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Infant Formula Not a Medical Expense

October 14, 2009 · 28 comments

It’s somehow appropriate that the IRS would release a private letter ruling regarding a double mastectomy in October (in case you’re not aware, it’s Breast Cancer Awareness month). Here are the facts:

Taxpayer had a double mastectomy. She later gave birth to a healthy baby. As a result of the mastectomy, she was not able to breastfeed her baby. To meet her baby’s nutritional needs, taxpayer bought infant formula. She then requested a ruling from the IRS to classify infant formula as a deductible medical expense on her tax return.

It’s worth noting that infant formula can be a significant expense. Estimates are all over the place but seem to settle in at about $40 per week for formula – or just over $2000 per year. If you require a special formula, such as Alimentum, you can easily double that estimate.

Generally, infant formula is not deductible as a medical expense. It’s nutrition and as far as the IRS is concerned, it’s no different than, say, an apple. That’s spelled out at section 262 of the Code which bars deductions for mere personal or living expenses.

However, section 213(d)(1)(A) of the Code allows you to claim an expense for “medical care” for amounts paid:

(A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body

“Medical care” may include special foods and beverages if they are prescribed to treat a specific illness and are in addition to your normal diet. But… And it’s a big but… If those special foods and beverages are consumed as substitutes for your normal diet, they aren’t deductible. This is why, for example, you can’t deduct your Jenny Craig meals (though certain diet program fees may be deductible).

So, using that criteria, the IRS found that, in this case, the infant formula was considered food and not a deductible medical expense as that term is defined under section 213.

Keep in mind that while private letter rulings are interesting in that they provide insight into where the IRS is going on a particular issue, they are not binding and are only applicable to the individual taxpayer. That said, do you think the IRS got this one right?

(Hat Tip: TaxProf Blog)

{ 20 comments… read them below or add one }

1 SuburbanOblivion October 14, 2009 at 7:34 am

The lactivist side of me says yes, it should not be deductable, because next thing you know every formula feeder in the world will be getting doctors to write notes saying they couldn’t BF due to ‘stress’ or some other such non-sense.

The other part says double mastectomy is absolutely a legitimate reason (obviously!) and formula is needed for that medical reason.

Truthfully, touch call!

2 margins October 14, 2009 at 7:41 am

There will always be difficult cases on the margin, and this fact situation is one of them. That being said, I suspect this is not a true hardship for the individual in question if she is trying to get a deduction based on the medical expenses limit. I think the threshold for that is that you can only deduct expenses in excess of 7.5% of AGI.

3 PJ October 14, 2009 at 8:48 am

I disagree with the ruling. An infant incapable of getting nutrition from her mother is medically dependent on formula, it is not optional. My disabled daughter received a perscription for formula when she was a toddler. As a perscription we went to the pharmacy, paid a copay, and deducted the copay. I see little difference here, it is still nutrition. My wife was able to breast feed, and did, but coud not produce the volume necessary to sustain my daughter. With a masectomy, similar enough situation. Maybe taxpayer should seek a prescription, but even without, uner the circumstances, it should be deductable up to the time the child can thrive on “table food” – as determined by the child’s doctor.

4 Kelly October 14, 2009 at 9:39 am

I think they got it wrong!
If a mother can not breastfeed, as in this extreme case, she should be able to deduct the cost of formula.

I don’t think it should apply to everyone, because for most mothers it is a matter of choice, or lack of support that they can not breastfeed.

We had to formula feed my oldest daughter. I successfully breastfed all 3 of my other children and had planned to nurse her as well, but she had a genetic disorder (that she thankfully outgrew) that made digesting milk protein of any kind difficult. She had to have soy formula and it was extremely expensive!

5 Evan October 14, 2009 at 10:28 am

I think this is one of those instances where “Bad Cases make Bad Law.”

As the people above me said, this is an extreme case, so where do you draw the line? Personally, I think the IRS should have went the other way saying, as they always do, the PLR doesn’t apply to everyone, and try getting away with this deduction at your own peril.

6 kosmo @ The Casual Observer October 14, 2009 at 10:41 am

My interpretation of the IRS code is that the “special food” must be used by the person with the medical condition. In this case, the person consuming the special food (baby) is not the person with the medical condition (mother). There is obviously a cause/effect relationship, but strictly speaking, it doesn’t meet this criteria.

So, my guess is that the situation failed this test before even getting into a determination of whether or not it qualified as “medical care”.

(Note: I’m not saying that this is right or wrong – simply stating why the IRS would have ruled against it)

7 mjaybee October 14, 2009 at 1:35 pm

Looking forward to my government run health plan….

8 TxBoy October 14, 2009 at 4:05 pm

The ruling says:
Section 1.213-1(e)(1)(ii) of the Income Tax Regulations provides that the
deduction for medical care expenses will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness.

Mom has a defect – she has had a double mastectomy and cannot produce breast milk as a result. Formula helps replace that defect. If you were an amputee and paid to modify a perfectly usable auto to be able to drive in your condition, that is tax deductible. I’m not comparing a baby to a car, but the car is fine and yet the expense qualifies as a medical expense. There are plenty of questionable expenses that the IRS finds deductible for medical reasons – clarinet lessons are tax deductible if you have an overbite – so I’m not sure why this doesn’t fall in.

There is now H.R. 3445 that has been introduced in Congress by Rep. Debbie Wasserman-Schultz. It seems like she agrees that the IRS should allow formula to be deductible under these circumstances.

