<<Disclaimer: Verify this information before applying it to your situation.>>
 
Reply to message from [log in to unmask] of Wed, 17 Jan
 
>TAX INFORMATION:  Save all receipts from gluten-free products purchased for
>your diet.  You are allowed to claim the excess cost for purchasing
>products.  Example if you pay 2.25 for GF pasta and it cost .60 for regular
>past you can claim l.65 as an extra cost deduction.  When filing taxes you
>need a letter from your doctor stating you need this special gluten free
>diet.  You should cite the Revenue Rule 55-26,Cohen 38-TC387. Revenue ruling
>76-80,67,TC 48l, Flemming TC Memo 1980 583,Van Kalb TC memo 1978 366.
 
This is a good summary of the proper tax treatment for the additional costs
of complying with a GF diet, under a doctor's direction.  Let me offer a
couple of points of clarification and amplification.
 
First, the appropriate Revenue Ruling is 55-261 (not 55-26).  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 "nonspecial" 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 GF diet.
 
As far as the mechanics of the deduction are concerned, you must first
establish the amount of your excess costs associated with the GF 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 unreimbursed 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 GF diet, exceed that
threshold amount would be deductible.
 
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 don't answer immediately, please be patient.  After
all, it is tax season.
 
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.  I will defer to the list owners on this issue.
 
Hope this helps clarify (rather than confuse) some of the tax issues.
 
Howard
 
--
Howard J. Kass, CPA                        [log in to unmask]
Cindy Koller-Kass                          Voice: (216)831-4141
                                           FAX:   (216)831-4887
Hope things aren't too taxing for you!