Cost of Addiction: Deducting Treatment Expenses on Tax Day

Published on April 8, 2019
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Canaan, CT – As the April 15th tax deadline approaches, many Americans are mentally bracing themselves as they sort through their finances and calculate what they owe Uncle Sam. Mountainside treatment center reminds those recovering from addiction that while Tax Day can present some stressors, the cost of treatment does not have to be one of them.

According to the Internal Revenue Service, treatment for substance use disorders can be listed as a qualified medical expense. The IRS classifies the following as deductible addiction treatment expenses:

• The costs of diagnosis

• Inpatient treatment at a drug or alcohol addiction rehabilitation center, including the cost of lodging and meals

• Payments for legal medical services rendered by physicians, surgeons, and other medical practitioners

• The costs of equipment, supplies, and diagnostic devices needed for these purposes

• Transportation to and from local 12 Steps meetings pursuant to medical advice

Filers looking to claim these expenses should itemize their deductions on Schedule A of Form 1040. These deductions must only reflect medical and dental expenses that total more than 7.5 percent of their adjusted gross income for 2018. As long as these alcohol or drug treatment costs were not already covered by insurance companies or other third-party sources, the IRS will reimburse filers for the cost of addiction treatment.

Parents who have financed their child’s treatment should likewise remember that they can deduct these medical expenses if the IRS classifies that child as a dependent. Similarly, family members who have covered the medical expenses of qualifying relatives – such as siblings, grandchildren, and in-laws – may also be entitled to a refund from the IRS.

Individuals in recovery and their families can strengthen their financial health by taking advantage of these deductions. Though tax season is coming to a close, those battling addiction can take comfort in the knowledge that there’s still time to write off treatment expenses. Consult with a tax advisor to find out more about deducting the costs of addiction treatment on Tax Day.