Is drug rehab tax deductible?

People who have been to rehab know one very important thing about treatment. It can get very expensive. For some people, the cost of rehab often acts as a deterrent to getting treatment. That’s very unfortunate, but there are ways to pay for rehab without breaking the bank. The best way is through health insurance.

Thanks to the Affordable Care Act of 2009, healthcare insurance providers are required by law to cover addiction treatment costs, in the same manner, they would any other medical condition. They are also not permitted to discriminate based on a preexisting clause. Therefore, people should be able to pay for a good portion of treatment with the healthcare insurance they have purchased through their employer or as an individual. As for the people who don’t have healthcare insurance, paying for addiction treatment becomes a bigger mountain to climb.

Since rehab is a medical expenditure, more than a few people have asked whether or not the costs of rehab are tax-deductible. That’s a very interesting question because if they are, that means the U.S. government would participate in helping someone pay for rehab. The short answer to this question is, yes, a lot of the costs related to adduction treatment are tax-deductible. It would be incumbent on each individual to research the topic based on their own situation. In the following section, we will give more details on how you can deduct the costs of rehab from your tax return is eligible to do so.

Requirements for Deducting Rehab Cists on Tax Return

When you file your tax return, you have to decide if you are going to use the standard deduction, which is currently $12,550 for a single taxpayer, or if you are going to itemize deductions. Of course, you would want to itemize deductions if you have enough qualifying deductions to exceed the $12,550 threshold. If you were to choose to itemize, you would need to use form 1040 (the long-form). If you are using that form, you would have the opportunity to deduct a portion of your rehab costs. That amount would be determined as follows.

According to IRS guidelines, each taxpayer can deduct medical and dental expenses to the extent they exceed 7.5% of the taxpayer’s adjusted gross income (AGI). Example: Your AGI is $50,000. 7.5% of that number would be $3,750. That means you would be permitted to deduct all of your medical and dental costs that exceed the $3,750 threshold. If your total medical and dental costs for the year totaled $5,000, then you could deduct $1,250. The next question you might ask would be what qualifies as medical and dental costs?

Here’s a partial list:

  • The costs of diagnosis, cure, mitigation, treatment, or prevention of disease
  • The costs to alleviate or prevent a physical or mental disability or illness
  • Healthcare insurance premiums
  • Transportation costs
  • Rehab costs

Remember, you can also deduct these costs for your spouse if you are married and filing jointly. So, you first have to determine whether or not you have enough total itemized deductions to go with 1040. The universe of possible deductions would include property taxes, mortgage interest, moving expenses, some educational expenses, business expenses for a sole proprietorship, charitable contributions, and much more. Yes, you would also want to include all of your medical and dental qualifying costs. If you do exceed the $12,550, you will know immediately you will be able to deduct some of your rehab costs.

It’s even possible that a big bill from rehab would be enough to put you into 1040 long-form status. You would also have to endure a lot of extra work to gather all of the supporting documentation for your itemized deductions. With that said, it might well be worth it if you end up getting an IRS refund due to your rehab costs. It might not be much, but every little bit helps. Regardless of your tax status, you still need to consider your personal health.

At some point, your addiction could do significant damage to your life. We are here to help you in any way that we can. That would include helping you to find ways to cover the cost of your treatment. If you would like to contact us at 833-820-2922, we would have the opportunity to provide you with information about our faculty and addiction treatment options. Maybe, this is a phone call you cannot afford to avoid.