The following post was originally written by me in October 2010, with some modifications for 2011 taxes. Please note that I am not an accountant or a tax expert. This is my understanding...
If you're anything like me, it's April and you haven't done your taxes yet.
As any Celiac knows, a gluten-free diet can be very expensive. According to this article:
"Gluten-free foods, on average, cost a whopping 242% more than regular, gluten containing foods!"
The good news for my Canadian friends is there is tax deduction information listed on the Canada Revenue Agency site. In order to qualify for this, you MUST:
- have a note from your doctor stating that the diet is necessary AND
- save all receipts for gluten-free products purchased AND
- calculate the difference in cost between GF items versus regular gluten-filled items.
You may claim this "incremental cost" of your gluten-free diet. The CRA website includes a sample chart showing how to determine incremental cost. (Keep reading to completely understand what all of this means for you.)
I found this information about medical expenses on the CRA website:
Only expenses in excess of the lesser of $2,052 (federal, for 2011) or 3% of net income can be claimed.
You are probably asking yourself, "But what does this mean?!"
Well, I decided to investigate further and let me show you, based on the 2011 tax year, my understanding of how this works...
You must spend over 3% of your net income (after taxes) annually in medical expenses. The last column in the chart above gives you an idea what that figure looks like per month so you can see how it compares to your monthly spending on gluten-free foods and other medical expenses.
If you have multiple people/dependents (kids) in the same household that must follow a gluten-free diet, or you have a lot of other medical expenses, it would probably be much easier to surpass the 3%. But you DO NOT get any credit for the initial 3%.
According to my friend Nikki, who is studying to be an accountant, you are entitled to a 15% credit on the amount above the 3% (or above $2052, depending on your income).
Example: In 2011, Mary's net income was $40000 and she spent $1600 on medical expenses (incremental cost of gluten-free food, dentist, prescriptions, etc). Three percent of her annual income is only $1200.
1600 - 1200 = $400
0.15 x 400 = $60
Mary would get a $60 tax credit.
I personally do not have the patience to keep all of my gluten-free receipts. Also, I do not have many other medical expenses so I really don't think I spend enough each month to make a claim necessary.
What are your thoughts on the tax deductions for gluten-free medical expenses?
Have you filed a medical expense claim for your gluten-free diet? I would love to hear your experiences.