Reviewing your financial statements in preparation for tax time can be a painful reminder of the high cost associated with fertility treatments and family planning. While many of the expenses of natural childbearing and adoption are covered by tax breaks and routine deductions, until recently deductions for IVF and other fertility treatments have been murky at best and nonexistent at worst.
In 2003, the IRS ruled that couples using IVF to get pregnant can deduct their medical fees associated with this treatment. This includes the costs of fertilization and transfer of the egg or embryo. Additionally, agency fees, donor fees, and any medical or psychological testing fees from the donor are covered as deductible medical expenses. Insurance premiums connected with post-procedure care and legal fees relating to contract preparation also qualify.
Surrogate expenses are, unfortunately, a whole different conversation. In general, if the surrogate expenses can be traced back to an underlying medical condition that makes it impossible for you to carry a pregnancy to its natural completion, then your surrogate expenses may qualify for a deduction.
If your surrogate expenses are not related to an underlying medical condition – and the law is very vague on whether infertility with no identifiable underlying medical condition counts, even though a plethora of professional opinions would contend that it does – then your surrogate expenses are most likely not deductible. Depending on your diagnoses and history of infertility, your doctor, lawyer, or tax preparer may be able to point you in the right direction for getting your surrogate costs covered.
Unfortunately, until laws and legal precedence change course, the ineligibility of deductions on surrogate expenses for medically healthy couples appears to be pretty firm. This is of particular concern for LGBT couples who require the assistance of a surrogate for growing their own families. There is some expectation that time and advocacy will make this deduction available to all families, regardless of sexual orientation. However, at the present time, such deductions do not exist.
Whatever your situation, make sure to discuss your questions and concerns with your tax preparer, tax attorney or CPA. He or she will have the answers that you need to properly file your taxes and to claim all of the deductions available to you.