<<Disclaimer: Verify this information before applying it to your situation.>>
Thanks to everyone who passed along information on deduction the extra cost of GF food for a tax deduction. I think I finally understand what is involved - and that is a lot of work with possibly no deduction in the end. I did also have a couple people pass on the excel spreadsheets they use to track the extra expenses - I'll pass those on if anyone else is interested and thinks the deduction might work for them. Also, www.celiac.com has some nice articles on the topic.
The main point people made is that it is difficult to have enough extra grocery cost ( you can only count the DIFFERENCE between "regular" food and GF). You have to meet 7.5% of your AGI in medical expenses to be able to deduct the grocery difference. I did a quick guess of how much my family now spends on groceries and we weren't close to 7.5% even after adding in what our other medical expenses would be in a year. It might work in a year where we have A LOT of out of pocket medical expenses. One thing some people are doing to save some money is paying for the difference in GF food with pre-tax dollars through their flex-spending accounts at work. I'll copy the e-mail responses below.
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I save all my grocery receipts. Then when I do my taxes I take about
3 or 4 receipts that I think represent a typical week. I figure out
the GF foods on those receipts and come up with a weekly average for
GF food expense. I multiply that by 52. I plug that number into my
taxes.
Like you say the food deduction is part of you medical expense and
this GF food along with your other medical expenses need to exceed a
certain percentage of you AGI.
We have been GF for 9 years. Each year I have done the exercise above
and each year I have not had enough medical expenses to warrant a tax
deduction.
Please note I plugged in the whole cost of the food not just the
difference. I know that the deduction must be on the difference in
the cost. But if I am not eligible for the deduction with the full
cost, I certainly won't be eligible with a cost less than that. So it
is not worth it to me to do that step unless I feel confident that I
will have something to deduct.
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this is a big undertaking, and at the end of the year may do you no good.
Example: If you buy a bag of GF flour $11.99; regular flour for the same size(say #5) cost $1.19; then you must write both down and substract the difference. This must all be recorded. You also must have a Dr. prescription for this. At the end of the year you may be able to deduct under your medical expenses, if you have not made too much money throughout the year. Medical, I believe, has to be more than 10-15% of your yearly income to take the deduction.
Another way you can get help is if your place of employment offers flex spending. You can allocate so much money, before taxes, to this account. Then draw that amount out as you need to use it. Where I work, I can draw from January 1 the amount I have allocated.
If you go to www.celiac.com and search, you will find an article Dwight Senne wrote a few years ago about this issue. I believe Dwight may be in the process of updating the information.
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This has been covered many times on the list and you can probably access
it in the archives. Unless your medical expenses are more than 7.5% of
your income you really can't deduct it.
I'm sure that you will hear from list members about it as well.
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As a start to answer your last question, yes it does go under the medical expenses and is related to your AGI.
Contact the Gluten Intolerance Group (GIG), they had an article in their 4th quarter 2007 magazine on this subject. Their email address is [log in to unmask], their website is www.gluten.net,
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I keep all my grocery receipts. For gluten-free foods, like bread for
example, I mark the "difference" next to the actual paid price. I usually
pay $1.00 for a loaf of regular bread (I always get the cheap one). If the
gluten-free loaf is $5.00, I mark "$4.00" in the margin. I then mark the
total "difference" on the top of the receipt and keep it in a file folder.
If I don't know the price of comparable non-GF item I check in the grocery
store before I leave.
When doing taxes, I add up my "differences" and include them in medical
expenses. I've never been audited, but I do keep my receipts in case I am.
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In my case, every time I make purchases I record the description, qty, price etc. and
at the same time when shopping take notice of the non-gluten equivalent, where
possible, price.
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http://www.celiac.com/categories/Celiac-Disease-%26-Gluten%252dFree-Food-Tax-Deduction-Info/
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The difference is what is tax deductable if your expenses exceed the 7.5% allowed. I use this for my Health Savings Account and for my medical flex account before that.
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Good luck everyone! I hope the information was helpful! Thanks again!
Kim
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