Thursday, January 16, 2014

Gluten-Free Glutton: Tax time an even bigger headache for celiacs / Tax Deduction Guide for Gluten-Free Products

Mark Basch for the Florida-Times Union writes: A year ago, I embarked on an exercise that I assumed would be futile and needlessly time-consuming. But in the interest of gluten-free research, I knew I had to pursue it.
I attempted to take the tax deduction available to celiacs for the extra cost of gluten-free food.
One year later, I can confirm my original hypothesis: Yes, the process was irritatingly time-consuming and, yes, it was futile — at least for me.
And while I didn’t spend enough money to qualify for the tax deduction, I was able to see just how much extra the gluten-free diet is costing me as I added this all up on Dec. 31. Happy New Year!
OK, when I wrote about the tax deduction a year ago, I promised I wasn’t going to whine about the extra cost, so I’ll stop there. But let me tell you about my wasted year spent documenting all of my gluten-free expenses.
First of all, for those of you who are newly diagnosed and may be unaware, the Internal Revenue Service does offer a potential tax deduction for people with celiac disease to cover the increased cost of gluten-free food.
Celiac disease is a medical condition with only one form of treatment — a strict gluten-free diet. So the additional cost of gluten-free food is considered a medical expense for people with a confirmed diagnosis.
Unfortunately, the deduction is not available for people who have some other type of gluten intolerance that has not been diagnosed as celiac. And needless to say, those of you who decided to go gluten-free because of a misguided notion that it’s a healthier lifestyle can’t take it either.
You won’t find any instructions on this deduction in any IRS publication and I doubt any tax help guide will give you information on it. The only official confirmation of the deduction I know of came in a letter from the IRS to the Celiac Sprue Association three years ago.
There is no separate deduction for celiacs. The gluten-free food costs have to be lumped in with all of your other medical costs when calculating your federal income taxes.
For years, the tax law allowed you to deduct only medical expenses that exceeded 7.5 percent of your adjusted gross income. That has made it very difficult for celiacs to take advantage of the gluten-free deduction.
Once you get the initial diagnosis, if you have no other problems, there’s no need to seek continuing treatment from a doctor, so you’re not going to rack up big medical expenses. I haven’t had any celiac-related medical bills since I was first diagnosed three years ago and I generally don’t make a lot of visits to the doctor, so I knew it was unlikely that I would reach the 7.5 percent threshold.
To make it even harder, the federal government last year increased the threshold for deducting unreimbursed medical expenses to 10 percent of adjusted gross income, for people under age 65. I didn’t learn about that until midway through the year and, if I knew that at the beginning of 2013, I may not have even started this project. The 7.5 percent threshold was difficult but the 10 percent threshold is hopeless, at least as far as my potential gluten-free deduction is concerned.
I thought about giving up when I learned about the new 10 percent rule, but since I was well into the project and had already spent enough time on it, I decided to continue.
The process of trying to take the deduction is time-consuming because you have to document every expense you have. Also, there is little guidance from the IRS on what expenses can be included.
The only guidance comes in the letter to the Celiac Sprue Association that said you can deduct expenses “to the extent the cost of the food for the special diet exceeds the cost of the food that satisfies a taxpayer’s normal nutritional needs if the special diet were not required.”
So how do you figure out the excess cost? Every time I bought a special gluten-free product last year, I entered the item and the price into a spreadsheet. And then I wandered through Publix or another store trying to find the price of an equivalent item. This was the part of the process I actually found the most annoying, because it wasn’t easy. Fortunately, nobody seemed to notice when I walked through the store with a little notepad and pen, because I didn’t want to stop and explain what I was doing.
Just as an example of how this works, the very first item on my spreadsheet is a package of four Udi’s gluten-free hamburger buns for $4.69. I found a package of eight Publix-brand buns for $1.29, which would mean four Publix hamburger buns cost about 65 cents. So I calculated the excess cost of my Udi’s buns at $4.04.
Do you see how expensive a gluten-free diet can be?
Of course, I have no idea if that would be a valid deduction. The IRS could argue that the Publix buns were not equivalent to the Udi’s buns, or they could argue that hamburger buns are not part of my normal nutritional needs.
As I said last year, who’s to say what my normal nutritional needs are? I entered every six-pack of gluten-free beer I bought into my spread sheet and calculated the difference between that and a six-pack of “normal” beer. Does anyone want to argue with me about that one?
Meanwhile, I was drinking a lot of gluten-free bottles of beer at bars and restaurants that cost a lot more than other available beers (very few places offer gluten-free beer specials). I didn’t put those into my spreadsheet because I couldn’t figure out a good way to calculate the excess cost.
Some restaurant meals at least make calculations easy because they have a clear gluten-free surcharge spelled out on the receipt. For example, Epik Burger adds a $2 surcharge for gluten-free buns with its burgers and other sandwiches, and Larry’s Giant Subs has a $2.25 surcharge for a gluten-free sub roll. I just entered the surcharge onto my spreadsheet.
While that’s easy, I missed out on a bunch of restaurant charges that I could have added to the spreadsheet. Oftentimes when I leave a restaurant, I instinctively grab a copy of my credit card receipt, but the credit card receipt doesn’t have the detail of the original receipt, so I had no record of the gluten-free charges.
If you hadn’t guessed this already, you have to keep every receipt to document your gluten-free costs if you take the tax deduction.
At the end of the year, my spreadsheet showed a total of $501.90 in gluten-free charges. Remember, this isn’t the amount of money I spent on gluten-free food, but a calculation of the extra costs beyond the normal charges for my “nutritional needs.”
I’ll bet I lost another couple of hundred dollars in gluten-free charges because of lost or forgotten receipts, so let’s say my excess gluten-free costs for the year were about $700. That turns out to be more than I spent on medical bills. So no, when I added it all up, I did not meet the 10 percent threshold.
Obviously, this is no surprise. Maybe one day, celiac advocates will successfully lobby Congress to put a straightforward celiac deduction into the tax code. But until that time, I’m not going to spend any more time thinking about a tax deduction.
Meanwhile, I was left with a file full of receipts to document my year of gluten-free spending. As I finished the project, it made for a nice pile of confetti to ring in the New Year.  Mark Blog's about the Gluten-Free life - click here.


Post a Comment