This week in support of National Infertility Awareness Week we are covering the topic of Saving on Fertility.
Saving on Fertility Expenses
When the average cost of fertility treatments today are running on average between $15,000-$24,000 and health insurance carriers continue to eliminate the various treatments they cover, researching all of your options can help you devise a smart savings plan. We have listed the top ways you can save on your taxes.
Health Savings Accounts and Flexible Spending Accounts
These accounts are great for medical expenses. Your income is deducted from your paycheck pretax and is deposited into specialized savings accounts.
Health savings accounts do have limitations per year. The current limitation for a married couple is $6,750. That is higher than the limitation for FSAs at $5,000. Health Savings Accounts require certain health insurance plans to qualify. Currently the Health Savings Accounts require a deductible of $2,600 for the savings accounts. The benefit seems low considering there are limitations on an annual basis but they reset at the beginning of every year. For example, most fertility processes cross two tax years. So you can effectively double the amount saved to $13,500.
Deduct the Expenses on your Tax Return
This should be your last resort for tax savings. You can deduct medical expenses on your tax return. However, there is a catch. The expenses have to be more than 10% of your income. On top of that you have to have enough itemized deductions for you to take that over your standard deduction. The process requires a long form 1040 and the attached Form Schedule A. While it is not that easy for the pieces to fall into place it still can be used as a tax savings tool.
Make sure to keep your receipts for all the medical expenses in case you are audited or need to provide proof of the expenses. Bank account and Credit Card bills do not count as evidence. This is critically important as abnormal amount of medical bills can be a red flag for the IRS.
What if you forgot to include the expenses on your tax return?
Lets say you forgot about the expenses and you wanted to take advantage of the tax savings listed above. You can file a 1040X for the last three years of tax returns.
The form is very easy to fill out and should not be expensive to prepare. I suggest you hire a CPA to go through the process but Turbo Tax can also walk you through the process in a simple way. Typically you will save more tax money by using a CPA but if you want to do it yourself, Turbo Tax would be the next best option.
—Edward Brockschmidt, CPA & Co-Founder of SeedTrust Escrow
Every Friday, CPA and Co-Founder of SeedTrust, Edward Brockschimdt, will focus on “financial fitness” by answering the most commonly asked financial and tax questions relating to surrogacy and egg-donation.
If you have a question that you would like answered, please comment or drop us a line at [email protected] and we may answer your question in the upcoming weeks.
For additional answers to tax related questions please see Brock’s profile on JustAnswer.com by clicking here.
