Hey there,
@Mr. Fluffy: Man, I feel for you. I had sleep problems long before tinnitus, due to neurological issues caused by a stroke. T made it worse, though. Scroll around the forums with the board's search tool and you will find lots and LOTS of posts on here about sleep. You definitely aren't alone.
Trying to run your life when you are bagging one or two hours of zzzs nightly is hell, I know. Did you have sleep problems before, given that you have had tinnitus for awhile. Is it the anxiety generated by the increased volume that is causing the problem?
The following is just my opinion, based on my experience. Your experience might be different. And my opinion should not overrule medical advice. Anyway....
Problem with prescription sleep aids is that they can be a slippery slope. I finally gave in a couple years ago, because I could not function at work with so little sleep. I started off with a pill maybe one, two days a week. Now I pretty much need a med every night to nod off. Your brain grows dependent on these drugs very quickly.
I personally use Lunesta in its lowest dose possible (2 mg), as it is the one sleep aid approved for "long term" use. But docs recommend you not use even this medication every day -- although I do. Tried Ambien briefly and found it seriously scary stuff - -at least for me. Made me very out of it and confused.
Xanax is a benzodiazapene, a family of medications for anxiety. It is not designed to be a sleep med. Unfortunately, though, anxiety caused by tinnitus can make it very hard to sleep. I had terrible panic attacks (even in my sleep) when I first had tinnitus, so my doctor (a psychiatrist in this case) gave me a low dose of Xanax (generic alprazolam). But after about a year, he said: no more. Benzos carry even more risk for dependence and addiction than sleep meds. So I no longer take them, except in extreme emergencies at night when my anxiety really kicks in (maybe once, twice a month).
I would explore all the non-med options you can. Melatonin helps some and it is a supplement. But be aware it carries more risk than your average supplement, as it seriously interacts with your brain chemistry. Some people have suggested melatonin should be regulated. For it to work properly, try to take it about two hours before you go to bed. And start with a small dose, maybe 1 mg. Be aware that 5-10 mg of melatonin is a large dose. And in my case, melatonin gives me whopping headaches and crazy dreams.
Other people have had success with tart cherry juice, valarian root, chamomille.
And then there is sleep hygiene: Same bed time and wake time at night, no TV/computer in the bedroom, sleeping in a dark/cool room, no heavy food at night and eating way before bedtime, etc. Google around and you find lots of stuff on sleep hygiene.
Sorry for the long email, hope its helpful. And that you get some rest! People who think not being able to sleep isn't a big issue clearly don't have a sleep problem.