Sunday, January 29, 2012

(Celiac) Medical Tax Deduction Threshold to Rise in January 2013 from 7.5% to 10%

I was randomly surfing the internet, when I came across an article that noted that in January 2013 (just a little less than a year from now) the medical deduction threshold would increase to 10%. Let me back up and explain, but first let me say that I am not an accountant so you should consult yours before filing your taxes.

The medical deduction gets dragged out every spring and lots of Celiacs get excited before they read the fine print. In a nutshell, (again consult an accountant for details) one can deduct the amount of their medical expenses that exceed 7.5% of their Adjusted Gross Income (AGI). For those who have a medical diagnosis for their gluten free diet, they can add the difference between the cost of a gluten containing item and its gluten free counterpart to their medical expenses. They can only deduct the full cost of items that have no counterpart (xantham gum is the common example here.) (There are lots of other details, see the article linked to below for the full scoop from an actual accountant.)

Personally, I feel that unless you pay for your own health insurance or have large non-gluten related medical expenses you will never meet that 7.5% cap. I have never met anyone properly taking this deduction (I have met a couple of people who are incorrectly taking this deduction and warned them so).

And that brings us to the article I found. I won’t link to it because even though it was fairly moderate, it was published on a website that isn’t and I don’t want to bring political bias here. As part of the 2010 Healthcare law (known to its supporters as the Patient Protection and Affordable Care Act (PPACA) and to its detractors as Obamacare) the Medical Itemized Deduction will rise from 7.5% to 10% starting in January of 2013. According to Wikipedia, the bill proposes generating 15.2 billion dollars via this change so it isn’t as if the act does away with unreimbursed medical expenses. Now, I haven’t read the entire act (it’s well over 2000 pages) so I hope this looks worse than it is . . . because it looks like it is cutting a deduction (and thereby raising the amount of taxes paid) on the sick? That just seems wrong to me.

Does anyone claim this deduction currently? Have you begun to look at how things will change in 2013? Please comment below, but please keep it civil and as non-partisan as you can!

If you are interested in learning more about this deduction, I found a discussion of it from a CPA here: The Celiac Tax Deduction; What's New? He covers the deduction itself, how to calculate it, what you can claim, how to document it, as well as HSAs and FSAs, and finishes with the changes coming as part of the PPACA. I’ve seen articles by him on this subject in the past so he definitely appears to be the authority on this.

Other articles you may be interested in:

How to Find a Celiac Support Group

Gluten Free Travel Tips

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