Buying gluten-free Food's Through An Hsa

[Eric-C]

Since we just started our HSA I figured I'd post this up again as a reminder.

I think this has been discussed before but not many people are aware that they can buy Gluten Free Items from their HSA and get the difference tax free.

https://www.celiac.com/articles/835/1/Flexi...enne/Page1.html

Prices on gluten-free products are coming down but still a $8.00 box of pasta is a $8.00 box of pasta.

So if your gluten-free Pasta is $8.00 and a regular box of pasta is $3.00 then the $5.00 difference can be funded through the HSA, tax free.

[Gemini]

Since we just started our HSA I figured I'd post this up again as a reminder.

I think this has been discussed before but not many people are aware that they can buy Gluten Free Items from their HSA and get the difference tax free.

https://www.celiac.com/articles/835/1/Flexi...enne/Page1.html

Prices on gluten-free products are coming down but still a $8.00 box of pasta is a $8.00 box of pasta.

So if your gluten-free Pasta is $8.00 and a regular box of pasta is $3.00 then the $5.00 difference can be funded through the HSA, tax free.

Where do you live? In our state, that's the one thing which is not taxed.....food!

[Eric-C]

When I mean tax free I mean pre-tax.

Prepared foods in Michigan are taxed, unprepared foods are not.

This is a better way to explain it.

You have 2 people, both make $60,000 a year. One has Celiac's, one does not.

Person A and Person B eat the same foods, both available in gluten-free and non-gluten-free.

Person A spends 100 a week in food. Person B has to spend $125 to buy the exact same foods, but gluten-free.

Now lets say both A and B have the same deductions.

Person A has health insurance that costs $100 which is pretax. They gross $1,250 per week each. Person A pays their insurance pre taxed and is taxed on $1,150(1250-100).

Person B also has health insurance that costs $100, which is pre-tax. However they also put $25 a week in an HSA so they can buy their gluten-free foods.

Person B pays taxes on $1,125(1250-100-25) and not $1,150 so pays less in taxes because the taxable amount is lower.

That is what I mean by buying food tax free, it comes out of your gross income and then is lopped off the amount used to figure your net income.

[Gemini]

When I mean tax free I mean pre-tax.

Prepared foods in Michigan are taxed, unprepared foods are not.

This is a better way to explain it.

You have 2 people, both make $60,000 a year. One has Celiac's, one does not.

Person A and Person B eat the same foods, both available in gluten-free and non-gluten-free.

Person A spends 100 a week in food. Person B has to spend $125 to buy the exact same foods, but gluten-free.

Now lets say both A and B have the same deductions.

Person A has health insurance that costs $100 which is pretax. They gross $1,250 per week each. Person A pays their insurance pre taxed and is taxed on $1,150(1250-100).

Person B also has health insurance that costs $100, which is pre-tax. However they also put $25 a week in an HSA so they can buy their gluten-free foods.

Person B pays taxes on $1,125(1250-100-25) and not $1,150 so pays less in taxes because the taxable amount is lower.

That is what I mean by buying food tax free, it comes out of your gross income and then is lopped off the amount used to figure your net income.

I completely understand the tax deduction principal and HSA accounts....I used to work for a CPA and had an HSA account in the past. However, no food items are taxed at all in my state, unless you dine out in a restaurant, so there's the difference. I also never used the HSA for the difference between gluten-free foods and non-gluten-free foods because it is just a real pain in the butt to keep track of all that plus I don't buy enough gluten-free labeled food to bother. My dental bills were the ones which made the HSA worthwhile!

[ravenwoodglass]

I don't know anything about HSAs but I do know that if you itemize and your health bills are over a certain amount that you can use that as a tax deduction on your federal return. It isn't a refund of the taxes paid but a deduction of the difference between gluten free and regular foods. You tax professional can explain it a bit better when tax time comes around.

I do agree that it could be a pain to total everything up but if the amount is substantial it might help in these tight times for folks that have other high medical bills also.

[Gemini]

I don't know anything about HSAs but I do know that if you itemize and your health bills are over a certain amount that you can use that as a tax deduction on your federal return. It isn't a refund of the taxes paid but a deduction of the difference between gluten free and regular foods. You tax professional can explain it a bit better when tax time comes around.

I do agree that it could be a pain to total everything up but if the amount is substantial it might help in these tight times for folks that have other high medical bills also.

On the federal tax returns, your deductions for medical have to exceed 7 1/2% of your adjusted gross income. That leaves 2 groups of people who may be able to

take advantage of this......those with really high, out of pocket expenses for medical issues or very low income groups. I fall into neither so don't bother with any of it.

[Juliebove]

On the federal tax returns, your deductions for medical have to exceed 7 1/2% of your adjusted gross income. That leaves 2 groups of people who may be able to

take advantage of this......those with really high, out of pocket expenses for medical issues or very low income groups. I fall into neither so don't bother with any of it.

The same applies to me. And oddly, most people do not know this. I have spoken to countless people who claim they do this on their taxes and didn't know. Makes me wonder if they are doing it correctly.

[ravenwoodglass]

On the federal tax returns, your deductions for medical have to exceed 7 1/2% of your adjusted gross income. That leaves 2 groups of people who may be able to

take advantage of this......those with really high, out of pocket expenses for medical issues or very low income groups. I fall into neither so don't bother with any of it.

I guess this is one time I should be glad that I am one of those low income groups. I have to talk to my tax person this year and see if I have to have every single reciept or whether I can average by my usual monthly gluten free items. Unfortunately I didn't save all my reciepts this year. I will next year though.

[Eric-C]

Correct, the idea is the HSA gets you around the 7.5 requirement.

[Gemini]

The same applies to me. And oddly, most people do not know this. I have spoken to countless people who claim they do this on their taxes and didn't know. Makes me wonder if they are doing it correctly.

I am amazed at the amount of people who insist on doing their own taxes and then neglecting to learn anything about tax law. This is pretty basic also and I am sure many who aren't aware of this are making mistakes....which will come back to haunt them should they be audited by the IRS. The one thing which makes it difficult to reach the baseline for deductions is being married and combining income. If I had known what I know now about tax law, I may not have gotten married to my husband and just lived together. Many retiree's and widowed folks, who chose not to re-marry again, do this for money reasons. I joke with hubby that we may have to get divorced when we retire!

The HSA's are OK but I just found that they require too much paperwork, which turned out to be a major pain in the butt. For every single transaction, you have to itemize and file a claim. If this is not done within a 2 week window from date of transaction, they freeze the card so you cannot use it. Then, at year's end, if you have any unused monies, you LOSE it! WTF! Not only does health care need some tweaking but so do these HSA accounts! They are not designed for ease of use and it can be difficult to guess how much money you will need for the next year, with regards to medical costs. All very aggravating......