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Deducting Food From Taxes


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26 replies to this topic

#1 SofiEmiMom

 
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Posted 17 February 2004 - 10:53 AM

Has anyone here made deductions on your taxes for the extra cost of gluten free food? Considering what it has been costing us to keep our family on a gluten free diet we looked into income tax deduction possibilities to help deter the cost. Apparently, the Internal Revenue Service does allow income tax deductions for people with dietary restrictions. We asked an accountant if we qualified and he said that we do but to insure ourselves in the event of an audit we need a letter from our doctor stating that we have celiac disease and must adhere to a gluten free diet for life. We got all of that, but, I didn't know if we would be flagging ourselves for an audit if we made the deductions. Anyone here have experience with this?

Thanks so much.

Kimberly
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#2 Guest_jhmom_*

 
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Posted 17 February 2004 - 11:24 AM

Kimberly,

I received this from another support group, I hope this helps you and answers your questions... I plan on printing this out and taking to my tax lady and deducting the cost this year.



TAX DEDUCTION FOR GLUTEN-FREE FOODS AS MEDICAL EXPENSE
1. You may deduct the cost of Gluten-Free (gluten-free) products that are in EXCESS of the cost of the gluten containing product that you are replacing.
2. The full cost of special items needed for a gluten-free diet may be deducted. An example is the cost of XANTHAN GUM (methyl cellulose) used in gluten-free home-baked items, which is completely different than anything used in an ordinary recipe.
3. If you make a special trip to a specialty store to purchase gluten-free foods, the actual cost of your transportation to and from the store is deductible. If you are using your vehicle for the trip, you may deduct $.10 per mile each way.
4. The full cost of postage or other delivery expenses on gluten-free purchases made by mail order are deductible.
If you are audited, you will need a letter from your doctor indicating that you have Celiac Disease and must adhere to a Gluten-free diet for life. You will also need substantiation in the form of receipts, cast register tapes or canceled checks for your gluten-free purchases and a schedule showing how you computed your deductions for the gluten-free foods.
The total amount of your deduction for gluten-free foods should be added to your other medical expenses that are reported on line 1 of Schedule A of your form 1040. Do not include your doctors letter, your receipts or your schedule showing how you computed your deduction for gluten-free foods. Save these documents which should be submitted only in the event you are audited by IRS or your state's taxing authority.
If you are audited and the auditor tells you that these items are not deductible, refer the auditor to:
Revenue Ruling 55-261
Cohen 38 TC 387
Revenue Ruling 76-80
67TC 481
Fleming TC MEMO 1980 583
Van Kalb TC MEMO 1978 366
Keep a worksheet to track your gluten-free purchases. The amount of medical expense you may deduct is the difference between the price of the gluten-free product purchased and the price of the product replaced (if any) plus 10 cents per mile for vehicle transportation to and from the specialty store plus any shipping charges.
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#3 tarnalberry

 
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Posted 17 February 2004 - 12:44 PM

Maybe someone can clarify this for me, but I think that if the gluten-free food goes into the medical deductions, you can only deduct gluten-free food if your medical deductions are high enough. (I forget the exact percentage of your income, but it's something like 10%?)
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Tiffany aka "Have I Mentioned Chocolate Lately?"
Inconclusive Blood Tests, Positive Dietary Results, No Endoscopy
G.F. - September 2003; C.F. - July 2004
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#4 erica

 
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Posted 17 February 2004 - 04:08 PM

Tarnalberry, You are correct. To deduct medical expenses, they must be a certain percentage of your total income. I am not sure exactly how much but an accountant would know.
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#5 Suzn14806

 
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Posted 17 February 2004 - 08:53 PM

Thanks for posting this. I am trying to keep track of all of my expenses for taxes and this is the very helpful.
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#6 Guest_PastorDave_*

 
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Posted 18 February 2004 - 07:06 AM

There is a way to purchase gluten free food with before tax dollars, but your workplace must offer a "cafeteria plan." This is where some of your paychecks are taken with before tax dollars and then when you make purchases that are tax-deductable (such as filling prescription medications, buying eyeglasses, paying co-pays for health insurance, and yes, buying gluten free foods) you are then reimbursed the amount from the account that has been deducted from your pay. This lowers your taxable income and therefore cases a tax deduction even if you don't spend enough to consider itemizing your tax deductions. You do need that letter from your doctor, and it is wise to keep all of your reciepts as well (so just give your workplace copies when it comes time to be reimbursed.) - Pastor Dave's financial genious wife. :P
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#7 fanfaire

 
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Posted 22 February 2004 - 03:52 PM

In the U.S., medical expenses that exceed 7% of your income are deductible. If you count meds, insurance, doctor's fees and lab fees along with your gluten-free food expenses, it is feasible that you could exceed 7%. In 2003, I paid over $8000 in medical NOT counting gluten-free food or all the OTC products I have to use for Sjogren's (eyedrops, special toothpaste, mouthwash, humidifier filters, etc.)

Thanks for the documentation...I probably won't be able to use it since I voluntarily went gluten-free and thus have no official diagnosis, but it is VERY good info to have. We pay far too much for these specialty foods, and not all of us can easily afford them.

