Treatment for substance abuse conditions can be costly; especially, if you go to a facility with all your desired amenities during your stay. Even though insurance can help you offset some of the costs, other people may ask if they can write off drug rehab expenses on their taxes.
The calculations can indicate if you have paid the government too little or too much that year when doing annual taxes. If you have paid too much, you will get a refund, but you will owe money to the IRS or Internal Revenue Service when you pay too little.
If you have a tax deduction, it reduces the amount you are meant to pay taxes on. However, if you choose a standard deduction, these deductions are automatically declared for you. If you also choose to itemize your deductions, you will have to provide receipts for certified deductions. You will then use the total to reduce the overall amount of money you will pay taxes. If your yearly tax deductions are more than the standard deduction, you are better off itemizing your deductions on your annual taxes. A good alcohol and drug rehab facility can give you an itemized list of the charges incurred during the treatment process. This will be helpful so you will have all the necessary paperwork when you need to prepare your taxes.
The Internal Revenue Service outlines medical costs as the prevention, treatment, relief, curing, or diagnosis of illness. According to the IRS’s outlines, alcohol and substance addiction is a disease, and going to rehab meets the requirements for medical costs. This is applicable whether an individual, their dependent, or their spouse attends a rehabilitation program. The only medical expenses that are characterized as tax deductions are those paid out-of-pocket. They are not inclusive of any amounts paid for you by your insurance company.
On the other hand, insurance premiums are also considered medical cost deductions. Illegal methods or treatments are not counted as acceptable tax deductions under medical costs. Some procedures may be directly related to addiction therapy, such as ambulance rides, x-rays, or hospital stays. In addition to other evaluative and diagnostic treatment services, these services satisfy the IRS criteria for medical costs that are tax-deductible.
Is Drug Rehab Included by the IRS When Qualifying Medical Costs?
The IRS acknowledges alcohol and substance abuse treatment as a medical cost. This means that any therapeutic expenses you incur amounting to higher than 7.5 percent of annual gross income can be written off on your yearly taxes.
If you are paying health insurance premiums, these monthly payments can be added to your overall medical costs for tax deductions. Simply because you have health insurance does not mean you cannot write off any out-of-pocket medical expenses on your taxes.
Drug rehab qualifies as a tax-deductible medical expense if the overall medical costs surpass 7.5 percent of your gross yearly income. This includes your overall medical costs and not just the drug rehab expenses.
Alcoholism Rehab Treatment
You can include costs paid for inpatient treatment at an alcohol rehabilitation facility in your medical expenses. This comprises lodging and meals provided at the facility during the duration of treatment. In most cases, individuals will also attend Alcoholics Anonymous meetings within their area, according to medical advice that this is necessary to treat alcohol abuse or addiction disorders. You can add the transport amounts used to and from these sessions to your medical expenses.
Drug Addiction
The amounts you pay for inpatient treatment at a drug rehab facility for addiction treatment can be added to your medical expenses. These expenses will also include lodging and meals provided at the rehab center. As for mileage, if you take a loved one to a reliable alcohol and drug rehab center that’s far away and you drive there or fly there, then the overall transportation cost will be tax-deductible. The typical mileage rate recognized for car operation expenses for medical purposes is 20 cents per mile. According to the IRS, deductible expenses for transportation include ambulance service, plane, train, taxi, or bus fares. You can even make a case that if you travel to a rehab facility to engage in the treatment process for family therapy, that those expenses would be treated as tax-deductible. Any transportation expenses used during routine visits to see someone suffering from a co-occurring mental illness are allowable if it is part of the treatment.
Paying for Alcohol and Drug Rehab Treatment
There are various financial alternatives to consider when paying for the costs of rehabilitation treatment. Some payment plans, such as a flexible spending account, health reimbursement arrangements, or health savings accounts, can help you achieve the 7.5 percent you are accountable for paying.
If you are having trouble getting an affordable program or paying for drug rehab, it can be helpful to list it as a tax deduction. However, cost should not be the only thing you look at when searching for addiction treatment programs.
If you select a program that is unsuitable for you in the name of saving money, the future costs of repeated rehab, addiction, and relapse can add up to a higher amount. There are various drug rehab programs, each with a different quality of care, duration of stay, and treatment method. Other rehab programs have more options, so finding the one that fulfills your requirements is essential.
It is crucial to talk to a financial expert about your funds and how you can pay for the rehabilitation treatment. There are so many treatment choices that can fully benefit you without taking everything in your pocket.