It’s that time of year when everyone begins filing or preparing to file their taxes. For many, tax filing is just a routine part of the year, but for surrogate mothers and intended parents, it can become a somewhat complicated task. Reading through tax documents can be daunting and many surrogates are left wondering if the medical expenses associated with surrogacy can be deducted, and if so, how much? Below, we’ve broken down the three main questions to help make this tax season as smooth and simple as possible.
- Whose expenses can you deduct? Generally, medical expenses are only covered for the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent(s). Neither surrogates nor egg donors or unborn children fall under any of these categories, therefore, payments on behalf of any of these parties are not tax deductible; however, expenses for the taxpayer, taxpayer’s spouse, and child (once born) are all deductible.
- How much can you deduct? If the grand total of your itemized deductions is greater than the standard deduction, then it will make the most sense for you to itemize your deductions. Where medical expenses are concerned, you are only permitted to deduct expenses that exceed 7.5% of your adjusted gross income. If your medical expenses amount to less than 7.5% of your adjusted gross income, you will not be able to deduct any medical expenses.
- Which expenses can you deduct? Typically, payments to the surrogate cannot be deducted; however, if the sperm and egg donor is either the taxpayer or taxpayer’s spouse, any medical expenses incurred by the sperm donor or egg donor is deductible, including IVF expenses, doctor visits, lab fees, and medication. Additionally, transportation and lodging costs for egg transfer and sperm donation can be deducted for both travelers, as long as it is within reason and not excessive. Finally, because signing a legal contract is necessary for the medical care, legal fees are also deductible.
Taxes are never cut and dry, and when surrogacy is involved, the gray areas seem to increase. Although the above guidelines should address the most common questions, working with a tax professional is the best way to ensure you are completing everything properly while making the most of your deductions. If you are looking for professional assistance for surrogacy tax deductions, contact the surrogacy experts at Surrogate Solutions today!