It’s a common question on the gluten intolerance forums: “Can I deduct the cost of eating gluten free?”  The short answer is yes, but the real answer is, probably not.

To start with, there is no specific deduction for gluten free food; instead it’s all rolled into the medical deductions.[1]  If you’ve considered using this you know that the threshold is actually fairly difficult to achieve unless you’ve had a particularly difficult year.  You can only deduct expenses that you paid and exceed 10% of your adjusted gross income (AGI) which is your income after deductions.  Yes, 10% - it increased in 2013.  This means that if your AGI is $50,000 your medical expenses have to exceed $5000 that year, and you can only deduct expenses over that $5000 threshold.  Keep in mind that these are only medical and dental expenses and don’t include insurance premiums, OTC medications or cosmetic procedure.

Additionally, this deduction is only available if you itemize; those that take the standard deduction can’t use this.

Applied to gluten free food[2]milletCredit: flikr

If you want to try to use this deduction, and include your "specialty" food, you will need to keep excellent records and you should probably have a letter from your physician in case you are audited.  The record-keeping applies because when it comes to gluten free food you can only deduct the amount that is over the cost of the same food that is not considered a specialty food. 

  • If your loaf of gluten free bread costs $6.00, and similar loaf of “regular” bread is $2.00, you can count $4.00 towards your deduction. 
  • The cost of any specialty items you buy such as guar gum can all be applied to meeting the deduction.
  • If you have to travel to a special store to buy your food you can deduct the cost of travel as well as any parking or toll fees.

You have to be able to prove these deductions if you are ever audited so you’ll need to keep all your receipts and you may want to stash a few store circular as well to justify your claims for what “regular” food costs.  You also need to be sure you’re comparing like items.  That $7.00 organic gluten free pizza can’t be compared to the $0.99 special of super cheap stuff.

For every year that you claim a medical deduction you’ll need to keep all of these records you’ve collected.  While the IRS requires that you keep these for a minimum of three years, many tax preparers recommend keeping them for seven.

taxesCredit: flikr

Note for Canadian readers

The above information is written for US tax payers, but my understanding is that the Canadian system is actually very similar. [3]

  • You will need a diagnosis from a medical practitioner.
  • You can deduct the difference in cost between gluten free and non-gluten free items.
  • I believe there is also a threshold requirement but it is much lower.  If you are a Canadian taxpayer you are undoubtedly more aware of the medical requirements needed than I am. 

So while the tax deduction exists, most people will not be able to use it.  Fortunately there are many non-specialty food choices when it comes to eating foods without gluten and most people can avoid the extra costs associated with processed foods.