IVF expenses deductible, gestational surrogacy expenses denied

Plain-English summary

A married couple used their own eggs and sperm for in vitro fertilization and engaged a gestational carrier because carrying a pregnancy posed a high health risk to one spouse. The IRS allowed deductions for IVF screenings, fertility medication and treatment, and egg and sperm retrieval because those procedures affected the structures of the taxpayers' bodies. The deductions remain subject to the 7.5 percent adjusted-gross-income threshold, continued marriage at year-end, and the specified joint return filings. The IRS denied deductions for the gestational carrier's testing, medications, transfers, insurance, delivery, legal fees, reimbursements, and related costs. Those expenses were not medical care for either taxpayer or a dependent under IRC § 213.

Ruling snapshot

• Question: Which IVF and gestational surrogacy expenses may the couple deduct as medical care?
• Outcome: Mixed, specified IVF expenses approved and gestational surrogacy expenses denied
• Key authorities: IRC § 213(a) and (d)(1)(A)

Full text (IRS public release)

Department of the Treasury
Internal Revenue Service Date:
Small Business/Self-Employed February 4, 2025
IRS Taxpayer ID number (last 4 digits):
Form:
1040

Tax periods ended:

Person to contact:
Release Number: 202518023

Release Date: 5/2/2025
Contact telephone number:

LEGEND UIL: 213.00-00
Taxpayer A =

Taxpayer B

Year 1 =

Year 2

Year 3 =

Date A =

Date B

Date C =

Date D =

Dear

On Date A, you submitted a request to the District Director having jurisdiction of your federal
income tax returns, for a determination letter on the deductibility of your unreimbursed expenses
for in vitro fertilization (IVF) and gestational surrogacy as medical expenses under IRC Section

213. In your submission, you represented yourselves as a heterosexual married couple. On Date
     B, you submitted a copy of the surrogacy agreement. On Date C, you provided supplemental
     information relating to your request including your representation that you will file, or have
     already filed, a joint Form 1040 federal income tax return for each of Years | through 3. You
     are requesting a determination letter regarding the deductibility of these expenses for all three
     years to the extent the expenses exceed 7.5% of your adjusted gross income for each such year.

Our determination

We approve a deduction under IRC Section 213 for the following medical expenses related to
your IVF procedures: screenings; fertility medication and treatment; and egg and sperm retrieval,
for Years | through 3, provided that: (1) the medical expenses, in each such year in which the
deduction is sought, exceed 7.5 percent of your adjusted gross income; (2) you are married to
each other at the end of each such taxable year in which the deduction is sought, and (3) you will
file an amended joint Form 1040 for Years | and 2, and an original joint Form 1040 for Year 3,

to claim this deduction. Based on the information you submitted, we determine that the egg and
sperm retrieval procedures affect the structures of your bodies and accordingly, the expenses for
those procedures are deductible as medical care under IRC Section 213(a) and (d)(1)(A).

We deny a deduction under IRC Section 213 for any expenses you incurred related to the
gestational surrogacy. This includes, but is not limited to: (1) pre-transfer testing costs for the
gestational carrier; (2) medications and procedure costs for embryo transfers; (3) embryo transfer
fees to reimburse the gestational carrier for pain and suffering of each embryo transfer attempt;
(4) embryo storage fees; (5) deductibles and co-pays for the gestational carrier’s health insurance
coverage; (6) the cost for life insurance and an accidental death and dismemberment policy on
the gestational carrier’s life; (7) the cost for the delivery of the child being carried by the
gestational carrier; (8) legal fees to establish parentage; and (9) base reimbursements to the
gestational carrier for the care and support of the fetus, for discomfort, pain, suffering, and
inconveniences, and for pre-pregnancy, pre-birth, and post-birth expenses. You cannot deduct
your expenses directly for the identification, compensation, and medical care of a gestational
carrier and you cannot deduct your reimbursement of the gestational carrier’s related expenses.
These expenses were not incurred for your medical care or for that of a dependent as required
under IRC Section 213(a).

Description of your request

You told us that due to your preexisting health condition, carrying a pregnancy to term poses a
high risk of uterine rupture for you. Therefore, you engaged the services of a gestational carrier
to carry your biological child to term. You requested that the expenses of the IVF procedure and
the expenses of the gestational surrogacy be allowed as your expense of medical care under IRC
Section 213.

You incurred expenses for IVF, using your eggs and your husband’s sperm, and for gestational
surrogacy in Years | through 3. The fertilized egg, i.e., an embryo, was transferred to a third-
party gestational carrier to carry the embryo to term. For Year 1, you filed a joint federal income
tax return. However, you did not claim a deduction under IRC Section 213 on that return for the
IVF or gestational surrogacy expenses because you are awaiting a determination by the IRS as to
the deductibility of these expenses. Similarly, you filed a joint federal income tax return for
Year 2 but did not claim a deduction on that return under IRC Section 213 for the IVF or
gestational surrogacy expenses because you are awaiting a determination by the Service as to the
deductibility of these expenses. You have not filed your return for Year 3 because it is not due
until Date D.

Basis for our determination

IRC Section 213(a) provides that “[t]here shall be allowed as a deduction the expenses paid
during the taxable year, not compensated for by insurance or otherwise, for medical care of the
taxpayer, his spouse, or a dependent ... to the extent that such expenses exceed 7.5 percent of
adjusted gross income.” IRC Section 213(d)(1)(A) provides that the term, “medical care,” means
amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the

purpose of affecting any structure or function of the body.

Other conditions that apply to this determination

This determination only applies to those expenses described in the above paragraph,
headed, “Our Determination.”

You must attach a copy of this determination to your amended joint Form 1040 filed for
Years | and 2 (to take the deductions permitted under this determination),

You must attach a copy of this determination to your original joint Form 1040 filed for
Year 3.

This determination is directed only to the taxpayer(s) requesting it. IRC Section
6110(k)(3) provides that it may not be used or cited as precedent.

You cannot rely on the conclusions in this letter if the facts you provided have changed
substantially. You must report any significant changes in this matter to the IRS at:

Internal Revenue Service
Small Business/Self-Employed
Attention Ms. Mia T. Sylve
Area Director

Field Examination,

You should keep adequate records to substantiate your medical expenses with the IRS if
necessary.

We will make this determination letter available for public inspection after deleting personally
identifiable information as required by IRC Section 6110(c). We have enclosed: (1) Letter 437,
Notice of Intention to Disclose — Rulings, and (2) a copy of the letter that shows our proposed
deletions. If you disagree with our proposed deletions, follow the instructions set forth in Letter
437 to notify us. If you agree with our deletions, you do not need to take further action. Please
keep a copy of this Determination Letter and the enclosed Letter 437 for your records.

If you have any questions, you may contact the person whose name and telephone number are
shown at the top of page 1 of this letter.

Sincerely,

Mia T. Sylve

Area Director

Field Examination,

Small Business/Self-Employed

Enclosures:(2)
1, Letter 437, Notice of Intention to Disclose.

2. Copy of the determination letter with proposed deletions.