Since most folks in the United States do not have insurance coverage for fertility treatment, we're always on the lookout for other ways to handle the expenses of our infertility journeys. For many, one of those ways is through understanding your tax-related options.
Many employees, especially of larger companies, have access to flexible spending accounts for health expenses. These programs allow an employee to determine a set amount of their income to be withheld from their paycheck and placed in an account to use for medical expenses only. You can use the funds for co-pays or other out-of-pocket expenses not covered through insurance. There are limits to the amounts that you can request be held, and you must use the money in the account within a year's time, so planning ahead is crucial here.
The tax advantage is that the money accrues in the account pre-tax from your income, so in effect, it's tax-free income.
If an expense is deemed "deductible," then factoring it in to your income tax returns can save you money. The good thing is that many health expenses (yes, even for fertility issues) are deductible! Here are a few of the possible deductible health-related expenses:
The general rule is that if you have medical expenses that are more than 7.5% of your adjusted gross income, you can claim those expenses as a deduction.
In order to make use of the available allowed deductions, you must itemize your returns. In short, that means you cannot use those easy, short forms. You'll be using the Form 1040 plus Schedule A (which helps calculate your deductible expenses).
Even for married couples who have always filed joint returns, it may benefit you to file separately if one person has over the past year incurred a lot of deductible expenses.
Tax laws can change, and it's hard for the average consumer to keep up with the lastest rules. These rules can directly impact how you file your income tax. The easiest way to be sure that you're taking advantage of all the possible avenues for deductions is to use a qualified tax advisor.
© Tracy Morris