Are Drug Rehab Expenses Tax Deductible?
04 May, 2022
Dedicated drug rehab programs are a crucial part of the journey to a healthy, sober life. However, finances may be a concern, and individuals or their families may feel they cannot afford the proper help for a sober life.
Looking into the financial side of addiction is a stressful but unavoidable part of the recovery process; luckily, there are ways to keep one’s finances under control.
Understanding how rehab expenses can be claimed as tax deductions can lessen financial burdens and encourage individuals to pursue the necessary professional recovery routes for a sober life ahead.
Rehab Expenses Are Medical Expenses
There is still a great amount of stigma surrounding words like “addiction” and “rehab,” and many people may have incorrect assumptions about what these words entail. The idea that addiction is only the consequence of failed morals is entirely false. Rather, addiction is the result of many factors, including one’s environment, social circles, the prevalence of stress or mental health disorders, and even genetics.
Addiction is a disease, and while the general population may have varying degrees of knowledge about what addiction and recovery entail, the Internal Revenue Service (IRS) is very clear. Rehab expenses and costs to address mental health and addiction are classified as medical needs and thus can be claimed in the same way as any other injury or illness.
The IRS classifies these medical expenses as anything that involves the diagnosis, treatment, curing, mitigation, or prevention of disease. Things like medication and ongoing individual and group therapy fall into this classification. It is important to view addiction through this lens for both tax purposes and to better understand the unique way addiction impacts one’s life.
However, expenses correlated to one’s recovery program may not be covered under this classification, even if they are necessary to attend a rehab program. Childcare programs or gyms and community memberships related to rehab, treatment, or recovery are not considered medical, so they are not tax-deductible expenses.
Keep Track of Your Spending
While rehab expenses are tax-deductible, those in rehab need to track their spending on anything involving their journey toward recovery. This includes many upfront costs, such as the actual cost of treatment at a treatment facility and any other expenses that are directly tied to one’s ongoing rehab.
Tracking expenses for transportation, the cost of medication, outpatient programs, and more all qualify as medical expenses if they are tied to one’s continued progress in recovery and thus can all be claimed as such. Effectively tracking one’s spending, keeping receipts, and maintaining a record of all of one’s spending and how it relates to rehab ensures that each individual can claim as many tax deductions as possible.
Tracking one’s spending is not just crucial for tax season, but it also helps develop effective financial and life skills in the process which are an essential part of recovery.
Reaching a Threshold
There are some stipulations on how much and when one can claim these medical expenses. When making claims, one must first spend a certain percentage of their annual income before beginning to deduct these medical expenses, typically 7.5% of their gross annual income. Anything under this threshold cannot be deducted, but any total expenses exceeding 7.5% of one’s income can then be deducted from taxes.
Likewise, it is vital to prepare for where one’s program falls throughout the calendar year. Those attending a rehab program into the new year, such as one that lasts from November to January, will have these expenses divided between two different years, which will affect how much is spent in one calendar year.
Unfortunately, taxes are notoriously obtuse and can be challenging to navigate. For those in rehab or supporting loved ones through their recovery, dealing with the complexity of tax season can be incredibly intimidating, especially when factoring in complicated medical expenses. Getting professional help to ensure that these expenses are filed and claimed correctly can ensure that one gets the most deductions possible while remaining financially responsible.
Investing in Your Future
The expenses of rehab can be intimidating. However, it is crucial to view these expenses as investments for one’s healthy, sober future. There is no way to put a monetary value on recovery, and while expenses of professional detox, treatment, and ongoing care may be difficult to balance, they are also instrumental in maintaining one’s sobriety.
Diverting spending away from addictive substances, learning life skills and coping strategies, and gaining the skills necessary to maintain gainful employment are all invaluable. This is on top of the other aspects of recovery that completely elude any kind of price tag: the rekindling of relationships or reclamation of trust and working to rebuild a family unit and healthy future. Claiming tax deductions for rehab is just another effective resource to help everyone on the path to a brighter, substance-free future.
Balancing finances and treatment can be difficult, but at The Edge Treatment Center, we’re ready to help you understand your options. Between tax deductions, insurance, and more, we can help you best understand your financial options while ensuring that you or your loved one are getting the best care possible.
From detox to outpatient care and beyond, we are ready to personalize a treatment program for your unique needs and goals. You can't put a price tag on sobriety, but our caring, trained staff can help you balance the bank and your healthy, sober future today. Contact The Edge Treatment Center today.