Drug Rehab and Tax Deductions
If you’re dealing with a substance use disorder, then you might be in a place where you want or need access to a treatment center. However, you might also be wary about moving ahead because you’re worried about the costs involved. The right addiction treatment center can help you get a new lease on life, but what if it’s too expensive? Health insurance covers a lot, but it won’t pay for everything. What can help is the fact that drug rehab costs are often tax deductible.
Can You Claim Tax Deductions for Drug Rehabilitation?
Tax deductibility can help offset the cost of your health insurance deductible. Depending on your plan, you might have to pay thousands of dollars before full coverage. Even then, insurance might only cover a percentage of your treatment costs. You might still be responsible for the rest, and an average month-long stay can run up quite a bill when you factor in treatment, therapy, lodging, and meals. Further compounding all this, you might not generate any income while in rehab.
Fortunately, many drug rehab costs can be tax deductible when you file your next return. The IRS has publications about medical expenses, listing quite a bit of information about which specific costs you can deduct from your taxes. You must file your taxes using the 1040 Form to enjoy these deductions. That’s the long-form return that lets you itemize your deductions. To minimize your tax bill, you can subtract these expenses from your adjusted gross income. Many taxpayers take the standard deduction, but itemized deductions can result in a lower tax liability if you have enough of them.
There are limitations to this. You must document everything to prove to the IRS that these expenses are legitimate. A tax professional can help determine if you have proper documentation. Also, medical expenses must be over 7.5% of your AGI before you can itemize deductions. The standard deduction might be your only option if your total costs fall under that percentage of your AGI.
Qualified drug rehab costs that may be tax deductible start with the expenses you pay to a treatment center for substance use disorder. You can also include the lodging and meals charged by the center while you are there for treatment. You can deduct transportation costs to and from the treatment center and support meetings in your community as well. Even bus fare to and from an Alcoholics Anonymous meeting is tax deductible if you keep your receipts. Furthermore, you can file for mileage and airfare for travel to and from a treatment center and home. Family members can do the same if they make visits for family therapy or otherwise participate in the treatment process.
Benefits of Drug Rehab
When going over all the potential costs and tax deductions involved with drug rehab, it can be overwhelming. You might even wonder if it’s worth it. The truth is, however, that drug rehab has numerous potential benefits. The primary goal of going through treatment is stopping substance use, but you can also learn techniques and tools useful in creating a productive life. It sounds simple, but it’s often very challenging. In many cases, acknowledging the need for treatment is the hardest part. You may have already crossed that threshold and are just trying to figure out the details.
The right treatment center is an environment free of drugs and alcohol so you can break your physical addiction. You should be able to enjoy a safe space surrounded by people who expect accountability about you freeing yourself of drugs. Detoxification is often the starting point of this process, where your body eliminates any drugs still in your system and manages withdrawal symptoms. Going through detox isn’t necessary for everyone. While it’s a crucial step for many, it’s not enough by itself to break long-term cycles of addiction. Further treatment is necessary.
Your treatment will involve learning about addiction. Even though you may have suffered a substance use disorder for a long time and personally experienced what it’s like to live through it, there’s a lot you can learn about the condition. As you are free of drugs, you will have more mental and emotional clarity. From that vantage point, you can get insight into the habits, events, individuals, and sensory experiences in life that often trigger cravings for illicit substances. As you explore your triggers, you can start concentrating on managing or avoiding such situations when you ease into daily life.
Eventually, you’ll start identifying and working on underlying issues. The reasons people develop substance use disorder can be quite varied, so you need to figure out the specific motivators that make your substance of choice so alluring. Possibilities range from coping with stress and avoiding responsibility to fitting in with a social group or getting someone’s approval. The revelations in this process can be profound, but they’re necessary to figure out why you have substance use disorder. Counselors in your treatment center help you process all of this so you can make peace with things.
Determining tax deductions for rehab costs might be new to you, but successful treatment will mean other things. You have to develop new practices and habits if you want to maintain a drug-free lifestyle. Self-care and discipline are crucial to long-term treatment success, so you must learn how to set and accomplish goals. The sheer concept of setting attainable goals is often foreign to someone living with addiction. You may have wanted to change your life many times but constantly fell short, and this ongoing cycle of defeat can sap your desire to get better. Drug treatment is a chance to learn new ways of thinking that fuel new habits and behaviors of a much healthier nature.
As you become healthier, you might have to start looking at other people in your life. Certain individuals might have to be avoided in your drug-free lifestyle. Some people are too toxic and might have been sources of stress that drove you to drugs in the first place. Others might enjoy using illicit substances themselves and would put peer pressure on you to start using again. What gets complicated is the people in between who aren’t used to you having healthy boundaries and might not react well to the new you. Proper treatment helps you identify specific social situations and personal relationships and how to handle them.
The Costs of Drug Rehab
While drug rehab costs are usually tax deductions you can take on your next return, the costs can vary quite a bit. Insurance is the first variable, and it might provide drug treatment coverage to a degree. However, each policy has different levels of health insurance deductible. In addition, the percentage of treatment costs also varies. Further complicating matters is that some treatment centers might be approved and others aren’t, or coverage levels might vary for places considered in-network or out-of-network.
Who owns or operates the drug treatment center can also dramatically impact the price. Federal and state resources might cost clients little money, and some might not charge. Financial aid is often available to those who qualify. Alternatively, private residential programs can cost thousands of dollars per week. Premium luxury programs often used by professional athletes, celebrities, executives, and other high-end clients might charge into the six digits per month. Locations also matter as centers conveniently located in urban areas are easy to access, but destination locations in the mountains or overlooking a beach can cost considerably more. At the actual facility, the general fees for treatment cover the basics, but there are specific fees for lodging, food, and entertainment. Luxury amenities might be added on individually.
Tax Professionals Can Guide You Best
While drug rehab costs are typically tax deductible, a professional tax preparer or even an accountant can be the best resource in determining what you can and can’t deduct. Consult the treatment center you are using or are considering entering for an itemized list of all charges, fees, and expenses, and then sit down with a tax expert to review them one at a time. Their knowledge of IRS regulations and tax laws will come into play as they help you determine how much you can deduct and what kind of documentation you need to prove your deductions. Using a tax professional is another expense, but generating the deductions that make treatment affordable is necessary.
If you’re unsure where to start looking for a tax preparer, the IRS has a directory of recognized professionals with credentials. One such credential is the preparer’s tax identification number or PTIN. These are reserved for qualified professionals who do the work for compensation; volunteers aren’t assigned PTINs. When your tax preparer does your return, ensure they include their PTIN in the documentation to meet IRS requirements. You should take things a step further and find someone who is a CPA, has an enrolled agent designation, or has an active law license. A background search through the Better Business Bureau is also a good step to take so you know you’re trusting your financial data in the hands of someone reputable.
Shopping around for tax preparers pays off. While many fees might have industry averages or standards, not every firm or professional will have the same rates. Most will offer free consultations you can use to learn their prices and get familiar with them personally to see if you’re comfortable with them. Specific features to look for are tax preparers who use the IRS e-file system, professionals who sign the returns they create, and agents or firms that would represent you in the event of an audit or appeal.
We Want to Help You
Our National Rehab Hotline is available around the clock every day of the year, and the call is always free. We have a team of crisis hotline specialists ready to help you with matters regarding mental health and substance use disorders. You don’t have to struggle any longer; help is available if you are ready to accept it. Questions you might need answers to include knowing the signs of addiction, what happens during rehab, finding resources close to you, and how you can help yourself or someone you care about.