Starting a family can be expensive, so it might come as a pleasant surprise that some of the costs you incur to get pregnant, while pregnant, or postpartum can actually be included as a deduction on your tax return. Read on for the scoop!
What’s a tax deduction?
Before we get into the details, let’s be clear on what a deduction actually is.
A tax deduction, also called a tax write-off, is an expense you incur that you can subtract from your taxable income. When you lower your taxable income, you lower the amount of taxes you owe.
It’s also important to know that there are two ways you can make deductions on your income tax return: you can itemize deductions or use the standard deduction. The standard deduction lowers your income by a fixed amount (it’s determined based on your filing status, age, and other criteria). Itemized deductions are made up of a list of all of your eligible expenses (like those we’ll get into below). You can choose whichever deduction (standard or itemized) lowers your tax bill more. And if you’re not sure which is better for you, the IRS can help you decide with this guidance.
It’s worth noting that most taxpayers opt for the standard deduction since it’s often a pretty high amount and saves you from having to carefully track all of your expenses and save all of your receipts. However, in a year that involves quite a few fertility and/or pregnancy expenses, the itemized deduction might be worthwhile.
Check this IRS tool to figure out your standard deduction, and then estimate whether your expenses eligible for deduction are more or less than this amount. If your eligible expenses exceed the standard deduction, it is worth skipping the standard deduction and instead opting for the itemized deduction. Note that the itemized deduction is the only way to write off your medical expenses, and to do so, your unreimbursed medical expenses must be more than 7.5% of adjusted gross income. Your tax software or preparer can also help you determine what makes sense, but no matter what, tracking your expenses so that you can make the best decision is a smart idea.
The expenses listed below are eligible for deduction, but remember, you may also have several others, like donations, mortgage interest, and more. The IRS provides a full list of eligible medical expenses here.
Deductible Fertility Expenses
Fertility treatments can be expensive. With an average cost of $12,000 per IVF cycle, it can feel like an unfair expense and added stressor to the emotional toll that the journey can take. Fortunately, you can recoup some of these expenses through the following tax deductions:
- Fertility treatments - everything from procedures like IUI and IVF to services like lab costs and storage of embryos, eggs, or sperm
- Medications related to infertility
- Pregnancy tests (however it is not clear whether ovulation tests are eligible)
- Supplements - like vitamins if they are recommended by a medical provider as treatment for a specific medical condition as diagnosed by a doctor
- Support services - like acupuncture and therapy with licensed psychologists and psychiatrists
- Health insurance premiums you paid for policies that cover medical care (and if you're self-employed and have a net profit for the year, you may be eligible for the self-employed health insurance deduction)
- Surgery to reverse a vasectomy (in order to be able to get pregnant)
- Travel costs to medical appointments including gas (or mileage), tolls, and parking, or any public transit fees to/from medical appointments
Deductible Pregnancy Expenses
Prenatal visits, labor, and delivery can get quite expensive, and even with good insurance, you can end up paying quite a bit out of pocket. While you can’t deduct the portion of expenses that your insurance covers, you can deduct your portion of the following expenses:
- Copays for doctors visits
- Lab work and other medical tests (e.g., blood and urine tests, genetic testing)
- Labor and delivery costs, and any out of pocket midwife costs. Note, doula services are not deductible.
- Supplements - like vitamins if they are recommended by a medical provider as treatment for a specific medical condition as diagnosed by a doctor (you’ll need a note from your doctor or midwife for your prenatal supplements)
- Prescription copays - like anti-nausea medications if you need them
- Health insurance premiums you paid for your policy (note if you're self-employed, you may be eligible for the self-employed health insurance deduction)
- Classes on childbirth, newborn care, and breastfeeding held at or by a hospital (note: classes outside of a hospital or birth center may be eligible but require a note from your provider).
- Pregnancy tests
- Travel costs to medical appointments including gas (or mileage), tolls, and parking, or any public transit fees to/from medical appointments
- Hospital services - like the cost of inpatient care at a hospital or similar institution, including meals and lodging while receiving care
Deductible postpartum expenses
- Breastfeeding supplies like breast pumps, milk storage bags, nipple cream, but not bottles to feed or store milk (before 2011 pumps were actually grouped with other nondeductible “feeding devices” like blenders and dishware. We’re really glad the IRS came to their senses on this one!)
- Lactation consultants - the IRS does not address the use of lactation consultants, but these services may be considered eligible if a note from your provider, or your infant’s pediatrician is provided
- Pelvic floor physical therapy - the IRS does not call out pelvic floor physical therapy specifically, but notes that “you can include in medical expenses amounts you pay for therapy received as medical treatment” - we recommend saving your referral letter and any documentation regarding your need for treatment
- Birth control pills - you must include your doctor’s prescription
- Support services - like acupuncture and therapy with licensed psychologists and psychiatrists
Adoption expenses
If you are growing your family through adoption, you aren’t eligible for tax deductions, but you are eligible for a tax credit. The difference is that a tax credit is used to directly reduce the amount of tax you owe. The IRS has a full description here, but in short, you can receive a credit for qualified adoption expenses up to $14,300 a year for tax year 2020 (this amount increases to $14,400 in 2021. The credit is nonrefundable, which means it's limited to your tax liability for the current tax year. But, any credit in excess of your tax liability can be carried forward for up to five years, so if you can’t claim it all one year, you may over the next five years.
Keep good records!
To make sure you can claim all of these family-building tax deductions, make sure you hang onto your receipts that track all of these expenses. If you’re doing a lot of travel to/from appointments or treatments, you may also want to keep a log of dates and miles traveled. It’s much easier to compile a folder as you go than to try to track them down next spring!
On top of all of the other responsibilities and efforts that go along with expanding your family, it might seem like a lot of work to keep track of your expenses, but trust us - it’ll be worth it to possibly save you quite a bit of money in the end!