You are a very helpful bunch, and I appreciate it.
:D
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#8 Kim

 
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Posted 24 February 2004 - 12:38 PM

PastorDave is referring to the healthcare flexible spending account. You allot a certain amount of pre-tax dollars to be taken out of your paycheck, for every paycheck during the year. Then, you submit receipts to be reimbursed from your own pre-tax dollars for the difference between the cost of gluten and gluten-free foods. For example, if I buy a gluten-free cake mix at $6 and a normal cake mix is $.99, then I get reimbursed $5.01.

The important thing with this type of account is that they are "use it or lost it" accounts. So, by the end of year, if you haven't spent all of the money that you alloted, then you lose the money.

I routinely use my flex spending account to use pre-tax dollars to help defray the cost of my gluten-free foods.

The benefits personnel in your company's HR department should be able to help you with this.
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#9 deweyhughie

 
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Posted 25 February 2004 - 05:34 PM

Good explanation, Kim. I would only add that not all Flexible Spending Accounts (FSA's) permit the reimbursement of these costs. It is actually up to the employer to decide which medical expenses (including gluten free foods) are reimburseable. I have communicated with some Celiac patients who are not able to get reimbursement.

In my own case, I called my HR department and was told "I doubt it". Me being the persistent type, I then called the FSA administrator for our cafeteria plan and fortunately had a very helpful customer service rep who dug and dug and dug and finally came back with the good news that my plan would cover this. The lesson learned here is do not take no for an answer - keep digging to be sure. Benefit plans can be very complex and too many people in the benefits department do not want to take the time to dig, it's alot easier to just say "no that's not covered".

The FSA route is a much better route to take because you do not have to reach the 7% IRS threshold. Also, keep in mind that only those expenses OVER the 7% threshold are deductible. (If my understanding of those simple tax laws is correct!) So if you're income is 40,000 per year, only the amount of medical expenses (including gluten-free food cost difference) over 2,800 are deductible. Then, you must still have other deductions to reach the level of itemization that even warrants filing the Schedule A in the first place!

With the FSA, there is no threshold, ALL of your price difference is in effect deductible. It just works differently, because instead of subtracting the amount you are spending from your taxable income on your tax return, you just do it upfront when you enroll in your FSA at the beginning of the year. It is at that time that you specify how much you want to put into your FSA for the year and that amount of income is not taxable. It is treated like income that goes into your 401k. Kim is also right in her caveat of "use it or lose it". However, what I do is, if by the end of the year I am still carrying a balance in my FSA, I just buy a bunch of gluten-free food to use it up!

The last item worth mentioning (like this post isn't long enough!), is that not all employers offer a FSA. In fact, I would be willing to bet most don't! In this case, your only option is the deductiblity route on Schedule A.

Best wishes,
Dewey
Marion, IA
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Best wishes,
Dewey
Marion, IA

#10 gf4life

 
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Posted 25 February 2004 - 06:07 PM

I was wondering if the diagnosis from Enterolab would satisfy the government as a diagnosis of the disease? Has anyone tried this? I would hate to pay an accountant and then be told it wouldn't count. Just because my own doctor doesn't accept the test results does not make them invalid. And I assume that they are a deductable medical expense as well.

God bless,
Mariann
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~West Coast-Central California~

Mariann, gluten intolerant and mother of 3 gluten intolerant children

#11 Kim

 
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Posted 26 February 2004 - 07:28 AM

Hi Dewey. You are correct that FSAs will vary from employer to employer, but the gluten free food is a prescription and should be included (certainly in all that I've worked with)... So, your recommendation to be persistent is very well taken.
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#12 lovegrov

 
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Posted 26 February 2004 - 09:04 AM

Actually, the medical expenses threshhold is 7.5 percent, not 7 percent.

Personally, I would hire a tax expert before trying this. This specific deduction has NEVER been approved by the IRS and the IRS HAS specifically ruled against letting overweight people deduct diet food. The reality is that we don't need special expensive gluten-free food to be gluten-free any more than overweight people need special diet food to lose weight. If you do try, be sure to cover all your bases.
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#13 SofiEmiMom

 
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Posted 26 February 2004 - 09:35 AM

Well, we took our info to our accountant and he told us to not even bother with the gluten-free deductions. He said it's a bit of a red flag for an audit and you have to have impecable record keeping for the year in the instance there were an audit...just a little tidbit of info.
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#14 Guest_jhmom_*

 
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Posted 26 February 2004 - 11:04 AM

The total amount of your deduction for gluten-free foods should be added to your other medical expenses that are reported on line 1 of Schedule A of your form 1040. Do not include your doctors letter, your receipts or your schedule showing how you computed your deduction for gluten-free foods. Save these documents which should be submitted only in the event you are audited by IRS or your state's taxing authority.


Just curious, did your tax guy add it to the medical expenses or did you have any to deduct?
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#15 lovegrov

 
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Posted 27 February 2004 - 07:50 AM

Even when adding gluten-free expenses to other medical expenses I don't come close. I don't have that many gluten-free expenses because I rarely buy the stuff, but even if I did I'd have to buy thousands of dollars worth.

richard
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