Can I Deduct Fertility Treatments As A Medical Expense?

Question:
We are married and earn about $300,000 per year. My wife is trying to become pregnant and we have already spent $24,000 in fertility treatment. Now we are considering using donor eggs which will cost an additional $42,000 Thus $66,000 in expense in 2015 or we can break it up to $24k this year and $42k next year. Is this type of expense deductible as a “medical expense?” Secondly, would the use of a FSA or HSA have been wise? Third, would it benefit to wait until 2016 to do this procedure and use a HSA or FSA? Fourth, assuming that we would receive some benefit by waiting until 2016, can they have the procedure done now and pay later to move the expense to 2016.

Answer:
Please find my responses below.

1) Is this type of expense deductible as a “medical expense”
Yes, the cost of fertilizing and transferring a donated egg or embryo, as well as expenses to obtain an egg donor that are directly related to and in preparation for receiving the donated eggs or embryo is deductible. This includes agency fees, donor fees, the donor’s medical and psychological testing fees, insurance premiums paid for post-procedure assistance, and legal fees for preparing the donor contract. There are more details on how one can deduct fertility treatments in IRS Publication 502.

2) Would the use of a FSA or HSA have been wise?
Yes, unless the plan excludes it.

3) Would it benefit us to wait until 2016 to do this procedure and use a HSA or FSA?
It may not make much of a difference as the FSA limit will likely only increase $50.

4) Assuming that we would receive some benefit by waiting until 2016, can we have the procedure done now and pay later to move the expense?
Taxpayers generally report on a cash basis of accounting. As such, the payment would be deductible in the year when paid.

Do you have more tax deduction questions? If so, write to us and we can help.

References:
IRS Publication 502

Posted in Personal Tax and tagged , .

Leave a Reply

Your email address will not be published. Required fields are marked *