ADDICTION TREATMENT MAY BE TAX DEDUCTIBLE

Addiction Treatment May be Tax Deductible

The rising costs of addiction treatments can be overwhelming, if your choice is high-end addiction treatment, the end bill can be astronomical. While your own health insurance may cover part of the costs, and you can always get financing to cover the rest, but when it comes to tax time, can you recoup any of the costs?


Ways to Claim Rehab on Your Tax Return.

As of right now, there are ways to claim the cost of drug and alcohol rehab on your tax return – as long as you itemize your deductions on Schedule A. In fact, any medical and dental cost is deductible in the same way, as long as it exceeds more than 7.5 percent of your adjusted gross income for the year. For example, if your adjusted gross income is $50,000, you can deduct the expenses that exceed $3750. So if your treatment costs $10,000, then you can deduct $6250. So which addiction treatment costs are included as acceptable medical expenses that can be deducted? According to §213(d)(1)(A) of the Tax Code, medical costs are defined as “the diagnosis, cure, mitigation, treatment, or prevention of disease.”

If you are enrolled in a treatment program and incur costs for psychological treatment or medical treatment then your costs are covered under the circumstances described above.



IRS Qualifications of Medical or Psychological Disease

Does drug and alcohol addiction qualify as a medical and/ or psychological disease according to the IRS? Yes. Even if the general public is split on the question, the medical establishment and the IRS are not.

They agree that costs incurred in the treatment of drug addiction is absolutely a medical expense and as such qualifies as a deduction for those who itemize and whose expenses exceed 7.5 percent of their income. We urge you to consult your tax professional regarding your out of pocket expenses, you may be eligible for the deduction.