How IVF Refund Programs Can Cut Your Taxes

How IVF Refund Programs Can Cut Your Taxes

Every penny counts when you are trying to conceive. For many couples infertility treatments are self paid, and with each treatment come hope for conception and an end to the extra expenses. But with each failed attempt come disappointment and a continuation of these extra expenses. You just don't know when it will all end. So preserving resources becomes paramount, and IVF refund programs can help keep costs low in an overlooked way: by cutting your taxes.

IVF Refund Programs

Self paid expenses for infertility treatments are tax deductible, but the IRS places limits on these deductions that dampen the tax savings for many couples. One feature of IVF refund programs helps couples overcome these IRS limitations to generate significant tax savings.

IVF refund programs provide qualifying couples the opportunity to get a portion of their money back should they fail to conceive. The typical program requires that you commit to at least three IVF cycles. You pay the entire cost up-front, and if you fail to bring home a baby (success criteria vary by program) a portion of the fee (usually about 75%) is refunded to you. The refund allows you to preserve resources to try again or pursue adoption.

IRS Tax Savings Are Limited

You may be asking yourself, "So how does an IVF refund program help me save taxes". You have to understand how the IRS limits your deductions to see why this is true. Your unreimbursed medical expenses are tax deductible for the amounts that exceed 7.5% of your Adjusted Gross Income (AGI). Follow this simplified example to see how the requirement that you purchase at least three cycles works to cut your taxes and preserve your resources earmarked for infertility treatments.

Meet Ron and Sally. Their combined adjusted gross income is $100,000, meaning that any unreimbursed medical expenses (infertility treatment costs) above $7,500 can reduce their tax bill. They are in the 25% tax bracket, meaning that every $1,000 of unreimbursed expenses generates $250 in tax savings.

If Ron and Sally undergo one IVF cycle and pay $10,500 out of pocket they have $3,000 of deductible expenses, and will generate $750 in tax savings on this amount. If they undergo four IVF cycles over four tax years they will generate only $750 in tax savings each year as the majority of the yearly expense is consumed by the 7.5% of AGI.

Tax Savings Much Higher With IVF Refund Programs

Many couples will try to spread their costs out over time it's just human nature to take smaller bites rather than larger ones when faced with extra expenses. And why pay for multiple cycles when you might conceive on the first try? IVF refund programs require that you purchase at least three cycles, and pay upfront. One hidden silver lining is that this lowers couples' tax bills and cuts costs.

By consolidating three IVF cycles into a single tax year you avoid consuming the 7.5% AGI limit three times. Take Ron and Sally for example. By paying for three cycles via thier IVF refund program they took $31,500 in deductible expenses in one year, and had $24,000 in expenses generate tax savings. This resulted in an incremental $3,750 in tax savings.

IVF refund programs can help you save money via tax savings, and help you preserve resources to try again.

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