The Gluten-Free Diet and Tax Deductions

One of the frustrating things with Celiac Disease is how expensive ‘gluten-free’ versions of mainstream products are. $5 for a box of Italian gluten-free pasta, $7 for a bag of gluten-free bagels, $8 for a loaf of decent tasting gluten-free bread. It can quickly become quite a burden to a family or even an individual to live on a diet with gluten-free replacements. Well there is some good news at tax time, you may be eligible to deduct some of that extra expense on your taxes.

Suzanne on the NYC Celiac Meetup message board and Celiac.com were great sources in helping me to pull together this guide to tax deductions and the gluten-free diet.

If you refer to IRS ruling 02-19 & IRS medical pamphlet 502 & COMPLY with their REQUISITES you can include your gluten-free food, toiletries, cosmetics, even envelopes with gluten-free glue as part of a medical deduction.

A few things you need first:

• This will be part of your medical expenses deduction so you must have sufficient medical expenses (as a % of your earnings) to itemize your deductions.
• A doctor’s letter to substantiate your condition as DIAGNOSED Celiac Disease.
• Receipts.

What you can deduct:

• You can claim mileage expenses, and postage/shipping fees for special needs shopping.
• The price difference between regular and gluten-free products. If you were buying wheat pasta for .99 and now buy gluten free pasta for $5.00, you have to deduct the difference and that amount is used for the deduction. If you eat cereal, for example & regular corn flakes are $3.50 but gluten-free corn flakes are $5.49 for a box half the size, you have to figure the cost per ounce then calculate the difference.
• The full cost of some replacement items such as gluten-free flour and xanthan gum. Some items are not interchangeable i.e. rice flour is not a one-to-one replacement for wheat flour the way pasta or cereal is so the entire cost is deductible.
• Restaurant surcharges – any extra fees that restaurants charge for gluten-free bread or pasta can be completely deducted.

According to Celiac.com:

“After you file, your IRS office may refer you to Publication 17 and tell you these deductions are not permissible. IRS representatives have ruled otherwise and this is applicable throughout the US Refer them to the following Citations:

Revenue Ruling 55-261
Cohen 38 TC 387
Revenue Ruling 76-80, 67 TC 481
Flemming TC MEMO 1980 583
Van Kalb TC MEMO 1978 366″

I am not an account or a tax attorney so please read all of the pamphlets carefully to check for updates and be sure that you are following their guidelines correctly.  While it’s not super-convenient or easy, it has the potential to provide substantial savings each year.  And if you are already tracking your spending with one of the many tools now available for free online it may not even be that inconvenient.