Maneuvering the financial aspects of egg donation can be daunting especially when considering tax deductions. Understanding whether medical expenses, legal fees, or agency costs actually qualify for deductions may depend on several factors like how they are classified by the Internal Revenue Service (IRS) and who incurs these expenses. This blog will explore the classification of egg donor compensation, IRS guidelines on income from egg donation, as well as tax filing tips for egg donors. A tax deduction basically lowers your taxable income and you only pay tax on the remaining amount. Lets say your gross income is $70,000 and your tax deductions are $ 7,000, you’ll only pay tax on the remaining $63,000. According to the IRS you may only deduct medical expenses more than 7.5% of your adjusted gross income. Additionally, it defines medical expenses as those incurred for “diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.” Expenses incurred in the process of preparing for a procedure e.g a fertility aiding procedure, that are directly related to the procedure are considered as medical expenses according to the IRS . Expenses such as: It is important to note that the IRS considers infertility as tax deductible. However a male tax payer in a same sex union may not be eligible for tax deductions as they case isnt a medical condition. Tax regulations may be complex thus consulting a tax consultant may be key to ensuring tax compliance and maximized tax deductions.
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