Can You Deduct The Cost Of Special Foods For Allergies, Celiac & Other Dietary Concerns?

Kelly Phillips Erb for Forbes writes: When my kids arrived home from the first day of school, they had little to do in the way of homework. I was not so lucky. I had a mountain of papers to sort through, which my kids referred to as “homework for mom.”

Tucked away in those papers were three letters regarding allergies. According to the school nurse, severe food allergies affect more than 3 million school children. To keep kids safe, each classroom has a list of foods that are prohibited at snack time. Depending on the classroom, the list runs the gamut from eggs to tree nuts to shellfish.

In addition to factoring in allergies, many parents struggle with accommodating dietary restrictions. It can be tough to figure out kids’ eating habits at the best of times but once you add in other factors such as religion, ethics and morality, and concerns about obesity and cholesterol, it’s even more complicated. Fortunately, organic, non-GMO and gluten-free foods are a bit easier to find than in years past but you do pay a premium. If you have to pay a bit more for special foods, can you at least have the benefit of a tax deduction?

Here’s your lawyerly answer: it depends.

You don’t get a tax deduction for buying special foods to satisfy an ethical or moral sensibility. Even if you have excellent reasons for avoiding animal products, for example, the cost of a diet for ethical or moral reasons isn’t deductible.

You don’t get a tax deduction for buying special foods as the result of a religious belief. Buying Kosher or Halal products doesn’t result in a tax break, even if you’re doing it for a power higher than the Internal Revenue Service.

You also don’t get a tax deduction for the cost of food used to improve your health even if a doctor specifically recommends that you lose weight or otherwise reform your diet. A low sodium, low fat, low sugar diet doesn’t result in a tax deduction. Special foods and beverages which are simply substitutes for your “normal” diet generally aren’t deductible (Harris v. Commissioner, 46 T.C. 672 (1966)); that includes the cost of food in weight loss plans like NutriSystem or WeightWatchers.

Notice the word “generally.” There are some narrow exceptions available. The IRS will allow you a tax break for the cost of special food if the following criteria are met:

• The food must not be used to satisfy normal nutritional needs;
• The food must alleviate or treat an illness; and
• The need for the food must be substantiated by a physician.

In other words, the food must be “special” in some way for the purposes of treating a medically diagnosed illness like severe allergies and disorders such as Celiac disease. If that is the case, the cost of the food would be considered a qualified medical expense for purposes of a tax deduction on a Schedule A (meaning that you must itemize to claim the deduction).

But don’t get too excited just yet. The amount you can deduct as a medical expense is limited to the amount by which the cost of the special food exceeds the cost of a normal diet (Flemming v. Commissioner, T.C. Memo. 1980-583). So, for example, if regular flour is $5/bag and your special flour is $7/bag, you can only include the difference ($2) for purposes of the deduction. Put another way, you cannot deduct the cost of all of your special food; you can only deduct the difference between the cost of your special food and your “normal” food. If there is no such “normal” equivalent, however, the entire cost of the product is deductible.

You’re still not quite done: the total of your qualifying medical expenses must meet a threshold. For 2013, that threshold – sometimes called a “floor” – is 10% of your AGI, or adjusted gross income (found at line 37 on your form 1040); for taxpayers 65 and older, the old 7.5% floor still applies until December 31, 2016. To figure your actual deduction, you figure amount of your expenses which exceeds the floor.

Confused? Here’s a quick example: let’s assume you have an AGI of $50,000. For purposes of this example, you can only deduct medical expenses which exceed $5,000, or 10% of your AGI.

If you have $3,500 in expenses, you don’t meet the threshold, so you cannot deduct your medical expenses.
$3,500 in expenses – $5,000 (10% of $50,000) = -$1,500

If you have $5,000 in expenses, you meet the threshold but you don’t have any excess, so you cannot deduct your medical expenses.
$5,000 in expenses – $5,000 (10% of $50,000) = 0

If you have $7,000 in expenses, you meet the threshold and you can deduct $2,000.
$7,000 in expenses – $5,000 (10% of $50,000) = $2,000

Got it? Good. Easy rule of thumb: only special foods which are prescribed by a doctor for a specific medical condition AND which, together with your other medical expenses, exceed the floor are deductible for tax purposes.

Of course, all of this talk about food is making me hungry… which brings me to our next giveaway.

RW Garcia, a Northern California-based family owned and operated leading maker of artisan and all natural corn-based snacks, is giving away a prize pack filled with two bags each of its three new tasty tortilla chips: English Cheddar Dippers, Sweet Potato Dippers and Salsa Mixtbag® (six bags in total).

RW Garcia makes its chips with wholesome, simple ingredients including stone-ground, verified non-GMO corn. All the company’s chips are certified gluten free and contain no trans fats, additives or preservatives. In addition, RW Garcia Dippers feature a trio of delicious and healthy seeds including flaxseed, black sesame seeds and chia seeds, plus a long rectangle shape and heartier texture, perfect for standing up to any dip.

To enter to win, just post a comment below telling me your (or your kids’) favorite healthy (or healthy-ish) snack food. I’ll get you started: My kids can eat their weight in edamame.
I’ll choose the winners randomly (using a number generator) out of all of the qualifying entries.

Here are some more rules because, as you know, I’m a lawyer and I like rules:

• Entries must be posted in the comments section for this blog post in the space below by 5:00 p.m. EST on September 4, 2013.
• Don’t panic if your comment doesn’t show immediately. If it goes to moderation because, for example, you’re new here, the time stamp on your comment is what counts. If you have difficulty registering, please send an email to blogadmin@forbes.com and copy me (tech@taxgirl.com) so that I can help if I need to/can.
• I love my Twitter followers and my Facebook FB +1.39% fans but for this particular giveaway, tweets and Facebook comments will not be counted. Ditto for emails. You must leave your comment on the blog at this post.
• You can enter as many times as you like but you must leave a different answer each time you comment.
• Offensive comments or comments that otherwise violate the comment policy will be deleted and will not be considered valid for purposes of the contest.
• Pingbacks and other links will be disregarded for purposes of the contest.
• You must include your full name and your email address with your entry, just enter it when you register to comment. I won’t publish your email address but I do need contact information for the winning entry.
• Due to shipping considerations, only United States addresses, please. Sorry, Canada, eh?
• I respect your privacy and I will not send you anything unrelated to your entry in this contest.By entering the contest, you agree that I may post any part or all of your submission including your name as a part of the contest announcements or promotions, with the exception of your email address.
• Like Judge Judy, my determination is final.
• Finally, the giveaway is about me, me, me. It’s not affiliated with or endorsed by Forbes. So leave them out of it, okay?

Comment away! And thanks for participating in Back To School Week!