9 Robert October 14, 2009 at 4:43 pm

As much as I disagree with some IRS decisions, I have to say that I think that they made the right decision here. If we assume that the mother had not had the surgery and was able to produce milk for her child she would not be able to deduct the cost of the food that her body used to produce her milk. So why should she be able to deduct the cost of the formula?

10 AC October 14, 2009 at 5:37 pm

So . . . what should she do? Starve the kid until the State steps in, rules that she is an unfit mother, and places the child in foster care (at State expense)?

WTF?

11 TxBoy October 14, 2009 at 5:58 pm

Again – the analogy to an amputee. If the amputee didn’t have his arm removed, he could have driven a perfectly usable car. Why should he be allowed to deduct the cost of modifying a perfectly drivable car? The focus should be on mitigating the defect, not for any collateral benefit/harm to a third party (i.e., the baby). A woman who has given birth is “supposed” to be able to produce breast milk. A woman with a mastectomy cannot produce breast milk. The cost of a reconstructive surgery is clearly deductible as a medical expense – but that is clearly cosmetic, but goes to significant issues of self-esteem and psychology. Why shouldn’t the cost of infant formula be similarly deductible?

12 Peter B October 15, 2009 at 2:03 am

This raises interesting questions:
•Would it have changed things for the baby’s doctor to prescribe formula?
•Would the services of a wet nurse have been deductible if breast milk were prescribed for the baby?
•Clearly, the baby must be fed. What if one were to establish a dollar value for breastfeeding and claim a deduction for the difference between that amount and the cost of prescribed formula?
Are these questions any more absurd than the fairly common situation in which the same item may be both available over the counter from the retail side of a pharmacy with no physician involvement and then, by virtue of paperwork to transfer a tube of it into the prescription inventory of the pharmacy, become available only by prescription?

13 jpe October 16, 2009 at 9:37 am

An infant incapable of getting nutrition from her mother is medically dependent on formula, it is not optional.

As an adult, I’m “medically dependent” on food; that doesn’t make it deductible.

14 jpe October 16, 2009 at 9:38 am

So . . . what should she do? Starve the kid until the State steps in, rules that she is an unfit mother, and places the child in foster care (at State expense)?

Yeah, just how I stopped eating because food isn’t deductible.

15 Marc October 16, 2009 at 3:04 pm

TxBoy, the amputee example is not analogous. In the case of the of the amputee, a normal car is not suitable so the car must be made special to accommodate the amputee, justifying the deduction. In the case of the infant, regular over the counter formula is sufficient so there is nothing special required for the nutrition of the baby. The only way to make the scenarios analogous is if the infant needed a doctor-prescribed special formula that wasn’t available at your local Wal-Mart.

On the flip side of all of this, breastfeeding is not without is expenses. A working mother will require a good breast pump, lots & lots of bottles & storage containers, coolers & freezer packs, a new chest freezer to store milk (as in our case), etc. I estimate we spent somewhere upwards of $700-$800 for breastfeeding activities and equipment for a year. A couple of times we had to upgrade our hotel room to get a refrigerator — so the cost is far from zero.

If a medical deduction is allowed for regular formula, then every mom in the county would get their doctor to justify why their milk production is insufficient.

16 JBruce October 17, 2009 at 1:04 am

One way or another, the baby has to be fed. If a healthy mother breastfeeds, the baby doesn’t eat “for free” — as Marc points out in the modern world it costs money to breastfeed, and we’re not even counting the food the mother eats. If she’s supplying nutrition to the baby, the she has to get more nutrition too. My ex-wife didn’t breast feed, so I don’t know the ins and outs of a nursing mother’s diet needs, but I’ll bet it adds expense to her otherwise “normal” diet. So, in spite of my great sympathy for the woman in this case (whether or not she had a baby) I’d say the formula shouldn’t be deductible.

17 Anonymous February 22, 2011 at 12:24 pm

If breastfeeding is tax deductible, then formula feeding that is the direct result of a medical condition (such as a mastectomy) should also be granted.

If the fear is that “every mother under the sun will want formula feeding deductions” well why should that be more of an issue than every breastfeeding mother?

Frankly, why should the rationale behind the decision to breastfeed or formula feed at all be a criteria that needs to be justified to anyone? I think the IRS needs to allow or not allow rather than saying it’s ok for one group but not another.

Not all tax deductions require a hardship to be valid so I have no idea where margins is making a reasonable argument.

I also doubt that whether or not it’s tax deductible is actually affecting the decision of a parent to feed their infant, regardless of whether that is breastfeeding or formula-feeding. A baby has to eat and leaving it to starve is simply not an option most sane mothers AND fathers would tolerate.

18 Balu April 12, 2012 at 10:18 am

Sounds insane .. I spent a fortune on Similac Alimentum. it costs twice the price of regular similac. My wife is Medical Resident she works close to 80 – 90 hrs/week.. with paltry pay. Due to excess work stress she could hardly breast feed my son. Irony is she did not have maternity leave.

We could not find a Nanny and spent another fortune on Baby Sitter who took only cash and in the middle she fled away. We were desperate then.

I wish i could deduct the special formula ..

19 Brian April 17, 2013 at 10:18 am

I think they got it wrong. I lost my wife during the birth of my twin daughters. Formula is expensive! I wish I could use it as a tax deduction.

20 Melissa January 16, 2014 at 1:44 am

Whether breast milk or formula the purpose is to provide food for your child. Therefore how can they deem one worthy of a tax deduction and not the other? It certainly doesn’t make sense that breastfeeding and the tools needed to do so should be a medical expense. There’s too much focus in the world on how a child gets fed. As long as there is some type of nourishment than that’s all that matters.

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