Being pregnant and having a baby are expensive. A 2013 report from Truven found that the average cost for a pregnancy and vaginal birth clocked in at approximately $30,000, while a pregnancy and a C-section cost an unbelievable $50,000. While insurance covered much of the cost, The New York Times points out that new parents with insurance were left with a bill of $3,400. That number significantly increased for those without health insurance plans.
Everyone could use some help managing these astronomical costs, especially since, you know, raising a kid is even more expensive than birthing one. And while we're sure you'd rather be shopping for adorable baby shoes, it's important to take the time to understand ways you can conserve some of your hard-earned cash, starting with everyone's favorite: taxes.
This year, you might notice things are a little different thanks to the passage of the 2018 GOP tax bill. For many (like this writer) the bill can be hard to comprehend, and if you have kids and/or are pregnant, you probably don't have the time or energy to sort through it. Don't worry. We've got you covered with our easy-to-comprehend breakdown of ways pregnant people can use the tax bill to their advantage come April.
Choosing a standard deduction vs. an itemized deduction
Ivan Philip Ivarson of Ivan Philip Ivarson Tax & Accounting Services explains taxpayers can deduct some qualifying medical expenses under Schedule A by itemizing their deductions rather than choosing the standard deduction. To do so, he says these expenses must exceed 7.5 percent of your adjusted gross income — which the IRS defines as "gross income minus adjustments to income" — for the 2018 tax year. (This, unfortunately, will shoot up to 10 percent for the 2019 tax year.)
Unless you plan to hire a tax expert, you're going to have to do some math. "Let's say someone has $100,000 worth of income," Vincenzo Villamena, American CPA and managing partner of Online Taxman, explains. "If the expenses are over $7,500, then that's when you can start thinking about deductions."
Sounds simple enough, right? Well, not so fast. According to Ivarson, choosing to itemize deductions doesn't make the most sense for everyone, as the itemized deductions would need to exceed the standard deductions (which includes things like mortgage interests and state taxes).
"This means that a single person would have to have more than $12,000 in itemized deductions, a head of household $18,000 and a married couple $24,000," he says. "On top of that, the first 7.5 percent of your gross income is deducted from medical expenses before the remaining amount can be counted toward itemizing your tax return. When you take all this into account, you need people with large medical bills and other deductions to be able to come up with more than their standard deduction. For most people, it makes just taking the standard deduction a better deal."
Still, it's nice to know that itemized deductions are an option, especially for those with above-average medical costs.
So, what can you include as a qualifying medical expense? According to Villamena, things like preventative care and surgeries are fair game.
Going to the doctor isn't always the most enjoyable activity, but for many pregnant women, it's necessary. According to Villamena, the amount you pay out of pocket at the doctor's office (your co-pay or anything not covered by insurance) is deductible as well as travel expenses getting you to and from your appointment.
But according to Thomas J. Williams, cofounder of Deducting the Right Way, deductible doctor's visits aren’t just limited to women who are currently pregnant. He says women can also deduct fertility enhancement treatments, such as in vitro fertilization treatments and doctor-prescribed smoking cessation programs.
Of course, you'll have to keep all of your receipts if you plan to properly document and itemize your deductions.
Unfortunately for your wallets (and for those who, like me, are squeamish), testing is a vital part of most pregnancies. According to Stanford Children's Health, expectant mothers will have to undergo routine tests, such as blood work and glucose-tolerance testing. If deemed necessary, some doctors will run additional tests, such as hCG testing or amniocentesis, to test for abnormalities. Any test ordered by a doctor is deductible.
According to the American Pregnancy Association, doctors can order ultrasounds during any pregnancy stage for a variety of reasons, such as monitoring fetal growth, identifying the location of the placenta, and scanning for abnormalities. All doctor-ordered ultrasounds are deductible as a medical expense.
Around the 18- to 20-week mark, medical professionals may be able to determine the sex of the baby. If this happens during a customary ultrasound, great! If not, you may be tempted to schedule a private ultrasound or sonogram to find out. Unfortunately, any private service, including those popular 4-D ultrasounds, aren't deemed medically necessary and are, therefore, not deductible.
As your pregnancy progresses, you'll likely need a few different (i.e., bigger) clothing items. But even though maternity clothes are often a pretty necessary part of being pregnant, Villamena says they are specifically excluded as a deduction by the IRS. *Sigh*
What pregnant person wouldn't want a little extra help around the house? While the idea of hiring a cleaner may be tempting, the IRS considers such services personal expenses and deems them ineligible for a tax deduction — yes, even if your doctor recommends them. The same, sadly, goes for childcare.
However, if your doctor orders in-home nursing care, you can absolutely deduct those expenses.
Childbirth classes & complementary health care
Good news for Lamaze lovers — Villamena says you can deduct childbirth classes as they count for preparing-for-delivery expenses. But check with your insurance before you file your taxes. Some companies may reimburse you for the classes if you attend a certain number.
If you prefer to relax in other ways, say with a prenatal massage, you're also in luck. Villamena says that doctor-ordered complementary health services are deductible.
As you've probably gathered by now, you're going to need a lot of supplies as a parent, from breast pumps to boatloads of diapers. Lamentably, many baby-related items (infant formula, baby food, diapers and diaper creams) are considered personal supplies, and are, therefore, ineligible for tax deductions.
But all hope isn't lost. Williams says that any supplies for lactation (breast pumps, bottles and pads) are eligible for tax deductions since they are still considered medical expenses. However, those with flexible spending accounts may find it easier to pay for these items using the pretax dollars stored in their accounts.
Labor & postpartum costs
All labor-related costs (ambulance rides, nursing care, C-sections and hospital stays) are deductible medical expenses. Like always, you can only include the out-of-pocket costs, not those covered by your insurance.
According to Williams, new moms "can also claim a tax deduction for therapy that is part of a medical treatment plan, a weight-loss program for a physician-diagnosed condition and a sterilization procedure." Just make sure to get all these approved by your doctor and keep all your receipts.
And at the end of the whole pregnancy and birth process, you get a little bundle of joy… and a child tax exemption!
For a full list of medical expenses, visit the IRS website.