How to Decide Whether To Use a Medical FSA or Itemize

There are a few ways that you can lighten the burden of medical expenses on your pocketbook. Using a medical Flexible Spending Account (FSA) is a good way to save on medical supplies and get a tax break from the government every pay check, while itemizing medical expenses on your tax return can lighten your tax burden at the end of the year. You can't use both, however.

Instructions

1. Review your past medical expenditures. If most of your medical expenses are over-the-counter medications, you should probably choose an FSA that lets you save on each little purchase. If most of your bills are doctor's visits, prescription drugs and hospital bills, you may be better off itemizing at the end of the year.

2. Add up the total number of expenditures for the year. In order for you to itemize medical expenses on your tax return, the amount you spent must be more than a certain percentage of your adjusted gross income. If that number isn't high enough, you should try an FSA.

3. Decide where you need the most tax help. An FSA gets you a tax break with every pay check, while an itemized medical deduction helps you when tax time comes. If you're worried about having money to owe the IRS at the end of the year, itemizing may be the better way to go.

4. Use it or lose it. With a medical FSA, you have to use up your money allowance by a certain date or risk losing it. When you're itemizing, you claim only what you spend.