Howard J. Kass is a partner at Zinner & Co. LLP, and has over 30 years experience and has cultivated particular expertise in individual and business income taxes, tax aspects of real estate investment, gift and estate taxes and tax exempt organizations. Howard applies his extensive knowledge and experience to a diverse client base of individuals and companies including closely held businesses in a variety of industries and ownership structures such as C Corporations, S Corporations, Partnerships, and LLCs. Industries served include real estate, manufacturing, retail establishments, insurance agencies, distributors and service companies.
This is a good summary of the proper tax treatment for the additional costs of complying with a gluten-free diet, under a doctors direction. Let me offer a couple of points of clarification and amplification.
Revenue Ruling 76-80 is more on point in that it specifically discusses the deductibility of the additional costs one incurs in purchasing a special form of a product versus the normal cost of the non-special version.
Additionally, if one has to purchase items that they would not otherwise purchase if not for the underlying medical condition (such as xanthan gum) then the full cost of such items are deductible.
It is important to point out that one of the requirements for deducting a medical expense is that the expenditure must be incurred to treat or alleviate a specific medical condition. It is necessary, then, to establish to the IRS that such a medical condition exists. This is best done by a letter of verification from your doctor. This requirement obviously places a celiac in the position of having to obtain a medical diagnosis in order to deduct the additional costs of following a gluten-free diet.
As far as the mechanics of the deduction are concerned, you must first establish the amount of your excess costs associated with the gluten-free diet. This is done by maintaining detailed records of your purchases, as well as maintaining records of comparable normal products, accumulating those costs and subtracting the costs of the normal versions of those products over the tax year in question. The deduction would then be taken as a medical deduction on schedule A of form 1040. To obtain the benefit of the deduction, then, you must first be able to itemize deductions, and you must have enough non-reimbursed medical expenses to exceed the threshold of 7.5% of your Adjusted Gross Income. The amount by which your aggregate medical expenses, including the additional cost of a gluten-free diet, exceed that threshold amount would be deductible.
Does anyone have any experiences or rulings on the legality of deducting as a medical expense the costs for attending a CSA/USA seminar?
IRS publication 502 (Medical and Dental expense handbook) does not give any specific examples for seminars, but they do ok the cost of special schools for medical or physical reasons. I can rationalize the cost of a Celiac seminar as a medical education expense.
According to Internal Revenue Code Section 213, travel expenses that may be deducted are those primarily for and essential to medical care . . .
Regulation 1.213-1(e)(1)(i) defines medical care as the diagnosis, cure, mitigation, treatment, or prevention of disease.
Depending upon how aggressive or conservative one wishes to be, one could interpret this to mean that meetings that educate individuals in the prevention of a disease are expenses incurred in the mitigation or prevention of disease. All of the case law that I saw dealt with travel to warmer climates, not to medical meetings and conventions.
Some practitioners might be inclined to take a somewhat aggressive approach and play the audit lottery, while advising their clients that there is risk in taking the deduction. Before taking a deduction, however, it is only prudent to consult with your tax advisor.
Obviously, this discussion only pertains to taxpayers in the United States.
I understand that this can be quite confusing. My best advice is to contact your tax advisor. I would be willing to answer questions of a general nature. If I dont answer immediately, please be patient. You can E-mail me at: firstname.lastname@example.org.
I do have the full text of the two Rev. Rulings mentioned above, as well as the two court cases, but the files are large (about 20K each) and I am unsure of what the copyright law allows as far as distributing this information. The materials are copyrighted.
Hope this helps clarify (rather than confuse) some of the tax issues.