have refunds coming). Yesterday I was looking back at my master baby bucks spreadsheet for some reason and had a *holy shit* moment. Medical expenses! We went from having a net refund of about $1,000 between Fed and state, to having over $6,000 in refunds after adding in our medical expenses for infertility treatments. So IF girls, please pay attention to this!

Most of us never get to deduct much of any medical expenses. You generally have to have a LOT of expenses to get above the 7.5% AGI (adjusted gross income) threshold. Meaning, if you have income of $100,000 in 2010, you have to have more than $7,500 in out-of-pocket medical expenses before you can deduct anything. So if you have $8,000 in medical costs, you would only get to deduct $500.

Costs paid for infertility treatments do qualify for the deduction. And you can bet your britches we're including all our IVF costs, meds, lab fees and my acupuncture costs. Understand that a deduction can only be taken for true out-of-pocket expenses paid with after-tax dollars. If you have a cafe plan at work with a flexible spending account or an HSA where you put in pre-tax dollars to use for medical expenses, you can not deduct any costs paid with those funds. And expenses covered by or later reimbursed by insurance are of course not deductible. Also, only costs paid in 2010 can be deducted for 2010. Even if you received treatment in 2010 but paid for a pre-paid plan in 2009, you cannot deduct costs paid in 2009 on your 2010 return. So like in my case, we paid for a pre-paid IVF plan in 2010. I will continue to receive treatment related to the plan in 2011, but I must deduct those costs on my 2010 return.

Just wanted to give you IF girls a heads up to be thinking about this. Keep good records and this is easy. Hop over here for some more guidance on deducting IVF (and other IF) costs on your return.

Personally, this was a huge epiphany for me yesterday. But if you remember, my parents graciously funded the bulk of our treatments last year. So as soon as I connected the dots, I sent the good news to my parents. The money is rightfully theirs, after all. And I was so excited to be able to "give" some of it back. But to our surprise, my parents talked it over and decided they wanted *us* to keep the money. My dad even suggested the hub and I take a little weekend trip somewhere after tax season with some of the funds since we've been so diligent with our beans-and-rice lifestyle while dumping debt. The hub and I both laughed and said "Hell NO!" to each other. That's going toward debt! Our heads are so intensely focused on getting out and staying out of debt that the idea of spending money on "fun" doesn't even register. We've got our eye on future fun. Thank you, Mom and Dad. We will get there faster because of you.


Charbelle said...

Y'all inspire me!!! Award for you on my blog :)

Unknown said...

I know a year has passed since this post, but did this work? My wife and I did IVF through the Attain Refund program, and I can't get a straight answer from them as to whether paying for IVF this way is an "eligible medical expense." Short of contacting a tax accountant, I haven't found anyone but you who seems to have the credentials to say definitively Yes or No.

Buford Betty said...

Yes, you can absolutely deduct the costs - whatever you paid during a given tax year. We did IVF, meds, acupuncture, the whole shebang!

lauren k said...

Did you and your hubby file married filing jointly? Would I get more money back from married filing separately? I had about $15,000 in uncovered IVF expenses the second half of last year, everything else (from Jan - June2012) was gratefully covered by my employer. We just had to pay for July - Dec, which included my IVF cycle and a surgery at RBA. Thanks for your help! :)


lauren k said...

did y'all file married filing jointly? would we be able to get more back if we filed married filing separately, because my income is less than my husband's? We had about $15,000 in IVF expenses for the second half of 2012. Gratefully, my employer covered my expenses at RBA from Jan - June 2012, and we paid for everything July - Aug out of pocket, which was my IVF cycle and a surgery. thanks for your help and advice! :)


lauren k said...

sorry - I may have emailed you twice, not realizing my comment sent the first time!! :)

Buford Betty said...

Lauren - yes we filed jointly, but in this case, it may be worth running your returns both ways to see what produces the better benefit.

holls said...
This comment has been removed by the author.
holls said...

Hi, what great blog! Such great info!

I have the same question about the attain program. But sounds like you did a pre paid plan too?

We're at 23,000 for our ivf cost this year with a loan. I thought about making payments on it with my hsa but maybe claiming it all is better? We tried to ask our cpa but i dont hink he understood (via email) what we were asking.

My husband and i love dave ramsey too!