The outcry over the steep increase in price for the EpiPen illustrates just how many Americans have serious allergies – including food allergies. Researchers estimate that up to 15 million Americans have food allergies. The numbers are even more dramatic in children: 1 in every 13 children under 18 years of age in the U.S. has a food allergy. That translates to two children in every classroom across the country.
Food allergies in the classroom can make lunch and snack time at schools tricky. However, in addition to factoring in allergies, many parents struggle with accommodating additional 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 for them at the register. It raises the question: if you have to pay out of pocket to keep you or your child healthy, can you claim a tax benefit?
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 – and even if those reasons include improving your overall health – the cost of a diet for ethical or moral reasons is never deductible. So that means that vegetarian and vegan diets aren’t eligible for a tax break.
You likewise don’t get a tax deduction for buying special foods as a result of a religious belief. Buying Kosher or Halal products doesn’t result in a tax break, even if you’re doing it in the name of a power higher than the Internal Revenue Service (IRS).
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 typically result in a tax deduction. Ditto for paleo, juicing, detox, and probiotics diets, as well as non-prescription vitamins and dietary supplements like Le-Vel Thrive, Plexus Slim, and Herbalife.
Special foods and beverages which are simply substitutes for your “normal” diet generally aren’t deductible (Harris HRS +1.10% 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 exceptions. The IRS will allow 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 (you can see the 2016 limits for itemizing here).
But don’t get too excited. 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 you buy special flour that costs $7/bag because of Celiac disease and regular flour is $5/bag, you can only include the difference ($2) for purposes of calculating the deduction. In other words, 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 2016, that threshold – sometimes called a “floor” – is 10% of your adjusted gross income (AGI); for taxpayers 65 and older, the old 7.5% floor still applies until December 31, 2016. You’ll find your AGI on line 37 of your form 1040:
To figure your actual deduction, you must figure the amount of your expenses which exceeds the floor. You can only deduct medical expenses which exceed 10% of your AGI – in this case, $5,000.
- 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.
Remember to include your other medical costs, including out of pocket costs for medical insurance, when figure the total medical expenses for purposes of the deduction.
And don’t forget to keep good records to justify your deductions: in addition to receipts, you’ll want to keep evidence of your specific medical condition and your doctor’s prescribed care. You don’t have to send those to IRS (in fact, IRS doesn’t want the extra paperwork) but you’ll want to keep those records together with your tax returns in case of audit.