I knew in the back of my head we could do this, but it literally just dawned on me yesterday that we would have enough medical expenses for 2010 to actually take a hefty deduction on our return this year. As soon as our 2010 prep software was installed at work, I started throwing in our numbers because I like to get our returns filed as early as possible (if we have refunds coming). Yesterday I was looking back at my master baby bucks spreadsheet for some reason and had a *holy shit* moment. Medical expenses! We went from having a net refund of about $1,000 between Fed and state, to having over $6,000 in refunds after adding in our medical expenses for infertility treatments. So IF girls, please pay attention to this!
Most of us never get to deduct much of any medical expenses. You generally have to have a LOT of expenses to get above the 7.5% AGI (adjusted gross income) threshold. Meaning, if you have income of $100,000 in 2010, you have to have more than $7,500 in out-of-pocket medical expenses before you can deduct anything. So if you have $8,000 in medical costs, you would only get to deduct $500.
Costs paid for infertility treatments do qualify for the deduction. And you can bet your britches we're including all our IVF costs, meds, lab fees and my acupuncture costs. Understand that a deduction can only be taken for true out-of-pocket expenses paid with after-tax dollars. If you have a cafe plan at work with a flexible spending account or an HSA where you put in pre-tax dollars to use for medical expenses, you can not deduct any costs paid with those funds. And expenses covered by or later reimbursed by insurance are of course not deductible. Also, only costs paid in 2010 can be deducted for 2010. Even if you received treatment in 2010 but paid for a pre-paid plan in 2009, you cannot deduct costs paid in 2009 on your 2010 return. So like in my case, we paid for a pre-paid IVF plan in 2010. I will continue to receive treatment related to the plan in 2011, but I must deduct those costs on my 2010 return.
Just wanted to give you IF girls a heads up to be thinking about this. Keep good records and this is easy. Hop over here for some more guidance on deducting IVF (and other IF) costs on your return.
Personally, this was a huge epiphany for me yesterday. But if you remember, my parents graciously funded the bulk of our treatments last year. So as soon as I connected the dots, I sent the good news to my parents. The money is rightfully theirs, after all. And I was so excited to be able to "give" some of it back. But to our surprise, my parents talked it over and decided they wanted *us* to keep the money. My dad even suggested the hub and I take a little weekend trip somewhere after tax season with some of the funds since we've been so diligent with our beans-and-rice lifestyle while dumping debt. The hub and I both laughed and said "Hell NO!" to each other. That's going toward debt! Our heads are so intensely focused on getting out and staying out of debt that the idea of spending money on "fun" doesn't even register. We've got our eye on future fun. Thank you, Mom and Dad. We will get there faster because of you.
Most of us never get to deduct much of any medical expenses. You generally have to have a LOT of expenses to get above the 7.5% AGI (adjusted gross income) threshold. Meaning, if you have income of $100,000 in 2010, you have to have more than $7,500 in out-of-pocket medical expenses before you can deduct anything. So if you have $8,000 in medical costs, you would only get to deduct $500.
Costs paid for infertility treatments do qualify for the deduction. And you can bet your britches we're including all our IVF costs, meds, lab fees and my acupuncture costs. Understand that a deduction can only be taken for true out-of-pocket expenses paid with after-tax dollars. If you have a cafe plan at work with a flexible spending account or an HSA where you put in pre-tax dollars to use for medical expenses, you can not deduct any costs paid with those funds. And expenses covered by or later reimbursed by insurance are of course not deductible. Also, only costs paid in 2010 can be deducted for 2010. Even if you received treatment in 2010 but paid for a pre-paid plan in 2009, you cannot deduct costs paid in 2009 on your 2010 return. So like in my case, we paid for a pre-paid IVF plan in 2010. I will continue to receive treatment related to the plan in 2011, but I must deduct those costs on my 2010 return.
Just wanted to give you IF girls a heads up to be thinking about this. Keep good records and this is easy. Hop over here for some more guidance on deducting IVF (and other IF) costs on your return.
Personally, this was a huge epiphany for me yesterday. But if you remember, my parents graciously funded the bulk of our treatments last year. So as soon as I connected the dots, I sent the good news to my parents. The money is rightfully theirs, after all. And I was so excited to be able to "give" some of it back. But to our surprise, my parents talked it over and decided they wanted *us* to keep the money. My dad even suggested the hub and I take a little weekend trip somewhere after tax season with some of the funds since we've been so diligent with our beans-and-rice lifestyle while dumping debt. The hub and I both laughed and said "Hell NO!" to each other. That's going toward debt! Our heads are so intensely focused on getting out and staying out of debt that the idea of spending money on "fun" doesn't even register. We've got our eye on future fun. Thank you, Mom and Dad. We will get there faster because of you.
