Are Egg Donor Expenses Tax Deductible?
Key Takeaways
- Most egg donor–related costs are considered medical expenses that may qualify for tax deduction.
- Egg donor compensation is taxable income and must be reported to the IRS.
- Only intended parents who pay for the medical procedures can claim eligible deductions.
- Donors should keep clear records and consult a tax professional before filing.
Tax season has a way of making us review the past year—everything from big milestones to unexpected experiences. For some, that includes the decision to donate eggs or build a family through egg donation. Whether you’re wondering if donor expenses are tax deductible or how compensation is treated by the IRS, here’s what to know before filing.
Are Egg Donor Expenses Tax Deductible?
They may be, yes. The costs related to using an egg donor are generally considered medical expenses that may qualify for tax deduction under IRS rules
These expenses can include:
- Medical testing and treatment for the donor
- Legal fees
- Counseling services
- Embryo Storage
- Agency Fees
- Travel Fees for the donor
Because insurance coverage varies, it’s important to check with your health insurance provider to see whether any part of the egg donation process is covered. Most intended parents pay these costs out of pocket.
How Egg Donor Compensation Is Classified
Egg donor compensation is considered taxable income because it’s payment for a service: the time, effort, and physical commitment involved in the donation process.
Unlike settlements for personal injury, which are not taxable, egg donation is voluntary and done with informed consent. As a result, this compensation is not treated as reimbursement for injury or damages.
Donors should report this income to the IRS, typically under “other income” rather than wages or business income.
IRS Guidelines on Egg Donation Income
Egg donation income covers the payment for the donor’s medical process - the time, effort, commitment to undergo IVF voluntarily for someone else.
Some donors receive additional allowances for travel, meals, or related expenses. These reimbursements are usually not taxable, but the main compensation is.
The compensation is added to the donor’s overall gross income, usually under “other income” and taxed according to gross income tax bracket.
Can Medical Expenses Be Deducted?
For intended parents, egg donor medical expenses can qualify for a tax deduction if two conditions are met:
- The total medical expenses exceed 7.5% of your adjusted gross income (AGI).
- You itemize your deductions instead of taking the standard deduction.
For example, if your household income is $100,000, only the portion of your medical expenses above $7,500 can count toward a deduction.
Because fertility treatment costs can be significant, it’s best to review your total annual medical expenses with a certified tax professional.
Tax Filing Tips for Egg Donors
- Get professional guidance. Before starting the donation process, talk with a tax advisor to understand how compensation could affect your taxes.
- Know your agreement. Review your donor contract carefully, including how compensation and reimbursements are structured.
- Include all income. Report egg donor income under “other income.” It doesn’t need to be filed separately.
- Be mindful of tax brackets. Multiple donations in one year could increase your total taxable income.
- Keep records. Keep documentation for all payments and reimbursements.
If you donate regularly, the IRS may view your donor income as self-employment income, which comes with additional tax obligations.
In Summary
For intended parents, many egg donation costs are considered medical expenses and may be deductible if they exceed IRS limits. For donors, compensation is taxable income and must be reported when filing.
Since every situation is unique, confirm your eligibility and deduction details with a certified tax professional.
At San Diego Fertility Center, we understand that cost is one of many factors to consider when building your family through egg donation. Our financial counselors can help you understand your options and plan with confidence.
Clinically reviewed by Alyssa Schoenemann, RN