TL;DR
A couple’s $32,454 IVF bill became a non-deductible tax burden thanks to the 7.5% AGI rule, exposing the flawed promise of tax relief for medical costs.
Story
John and his partner dreamed of starting a family. That dream turned into a financial nightmare, costing them $32,454 in out-of-pocket IVF expenses in 2024. Adding insult to injury, they couldn’t deduct these costs when filing taxes, even with receipts.
The culprit? A cruel quirk of the US tax system. While medical expenses are deductible, there’s a catch: you can only deduct the amount exceeding 7.5% of your Adjusted Gross Income (AGI).‣ AGI: Your total income minus specific deductions. Think of it as a high hurdle you must clear before getting any relief.
John’s AGI was about $136,000, so 7.5% is roughly $10,200. That means only $22,264 of their medical bills counted towards itemized deductions. Sadly, this, plus any other deductions, didn’t exceed the standard deduction for married couples ($29,000). Like so many before them, John learned a painful lesson: tax deductions aren’t a safety net, especially for significant medical expenses.
This case echoes the 2008 housing crisis where fine print and hidden complexities trapped people in unaffordable mortgages. Similarly, John’s experience highlights the illusion of tax breaks—promising relief that never arrives.
The tax code’s complexity isn’t an accident. It favors those who can afford expert advice, leaving everyday taxpayers like John to navigate a minefield of rules. This opacity breeds distrust and fuels cynicism towards a system seemingly designed to keep the average person down.
Advice
Don’t rely on medical expense deductions. Overestimate costs, scrutinize AGI impact, and brace for disappointment.