As a CPA currently working as a full-time mom to my twin girls, I have really enjoyed being able to put my accounting skills to use for the Real Diaper Association for a cause I am so passionate about. As the new Treasurer, I was very excited that right from my first meeting I was able to help out by researching a couple of tax related cloth diapering topics.
The first of these issues was whether or not parents had any support for deducting the cost of cloth diapers. It turns out that the issue is pretty clear cut and some very specific rules exist. If cloth diapers have been prescribed for the “treatment of a disease”, then parents can pay for them with funds from their flexible spending accounts or take their cost as medical expense deduction. I got this information from IRS’s Publication 502, “Medical and Dental Expenses”. Anyone who would like more information can find this publication at irs.gov or should discuss this with the tax adviser or plan administrator. We’ll be adding this information to our Real Diaper Facts at realdiaperassociation.org to help make parents aware of this potential tax savings if they’re in this situation.
I hope this will be the first of many opportunities I’ll have to share (what I hope is) helpful tips with other cloth diapering parents.
June 24th, 2009 at 12:45 pm
A diaper service owner in Vancouver, BC, “has a petition in the Canadian House of Commons to ask for a tax credit for those that use cloth diapers and/or use a diaper service, and to increase taxes on disposable diapers.”
Her post about it makes great reading: http://resolvingtimelineissues.wordpress.com/2009/06/22/green-tax-credits/
August 13th, 2009 at 7:22 am
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December 5th, 2009 at 8:46 pm
Do you have to provide documentation from your doctor showing that cloth is necessary for treating a disease?
Thanks for researching this!!
January 4th, 2010 at 2:25 pm
You don’t have to include the documentation with your tax return when you file it, but you should have that documentation on hand in case you are ever audited. You may also be required to provide documentation to the manager of your cafeteria plan if you are trying to use money from the plan.
February 16th, 2011 at 7:53 pm
Wow, this is awesome and I can’t wait to share it with all my customers!!!!