By Rahwa Asmerom
Provided by 
Health insurance and health care are two of the most complicated and heated topics in politics today. In terms of taxes, however, the rules governing health-related deductions are vast but easy to follow. Certified public accountant Jim Sharvin shares his tips on how and what to itemize to get the most out of your health expenses.
Utilize Your FSA or Health Care Plan
It's important to take advantage of the benefits of your health care plan by the end of the year, especially if you have a flexible spending account. "It's what we call a 'use it or lose it,'" Sharvin says. "If you don't use your funds by December 31, then you lose it." Also, the end-of-the-year rush to squeeze in treatments or procedures may leave you hanging if your doctor is booked, so don't wait until the last minute.
Ask Yourself Two Questions
Is it a qualified medical expense? Are you over the 7.5% threshold? To be a qualified medical expense, the expense could not have been covered using money from a tax-advantaged account like a flexible spending account. Also, certain medical procedures and treatments do not qualify. In total, "your qualified expenses would have to exceed 7.5% of your adjusted gross income to be eligible for deduction," Sharvin says.
Reap Rewards of a Lower Income
For many who have lost their jobs or who have become underemployed this past year, one advantage is having greater room for medical deductions. Since the 7.5% rule makes it more difficult for higher income earners to meet the criteria, a lower income can mean greater savings for those needing medical treatment. "If you're making $100,000 in adjusted gross income, that means that the first $7,500 of expenses is not going to be eligible for deduction," Sharvin says. "Now, if you make half that amount, you only have to come up with $3,750 dollars out of pocket and the rest will qualify for a deduction." Once you're over the 7.5% threshold, Sharvin recommends maximizing it to the fullest.
Deduct Premiums If You're Self-Employed
For the self-employed who can't participate in employer-sponsored tax-advantaged accounts and flexible spending accounts, health insurance premiums are completely deductible.
Note Miscellaneous Expenses
Did you know that driving to the doctor can go towards your medical deduction? "You get 24 cents per mile in 2009 for driving to the hospital or to anything medically related," Sharvin says. Other random qualified expenses include pregnancy test kits and the cost of any health-related prescription from your doctor.
What Does Not Qualify
Here's an example of a popular item that does not qualify as an automatic deduction: gym fees. "Unless your doctor prescribes you a weight loss program for medical reasons, gym fees are not deductible," Sharvin says. Cosmetic surgery and other non-health related procedures usually do not qualify either.
Jim Sharvin is the owner of the tax and business consulting firm Sharvin and Associates.
Read the original family finance article on FiLife: http://www.filife.com/stories/itemizing-your-health-expenses
