Which Fertility Expenses Related to Donor Eggs are Deductible?

[jcaponetto]

I have seen a number of responses to donor egg expenses being tax deductible, but I do have some more granular questions about specific fees I can't seem to find answers.

So for example, my girlfriend who will be claiming the deduction is of advanced maternal age and is required to use donor eggs.  Our breakdown of the fees include:

-  Egg Lot: $17,800

- Shipping Fee: $850

- Euploid Supplement Fee: $4,500

We know the egg lot fee for the eggs is tax deductible, but what about the fee to ship the eggs to our clinic and the supplement fee which is basically a rider to insure the eggs can be fertilized?  The euploid supplement was an optional but necessary fee, but not sure the IRS would go as far as picking this apart.  

Can anyone provide some experience or guidance?  It would be greatly appreciated.

Thank You

Jason

[Bsch4477]

All fees incident to treatment of infertility are medical expense deductions. The total amount of medical costs is reported to the IRS, not the individual costs. In the unlikely event of an audit you can justify your expenses with good documentation. 

[NCperson]

@jcaponetto do note that while the medical expenses are deductible for it to mean anything, only the medical expenses that exceed 7.5% of her income are deductible and that number plus any other itemized expenses must exceed $13,950...otherwise, she'll be taking the standard deduction (assumes she is filing SINGLE in 2023)

[jcaponetto]

So it would need exceed about 7.5% of her AGI, so for her I estimate its expenses that exceed approx $8,250 are deductible.  The cost of egg donor alone exceed this by $15K, then additional medical expenses associated with the IVF and testing (~$5K) not covered by insurance brings it closer to $20K.  Sounds like we will be well beyond the $13,950 standard deduction and should be good to go.  This is costing us a small fortune, trying to ensure we are taking whatever benefits we can.

[NCperson]

Let me repeat it back to be sure I am understanding what you wrote:

Her AGI is ~$110,000 so 7.5% of that is $8250.

and her medical expenses are estimated to be $28,250, so she can deduct $20,000 by itemizing.

Since $20,000 is more than the standard deduction of $13,950, she will itemize on her tax return.

is that what you meant? 

[jcaponetto]

You wrote it much clearer than I could have, but that was my thinking.  Is that correct?

[NCperson]

@jcaponetto yes, it is correct.  Good luck! 

[NCperson]

@jcaponetto - note that when you itemize, you can also deduct State and local taxes, donations and mortgage interest as well.  

So if she lives in a state that has an income tax requirement, that is deductible as well (up to $10,000) - that'll increase the refund for her.