This article was originally published on the Marijuana Patients Organization site on January 11, 2014.
There is a lot of debate as to whether medical marijuana patients who have a doctor certification and are registered with their state are eligible to claim a medical deduction for the cost of their medicine. In the past, a taxpayer may expense medical expenses in excess of 7.5% of their Adjusted Gross as an itemized deduction. This has proven to be a very high threshold to obtain. In 2013 Obamacare has raised that floor to 10% of adjusted gross income. But that has not stopped people from believing that there is a way in which to claim this deduction.
According to a Revenue Ruling by the IRS, amounts paid to obtain a controlled substance in violation of federal law are not deductible expenses for medical care under the Internal Revenue Code citing the Controlled Substance Act as the defining authority of the legality of a treatment (Rev Rule 97-9, IRC Sec. 213).
But as recently as 2010 a letter to US Senator Chuck Schumer by IRS Associate Chief Counsel sanctions the use of an “herb” as a medical expense under the following conditions:
- Taxpayer has a medical condition;
- Is purchasing the herb to treat or alleviate the medical condition;
- And would not have purchased the herb but for the medical condition.
Unfortunately, the “herb” in question was believed to be Petadolex, a nutritional supplement.
Certifying physicians in my home state as well as other medical marijuana states are not prescribing marijuana instead they are certifying the use of medical marijuana to treat a specific condition. Obamacare makes the possibility of deducting it as a medical expense even slimmer. Under the new rules, deductions with respect to medicine and drugs shall be taken into account if such medicine or drug is a prescribed drug. This applies not only deductibility as an itemized deduction but also to FSA, and other health savings plans.