Addictions have a huge impact on our society. They range from substance abuse and sexual addictions to food addictions. People who find themselves addicted to unhealthy substances and unpleasant behaviors will normally have their lives adversely affected by such habits. Addictions, especially drug addictions, have been known to reduce talented actors and actresses, musicians, and celebrities to total dependency and at times, even death. However, treatment and rehabilitation is available for those who find themselves trapped in these addictions. What is even better is that there is quite some tax relief that is available with some of the addiction treatments.
Drug and Alcohol Abuse
Rehabilitation costs for alcohol and drug addictions are part of the qualifying medical expenses for tax deductions. However, the extent of the expenses to be covered is a gray area. The law allows for the deduction of medical care but does not give complete details on what qualifies as “medical care.” The IRS regulations on medical expense deductions provides examples of medical care – surgery costs, X-rays, hospital services, laboratory work, nursing services, dental work (such as artificial teeth), diagnostic and healing services, medicine and drugs, artificial limbs and ambulance services. However, these are only examples and pretty much, most of other medical costs can qualify under these definitions.
Deducting drug and alcohol rehabilitation medical expenses is only possible for taxpayers who itemize their deductions. To do this, you will need to itemize your deductions on Schedule A of your tax return form. All other itemizing rules apply, including the deduction of the costs (total costs for all qualifying medical expenses) that exceed 7.5% of your Adjusted Gross Income (AGI).
Treatment for Obesity and Food Disorders
For the rehabilitation costs of an addiction to be considered as a qualifying medical expense for deduction, the addiction must be categorized as a disease. Unfortunately, obesity does not qualify as a disease. This means that any treatment primarily targeting at treating obesity will not qualify for the medical deduction. This is especially important to note, as most of weight loss treatments will be rejected for tax deduction qualification. To the IRS, obesity is seen more of a lifestyle choice. However, treatment of specific conditions associated with obesity will qualify for tax deductions. These conditions include high blood pressure, diabetes, and heart disease.
Smoking Addiction Treatment
Smoking addiction was for a long time, considered as a lifestyle choice problem as opposed to a disease by the IRS. For this reason, the IRS did not allow the deduction of costs related to treating smoking addictions. However, in 1999, the IRS reversed this rule and allowed smoking addiction treatment as a qualifying medical expense for deduction. While allowing smoking addiction treatment for tax deduction, the IRS noted that nicotine was a powerful addictive agent and thus, qualifying it as a disease.
Using Marijuana and Heroin for Medical Reasons
The law that provides for the deduction of medical expenses specifically prohibits the deduction of medical costs associated with use of illegal drugs and substances. For this reason, the medical use of Marijuana and Heroin for treating patients is not an allowable expense, even when prescribed by a qualified medical practitioner. This is especially limiting, as modern medical discoveries show that some of these illegal drugs can be used to treat genuine medical conditions. Tax experts foresee the adjustment of this law in the near future to allow deductions of treatments with some of these substances, as long as they are prescribed by a doctor.
Gender Identity Cases
One of the medical expenses that is least expected to pass for an allowable medical expense but yet, allowed for deduction is gender reassignment. The changing of one’s gender is seen as a treatment for a psychological condition – gender identity disorder – and therefore, allowable. This was determined in the case of Rhiannon O’Donnabhain vs. the IRS, where the plaintiff was denied the deduction of costs associated to his/her sex change from a man to a woman. The Tax Court allowed deduction of the surgery costs, but denied the deduction of the breast enlargement costs, as the court ruled this to be for cosmetic reasons rather than medical.