When pursuing surrogacy to grow your family, understanding the financial implications is crucial. NewHopePoints guides you through the surrogacy journey, helping you navigate the complexities, including how surrogacy expenses interact with U.S. tax laws.
Surrogacy and Taxes: What You Need to Know
Surrogacy involves various medical procedures and agency fees. Many intended parents wonder if these costs are tax-deductible. In this blog, we’ll clarify how surrogacy expenses relate to tax deductions and what you can and cannot claim.
Can You Claim Surrogacy Costs on Taxes?
No, the IRS currently doesn’t allow intended parents to deduct surrogacy-related expenses as medical deductions on tax returns. This rule applies to costs related to the surrogacy process, such as fees paid to a surrogacy clinic, compensation for the surrogate mother, and payments to surrogacy agencies.
Are There Tax Breaks for Intended Parents Using Surrogacy?
Although direct surrogacy expenses aren’t deductible, some intended parents may still find tax-saving opportunities. For instance, if you incur fertility treatment costs before surrogacy, certain medical expenses might qualify for a deduction. It’s essential to consult with a tax professional to determine what specific expenses can be claimed.
Which Medical Expenses Related to Surrogacy Are Tax-Deductible?
The IRS allows deductions for medical expenses that exceed 7.5% of your adjusted gross income, provided they directly relate to your health. Unfortunately, costs directly tied to surrogacy, like payments to surrogacy clinics or surrogacy agencies, don’t qualify. However, fertility treatments or other medical procedures related to the surrogacy journey might be deductible.
Are Fertility Treatments Tax-Deductible If Used for Surrogacy?
Fertility treatments, such as IVF, may be tax-deductible if they aim to improve your reproductive health. If you undergo these treatments before engaging in surrogacy, you might be able to claim them as a medical expense on your tax return. A tax professional can help you determine if your specific situation qualifies.
How to Report Surrogacy Expenses on Your Tax Return
If you’ve incurred qualifying medical expenses related to fertility treatments, report them on Schedule A of your tax return as an itemized deduction. Remember, you can only deduct expenses that exceed 7.5% of your adjusted gross income. It’s important to maintain detailed records of all medical expenses, including receipts and documentation from your surrogacy clinic.
Key Considerations for Intended Parents
- Consult a Tax Professional: Tax rules can be complicated, especially concerning surrogacy. Consulting with a tax advisor who understands surrogacy-related expenses is essential.
- Understand What’s Deductible: Not all expenses in the surrogacy process qualify for tax deductions. Fertility treatments may qualify, but payments to surrogacy clinics and surrogacy agencies typically do not.
- Keep Detailed Records: Accurate record-keeping is crucial. Save all receipts, invoices, and documentation related to your medical expenses and surrogacy process.
- Explore Other Financial Assistance: Tax deductions might be limited, so many intended parents seek financial aid, such as grants, loans, or employer benefits, to offset surrogacy costs.
Conclusion
Navigating the tax implications of surrogacy in the USA can be challenging. While many surrogacy-related expenses are not tax-deductible, understanding what is and isn’t deductible can help you make informed financial decisions. At NewHopePoints, we support intended parents through every step of the surrogacy process, but it’s important to note that we do not work with ICSI treatments. Always consult a tax professional to ensure you are maximizing any potential tax benefits available to you.