Ah, the fun of tax season is upon us. For some of us, that means coughing up some cash for Uncle Sam. Others are looking forward to a decent tax return; a post-Christmas Christmas if you will. But as we navigate a labyrinth of forms, there are a few points where we find ourselves grasping for something, anything to work in as a deduction. So, it’s not surprising that I often find friends and associates asking, “Is there any way to use a marijuana tax deduction for medical weed?”
Federal vs. State Income Taxes
Is there any way a frugal patient can work a medical marijuana tax deduction into their federal income tax? That’s actually a pretty hard “no” on account of the perpetuated federal illegality of cannabis, even for medicinal use. But can you finagle a marijuana tax deduction as a medical expense in states that require state taxes? That’s still pretty much a “no” but not a solid steel “no” like you’d get from the federal government. Taxes can be brutally complex, especially when you begin to factor in wild cards like the “legal, not legal” ambiguity of marijuana.
Likelihood of a Marijuana Tax Deduction when Filing with State
Going through the trouble of trying to work a marijuana tax deduction into your state taxes probably isn’t worth the hassle. For one, the odds are definitely not in your favor of your state honoring the deduction as legit. But even if you’re feeling lucky, your medical marijuana expenses would need to be pretty immense. In fact, your weed expenses would need to exceed 10% of your gross adjusted income. For some of us, that’s not too
much of a stretch, but you’re still looking at a relatively tough sell to your state’s government. In situations where one spouse in a married couple has been prescribed medical marijuana, it’s less challenging to exceed that 10% limit when filing separate tax returns as opposed to filing jointly.
What Counts as a Medical Deduction?
Matters become even more confusing when you start to ponder what could constitute as a medical deduction. In many cases of non-marijuana related medical deductions, you can factor in a plethora of related expenses up to and including the cash you dropped on gas to get to the doctor’s office. So could this apply to grinders, concentrate containers, vape pens, and gas spent on trips to the dispensary? It’s very unlikely but not necessarily impossible.
Marijuana Business Taxes
Of course, the feds aren’t going to pass up the opportunity to collect money so while you may not benefit from a tax deduction, the IRS has strongly insinuated that marijuana businesses better be reporting their earnings, legal or otherwise. It’s like a reverse Sophie’s Choice
in which, rather than kill something they love, businesses are instead forced to pick their own poison: attempted tax evasion or written confession of federally illegal activity to the IRS.
In the end, if you’re dead set on seeking a medical marijuana tax deduction this year, your best option is to either work with a tax professional who fully understands your state’s tax laws or go directly to the source by contacting your state’s tax authority
. Until the federal government begins to recognize the legitimacy of marijuana as a medicine, a marijuana tax deduction on state forms is a definite shot in the dark with the odds stacked against you. And, unfortunately, the only thing close to being as certain as death and taxes is the DEA’s refusal to acknowledge the medical benefits of marijuana.