Wednesday, September 11, 2013

The Rules on Tax Deductions for Special Food Necessary Because of Food Allergies

You may have heard that if a food is medically necessary because of life threatening food allergies, it is tax deductible.  This is true, but there are steep thresholds before you will have any real tax savings.

First, the food must be medically necessary and must cost more than the food it is substituting.  Some examples of what might constitute a medically necessary substitute is soy milk, in lieu of cow's milk, due to a life threatening milk allergy; gluten free flour in lieu of wheat flour, due to a life threatening wheat allergy; or Sunbutter in lieu of peanut butter, due to a life threatening peanut allergy.  The allergy must be diagnosed by the doctor and the doctor must recommend strict avoidance.  That last part is a given with life threatening food allergies. 

Second, you may only deduct the cost of the product that is above and beyond what the product you are substituting costs.  So, if soy milk costs $5.00 per gallon and cow's milk is $2.00 per gallon, then you get a $3.00 deduction for each gallon of soy milk you buy.  You have to save the receipts, keep a log of the purchase price, estimated price of food you are substituting, and difference.  As you can imagine, this can be tedious.  Imagine doing this for every single allergy substitute product you purchase for a whole year.  But, if you made it part of your routine when you return from the grocery store to take the receipt and put the numbers in the spreadsheet, then the process may be able to work its way into your routine.

Third, for the first 10% of your adjusted gross income worth of food deductions, you get no actual tax deduction.  Your adjusted gross income is found on Line 37 of tax form 1040.  If you make $70,000 per year, you would have to have $7,000 in food deductions for which you receive no tax deduction first, and then on the $7,001 dollar in food deductions you can deduct one dollar, and then every dollar after that above the $7,000 threshold.  If you make $100,000, then your threshold is $10,000, and so on.  

Is it worth all of the effort?  That depends on your gross income and how much extra you spend on your allergic kid.  However, since this deduction is not limited to food for food allergies, you can also deduct your other medical expenses, which might help you reach the threshold faster.  You can deduct any co-pays or out of pocket costs your insurance does not cover.  You can deduct the deductible you had to pay before your insurance kicked in.  This applies to all medical expenses, including doctors, dentists, and eye doctors.  Medical devices such as nebulizers count.  Prescription drugs count.  Maybe it was a bad year and someone in your family was hospitalized or maybe you had a baby.  A 10% copay in those circumstances can be substantial.  If you or your spouse lost your job and your income went down, so would your threshold.  The food deduction might just push you across the threshold into a real money deduction.  For many people, though, it is probably not worth the effort. 


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  2. HELLO I have sulfite and milk allergies how do I go about this tax deduction.

  3. I've been looking for a several sites that could help me on some guidelines about food allergy law. Now I found it in your blog. Thanks for the information. Keep posting.
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  5. Thank you for sharing! This article is very informative and helpful. I hope other articles will be as good as this article.

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