Is Rehab Tax Deductible?

Get Answers on Claiming Tax Deductions For Drug or Alcohol Rehab

The question we are going to answer on this page is a straightforward one: Is rehab tax deductible?

While that might be a direct question, like everything else related to taxes, the answer might prove to be a little murky. We hope to clarify things by the end of the page so you can know where you stand on this crucial financial matter.

Whether you are facing your own drug addiction or you are paying for treatment for a loved one, it’s a good idea to get clear on tax matters right from the start. In addition to reading the information on this page, also consider checking in with an accountant or tax professional just to make sure you understand the relevant tax laws correctly.

Regardless of the tax implications, getting started on rehab right away is critical for anyone in this situation. At Ingrained Recovery, we offer alcohol and drug rehab treatment services in Eastman, GA, to help our clients get life back on track. Call now to learn more.

The Basics of Medical Expense Deductions

Certain medical expenses can be deducted under IRS rules. It’s important to note that this typically does not mean the money you spend on premiums for health insurance, but rather the actual costs associated with receiving medical care.

Generally, you will only be able to deduct medical expenses if they exceed a certain threshold as a percentage of your adjusted gross income, or AGI. At this time, that threshold is 7.5%.

So, money that you spend to receive services to diagnose, cure, treat, or prevent disease may be eligible for a deduction. This can include treatment for substance use disorder, so it is possible that your treatment costs will wind up being deductible medical expenses.

Of course, you’ll need to exceed the threshold mentioned above before you will be able to take any deductions.

The Most Common Rehab Costs That May Be Tax Deductible

There are many different kinds of costs you can incur during the addiction treatment process. These out of pocket expenses might not all be tax deductible, so it’s important to carefully track what you spend to make sure everything is accounted for accurately.

Inpatient Treatment

It’s possible that the entire cost of a stay at an inpatient treatment facility like Ingrained Recovery will be tax deductible. The money you spend on inpatient treatment includes medical services, meals, lodging, and more. All of this could be considered medical treatment and therefore eligible for deduction.

Medication Costs

You may be prescribed medications as part of your recovery process. The cost of buying those medications will be included in your total medical expenses and may be able to add to the deduction. Addiction recovery often uses drugs like Suboxone, Naltrexone, or other medications to achieve the desired outcome. What you spend on such medications might be able to be subtracted from your total tax bill for the year.

Transportation Costs

Many clients of rehab centers will accumulate costs getting to and from the treatment facility. This could mean putting miles on your own vehicle, or paying for tickets on a bus, train, or plane. There is also the matter of lodging staying near the treatment facility that can be considered, although some limits may apply to deducting those costs.

Again here, tracking all expenses related to your treatment is critical. If you work with a tax preparer later on, having detailed records will make their job much easier when filing your tax return.

What’s Not Deductible?

Not everything you purchase in relation to your treatment and recovery is going to qualify as a deduction. Some drug rehab costs, even if you consider them to be essential, won’t fit the terms applied to this topic by the IRS.

For example, any luxury services you utilize at a treatment facility will not be deductible. This includes things that are offered by the treatment facility to make your experience more enjoyable or comfortable, such as massage therapy, but aren’t medically necessary to help you overcome your addiction.

You also won’t be able to claim a deduction for any non-prescription treatments that you decide to purchase. If the medication or supplement wasn’t prescribed by a doctor, it isn’t considered to be necessary.

Importantly, you also can’t claim lost wages or costs for childcare while you are in rehab. These are two big factors that will play into the financial picture of getting help, so be sure to consider their role in your treatment timeline.

Who Can Claim the Deduction?

If you paid for rehab yourself, you are naturally able to pursue this deduction on your own tax return. That also applies if you paid for rehab for your spouse. Money spent on addiction treatment for yourself or your spouse is eligible to be deducted from your annual income, so long as all of the other requirements are met and you have the documentation necessary to prove all of your spending.

You may also be able to claim this deduction if you paid for rehab for a dependent. For example, if you have a child who needs addiction treatment, those costs may be deductible as long as your child still meets the definition of a dependent.

The child could be over the age of 18 and still count as a dependent, as long as certain criteria are met. Go over those criteria carefully with your tax professional to classify everything properly on your return.

The Role of Insurance in Paying for Rehab

Using insurance to help pay for rehab is a great option. If you have an insurance policy in place, you may be able to use that policy to pay for some or all of the cost of addiction treatment and recovery. For many people, using insurance is what makes it possible to secure the help they need to overcome this addiction.

Remember to note that any money that is reimbursed by insurance can’t also be deducted on your tax return. For example, if your insurance policy pays for 70% of your treatment costs, only the remaining 30% that you cover on your own will be eligible for a deduction.

Beyond tax concerns, it’s a good idea to think about the role insurance will play in your treatment right from the start. You want to be sure to work with a treatment center that is going to accept your insurance and make your care more affordable. At Ingrained Recovery, we are always happy to check your benefits and confirm what they will be able to cover in our facility.

Prioritize Recovery: Get Started at Ingrained Today

It’s never too early to start exploring drug treatment options. Addiction treatment can turn life in an entirely new direction for you or a loved one. In some cases, it can even be life-saving.

Don’t let addiction treatment costs and financial concerns like tax implications stop you or a loved one from getting the help that is desperately needed.

Contact with an admissions coordinator at Ingrained Recovery today to start this process. We would be proud to serve you and your family by delivering the critical care and treatment needed to break free from substance use disorder once and for all.