Tax Credit?

[elk]

Can anyone shed light on the tax credit for Celiacs? It was mentioned on a couple of other posts, so I'm curious.

[The Glutenator]

In Canada people with celiac disease can get a tax credit for the cost difference between gluten-free product and regular ones. Here is the info for you from the government's website (Open Original Shared Link). When I called, they said that if you do your taxes on-line, just give them the final cost difference but keep all the documentation in case they ask to see it. If you are submitting your taxes on paper you need to send it all in.

Incremental cost of Gluten-Free (gluten-free) products, an eligible medical expense.

Persons who suffer from celiac disease (gluten intolerance) are entitled to claim the incremental costs associated with the purchase of gluten-free (gluten-free) products as a medical expense.

You do not qualify for the disability amount (line 316) based on the inordinate amount of time it takes to shop for or prepare gluten-free products.

What is the "incremental cost"?

The incremental cost is the increased cost of purchasing a gluten-free product as compared to the cost of a similar non-gluten-free product. It is calculated by subtracting the cost of a non-gluten-free product from the cost of a gluten-free product. The calculation is shown below in the sample summary.

What items are eligible?

Generally, the food items are limited to those produced and marketed specifically for gluten-free diets. Such items include, but are not limited to, gluten-free bread, bagels, muffins, and cereals.

Intermediate items will also be allowed where the patient suffering from celiac disease uses the items to make gluten-free products for their exclusive use. These include, but are not limited to, rice flour, gluten-free spices, etc.

What if there are several people consuming the gluten-free products?

If several people consume the products, only the costs related to the part of the product consumed by the person with celiac disease are to be used in calculating the medical expense tax credit.

What documents do I need to support a claim for the medical expense tax credit?

If you are filing a paper return, include the following supporting documentation. If you are filing electronically keep the following supporting documentation in case we ask to see it:

a letter from a medical practitioner confirming the person suffers from celiac disease and requires gluten-free products as a result of that disease;

a summary of each item purchased during the 12-month period for which the expenses are being claimed (a sample summary is shown below); and

a receipt to support the cost shown in column (4) of each gluten-free product or intermediate product claimed.\

Hope this helps! And I am not sure what the policy is in the States.

[kareng]

Can anyone shed light on the tax credit for Celiacs? It was mentioned on a couple of other posts, so I'm curious.

It is the medical one in the US. It is only deductible if your medical expenses exceed a percentage of income. Might check the IRS website to see the specifics.

[tarnalberry]

In the US, you have to hit 7.5% of adjusted gross income (or higher) ($3750 with an AGI of $50,000) to deduct medical expenses. Only then can you deduct the cost of specialty gluten free goods (above and beyond the cost of regular goods), which requires a lot of record keeping. It also requires a note from your doctor, and increases your risk of audits.

[mbrookes]

It hardly seems worth the trouble. Especially since I keep a gluten-free kitchen and I'm the only celiac, the record keeping would be a nightmare.

[The Glutenator]

Yeah, it is quite a bit of work. Though as a starving student any bit helps and it is worth the hassle!

[elk]

wow, thanks for all the info everyone.

[ravenwoodglass]

It hardly seems worth the trouble. Especially since I keep a gluten-free kitchen and I'm the only celiac, the record keeping would be a nightmare.

I agree. The process is complicated and for myself even though my income is very low it isn't worth the trouble for a loaf of bread a week and a package of pizza crusts or a cake mix once a month or so. In addition since I almost never need to see a doctor anymore I don't want to do all that paperwork when I likely won't be able to deduct it anyway. I had my taxes done by a professional last year and asked him about it and he looked at me like I was looney. He said by the time he got done adding all the stuff up and subtracting the cost of regular foods I would end up paying him more than I would get back anyway.

[tarnalberry]

That's the thing - it's not even a credit. It's a deduction. All that means is that you wouldn't have to pay income tax on the extra money you spent for gluten free stuff. That's not going to generally make a large change in anyone's tax bill.

[T.H.]

For more information, you can check out this link:

Open Original Shared Link

I've thought about it, although I didn't do it last year.

If you do it, I believe you have to keep track of what gluten free foods you buy, the cost and amount (so you can have cost per amount to compare to gluten foods), and how often you go to the grocery store if you have to go to a special store. Some of it is not so bad. I mean, once you figure out what the the price is, you just have to note the brand and the rest of the info. you already have, you know?

