Key Takeaways
- Your tax refund can be used as one of your surrogacy financing options to cover some of your surrogacy costs.
- By keeping your personal medical expenses in a single year, you can cross the 7.5% threshold to create a refund opportunity.
- You can combine different options to finance surrogacy.
One of life’s most amazing experiences is becoming a parent. However, some people face challenges along the way to becoming parents. There is hope for these intended parents, and they can fulfill their dream through surrogacy.
There are many aspects involved in the surrogacy journey, but one of the most important factors you would need to look at may be surrogacy financing options. You may consider the option of taking loans, or you may be eligible for a grant. But you could also think about how to spend your tax refund to finance surrogacy.
How Your Tax Refund Can Help
Your tax refunds can come from one of two things. Either your employer overpaid your taxes through the tax year, or you claimed medical deductions that became a tax refund. With the right planning and timing, you can use the refund to your financial advantage.
Tax refunds can be used efficiently to offset some of the costs of surrogacy. If you work wisely with your financial planner, you can put your refund towards your surrogacy financing options. By using medical deductions for certain medical procedures and expenses, you could basically create an opportunity for a tax refund.
Other Financing Options
There are different financing options that you can consider as well.
Fertility grants
One option you could look at is fertility grants. These are hard to come by, and you have to meet certain criteria in order to qualify for these grants. Some places provide grants biannually. Others specialize in LGBTQ+ grants. But you cannot rely on getting a grant.
Specialized lenders
Another option is through surrogacy loans with specialized lenders. Often, they offer lower interest rates than banks do on credit card loans, and they may offer milestone financing. As far as these surrogacy financing options go, specialized surrogacy loans offer hope to many.
You could still think about how to spend your tax refund to finance surrogacy alongside a surrogacy loan. Together, they could make a comprehensive finance plan.
Employer benefit packages
Some modern companies offer trendy benefits. Check with your human resources department to find out if your company offers surrogacy benefits. You could add these benefits to your tax refund to create a larger financial pool.
Taking a loan
A more popular financing option is taking out loans. You can take a personal loan, or if you are a homeowner, you could apply for a home equity line of credit. Alternate surrogacy financing options could be to take a 401(k) loan (borrowing against your retirement). And the interest you pay back goes back into your retirement fund, so you are basically self-funding.
Making Your Tax Refund Beneficial To Your Surrogacy Plans
With all these options available, the best one is still to create a tax refund opportunity. How it works is simple.
The IRS allows you to deduct medical expenses that exceed 7.5% of your total income for the year.
To explain with a basic example*:
- You earn $100,000 in a year.
- Your medical expenses were $30,000.
- You can deduct certain medical expenses once you’ve spent $7,500.
- Thus, $22,500 is tax-deductible.
- In refund amounts, this means you just got almost $5,000 as a tax refund.
(*amounts are approximate and used to illustrate the example.)
Finding surrogacy financing options just got a lot easier.
Timing
Now you can plan how to spend your tax refund to finance surrogacy. If you plan correctly, you can bundle all your major tax-deductible medical expenses into one year and use the refund you get to further surrogacy costs in the next year. It is all about timing everything perfectly.
What is tax-deductible?
Medical expenses such as IVF fees, egg or sperm retrieval, medications for fertility, and travel costs can all be used as tax-deductible expenses.
It’s important to know that your medical bills are covered. However, you cannot use your tax refund claim as one of the surrogacy financing options to claim any compensation paid to the surrogate or agency, their medical bills, or any matching fees, either. A tax refund claim will also not cover any legal contract fees. You can, though, use the refund amount to fund these costs.
Consult a CPA
Using a tax refund can be highly beneficial, but it is best to consult a CPA before starting. They will advise you about best practices and make sure that you itemize your deductions in Schedule A of your tax return. While you may have to look at a comprehensive financing plan, your CPA will be able to give you the best advice.
Final Thoughts
Don’t rush into any surrogacy financing options or decisions. You should first explore your options and put a watertight financial plan in place, and remember that timing is essential, too. With the right planning, you will understand how to spend your tax refund to finance surrogacy.
At Family Creations, we believe that the journey to parenthood is an exciting experience. Don’t get lost while making plans when you could be living them instead, because surrogacy can help you realize your dreams of parenthood. Contact us today, and let’s start making your dreams come true.
