Using A Health Reimbursement Arrangement (HRA) For Drug RehabĪ health reimbursement arrangement (HRA) is owned and funded by an employer. An FSA requires a bit more planning, as it can only be opened in specific situations, such as when you are hired or during annual open enrollment. At the end of the year, any remaining money is void. Any reimbursement they receive counts as a tax deduction. If they are married, their spouse can do the same. Each year, a person and/or their employer can put $2650 in their FSA.
As long as you stay with them, your FSA will reimburse you for medical expenses like drug rehab. If you leave your job, you lose your FSA. Using A Flexible Spending Account (FSA) For Drug RehabĪ flexible spending account (FSA) is offered by an employer and tied to them. If you have money in the bank to cover health costs, you may be able to open an HSA and transfer the money before paying for rehab. But you don’t necessarily have to plan ahead. Using an HSA to pay for drug rehab makes sense if you already have money saved in it. You may also qualify for an HSA on your own if you meet certain requirements, such as not being on Medicare and having a high deductible health plan. If you leave your job for any reason, your HSA stays with you. An HSA may be offered through your employer, and some employers put money into it. This amount can come out of your paycheck pre-tax or you can put it in later and claim it as a tax deduction. For 2019, the maximum contribution amount was $3500 for an individual and $7000 for a family. Each year, you can put a certain amount of money into it that will not be taxed. Using A Health Savings Account (HSA) For Drug RehabĪ health savings account (HSA) is a personal account for medical expenses.
Deductible medical expenses for 2019 professional#
A tax professional can help you determine if one of these options is right for you. A health savings account, flexible spending account, or health reimbursement arrangement may cover some of the costs for you or a dependent family member. There are several tax-free ways to pay for the 7.5 percent of drug rehab costs that aren’t tax-deductible. In this case, if a rehab program costs $15,500 or more, the person could deduct $12,500 or more from their taxes, so it would be worth it for them to itemize. It makes sense for someone to itemize deductions if the result will be a higher amount than the standard deduction. The standard deduction for 2019 was $12,200 for single people and $24,400 for married couples. When filing taxes, an individual can choose whether to claim the standard deduction or to itemize deductions. The individual in the example above would only have to pay taxes on $33,000, which would significantly reduce their tax burden. What Is A Tax Deduction?Ī tax deduction reduces the amount of income that someone has to pay taxes on. For specific questions about whether the drug rehab is tax-deductible in your situation, check with a tax professional.
Only what you pay out-of-pocket counts as a qualifying medical expense. Though deductible health costs also include insurance premiums, they do not include the money paid by your insurance company for drug rehab. If they attend a treatment program that costs $10,000, they can deduct $7000 from their taxable income. If someone’s AGI is $40,000, any medical expenses over $3000 are tax-deductible. However, a person can only deduct the cost of rehab that exceeds 7.5 percent of their adjusted gross income (AGI). Since addiction is a disease, drug rehab falls within these limitations. “Medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease,” says the IRS. This applies whether the individual, their spouse, or their dependent attends a rehab program.
When Is Drug Rehab Tax-Deductible?Īccording to the Internal Revenue Service (IRS), inpatient drug rehab (treatment, meals, and lodging) is a tax-deductible medical expense. What many people don’t know is that drug rehab is tax-deductible in certain situations. High costs for quality care prevent many people from seeking help for addiction. Paying for drug rehab can be a challenge.
0 kommentar(er)
