Federal Benefits - Tax Deduction ?
If you or one of your dependents has celiac disease and you itemize your deductions, the extra costs due to gluten-free dietary restrictions may be taken as a medical expense. In addition, you can deduct the cost of attending medical education conferences.
Do you qualify for a deduction?
- AGI threshold increase. Starting in 2013, the amount of allowable medical expenses you must exceed before you can claim a deduction is 10 percent of your adjusted gross income (AGI). The threshold was 7.5 percent of AGI in prior years.
- Temporary exception for age 65. The AGI threshold is still 7.5 percent of your AGI if you or your spouse is age 65 or older. This exception will apply through Dec. 31, 2016.
- You must itemize. You can only claim your medical expenses if you itemize deductions on your federal tax return. You can’t claim these expenses if you take the standard deduction.
- No double benefit. You can’t claim a tax deduction for medical expenses you paid with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from those plans are usually tax-free.
Gluten-Free Food and Travel Expense
What can you deduct?
- You may deduct the cost of gluten-free (GF) food that is in excess of the cost of the gluten containing food that you are replacing. For example, if a loaf of gluten-free bread costs $5.00 and a comparable loaf of gluten containing bread costs $2.50, you may include in your medical expenses the excess cost of $2.50.
- The full cost of special items needed for a GF diet may be deducted. An example is the cost of xanthan gum used in gluten-free home baked items, which is never used in a gluten containing recipe.
- If you make a special trip to a store to purchase GF foods, the cost of your transportation to and from the store is deductible. If you used your vehicle for the trip during the year 2014, you may deduct 23.5 cents per mile. For 2015, you may deduct 23 cents per mile. You may also include tolls and parking fees.
- The full cost of postage or other delivery expenses for GF foods made by mail order are deductible.
Step One: Get an official, written diagnosis from your physician. You will need to submit this form with your taxes, so make sure to keep a copy for your records.
Step Two: Save your receipts for your gluten-free groceries.
Step Three: Based on the list above, figure out what you can deduct and then start your calculations! You will need to calculate the difference between gluten-free products and non-gluten-free products from the grocery store.
Step Four: File! Fill out the medical deductions form called the Form 1040, Schedule A.
Please consult your tax preparer when calculating your deductions, and refer to the publications below. If you are audited and the auditor tells you that these items are not deductible, refer the auditor to the following:
- IRS Publication 502
- Revenue Ruling 55-261
- Revenue Ruling 76-80
- Cohen 38 TC 387
- 67 TC 481
- Fleming TC MEMO 1980 583
- Van Kalb TC MEMO 1978 366
If you are audited, you may need a letter from your physician indicating that you have celiac disease and must adhere to a gluten-free diet for life. You will also need substantiation of the expenses in the form of receipts, cash register tapes or cancelled checks for your GF purchases and a schedule showing how you computed your deductions for the GF foods.
The total amount of your deduction for GF foods should be added to your other medical expenses that are reported on Schedule A of your Form 1040. Do not include your physician’s letter, your receipts or your schedule showing how you computed your deduction. Save these documents, which should be submitted only in the event the IRS or your state’s taxing authority audits you.
Medical Education Expense Deductions
IRS Publication 502 provides that “You can include in medical expenses amounts paid for admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent.
The costs of the medical conference must be primarily for and necessary to the medical care of you, your spouse, or your dependent. The majority of the time spent at the conference must be spent attending sessions on medical information” However, you may not deduct the costs for meals and lodging while attending the medical conference.
For the final determination for what is tax deductible, refer to IRS ruling 2000-24 and IRS Publication 502.
- David Mitchell