You can deduct the price of some foods entirely, like xanthan gum. Some foods you deduct the difference in price between gluten vs. non-gluten per amount, like a loaf of bread. And if you have to drive extra distance past your normal grocery store, you can deduct a price per mile extra for gas costs.

Can anyone shed light on the tax credit for Celiacs? It was mentioned on a couple of other posts, so I'm curious.

[The Glutenator]

Wow, that American system is pretty complicated if they consider gas mileage! For Canadians, it takes a bit of effort to set up but then really easy to do. I just made an excel spreadsheet, which took a bit of time to set up, but now I just have to spend 30 seconds increasing the quantity number column each time I go grocery shopping and its no problem at all.

[SGWhiskers]

I have a flexible spending health care account through my employer in the US. Each employer is different in what they will and won't allow, so check your own before contributing. The way a FSA works is that you put in your own money pre-tax. Then throughout the year or at year's end, you submit for the dollar amount with receipts for what you spent on medical expenses until that money is used up. Then you are out of luck or dependant on reaching the 7.5% mark. It is a use it or lose it system which means that money can't be rolled into the next year if you contribute too much to the FSA. I've always had high medical bills so I contribute what I know I'll spend on monthly prescriptions plus a bit extra for doctor's copays. I probably only have contributed 50% to 66% of what I actually spent in years prior to diagnosis for fear of losing the money if I didn't spend it all. So, now since I'm diagnosed, (and you need a letter from your doc), and my employer agrees with the federal government that gluten free groceries are a medical expense, I contribute a lot more to my FSA. Then I save all my grocery receipts in a basket in the pantry for the year. When I sit down to do my FSA reimbursement in November or December I add all my medical expenses first. So far, I've come close to 90-100% of my expenses for medical bills. I use the grocery receipts as my back up in case I would need to come up with more medical expenses. Ugh. That didn't make sense.

So in the past, I might put aside $1000 in a FSA for the year.

Come December, I add up my expenses and see I really had $1500 in medical bills.

I would get reimbursed for the $1000 after submitting receipts.

Now, I can be a little more liberal in how much I set aside because I know I won't lose the extra if I don't use it because I have the grocery receipts as back up.

Now, I set aside $1500 in my FSA.

Come December, I add up my medical expenses and see I really had $1400 in medical bills. That's OK because I can use the grocery bills to come up with another $100 dollars of difference between generic oats and Bob's Redmill Gluten free oats purchased every week (for example).

Now I submit my $1400 for medical bills, my $100 difference between the price of the two oats, and my celiac letter.

I'm reimbursed for $1500.

The reality is that since going gluten free, my out of pocket medical bills have gone from $1500-$2000/year to about $800/year. I have not actually had to submit for reimbursement for the gluten free food, but I am able to contribute the maximum amount I could possibly think I would spend on medical bills because I know I have those receipts in a basket in the pantry if I need to go through the hastle of getting them reimbursed. (and I'm the one doing the leg work, so for the FSA, I don't need to spend money on an accountant's fees. The cost is really a day at the grocery store finding the cheapest gluteny comparable items and then a looooong evening with the calculator and forms at home).

I know my FSA will reimburse for things that are obviously stated gluten free. I don't know how they would do with something like spagetti sauce that does not have gluten vs. one from a generic company that is questionable. I'm pretty sure I couldn't submit for mountains of fruit and steak instead of hamburger helper for dinner. I can't event imagine what they would do about a $25 gluten free apple pie from a specialty store vs a $6 one from the grocery store.

Remember, if you decide to start using your FSA at work (your spouses will work as well), just make sure in advance what their policy is on medically necessary diets. I'm pretty sure that food allergy and low sodium/diabetic foods are not eligible for the cost difference like celiac food is.

In the end, using a FSA, the savings represent only the amount you would have paid on income taxes for that dollar amount. You can't claim money in a FSA and the same expense as part of the 7.5%. I suspect if you had cancer or something horrible and wound up using up the money you put in your FSA and then spent 7.5% of your income on medical expenses, you could claim both places, but for different expenses. (I'm not an accountant though).

So, while I have not used the grocery bills directly, just by saving the year's worth in a basket, I was able to increase my reimbursement level on other medical expenses without the fear of losing unspent money at the end of the year.