This year, our household has the biggest medical expenses we’ve had in a decade—and we’re not alone. My Webmaster is facing over $25,000 in expenses not covered by his family’s high-deductible insurance policy.

Are you hurting, too? If so, there may be tax implications.

Let’s look at what has changed since last year and find out if there is anything we can do to scratch out a tax deduction.

A job-related flexible spending account (FSA) allows you to allocate part of your wages to medical and dependent care expenses before paying taxes on those wages. Last year, we could set aside $5,000 towards medical expenses. This year, the limit is only $2,500.

What can you do about this? Make sure that both you and your spouse use an FSA, if one is offered by your employers. If your child is working and the employer offers an FSA, help him or her get a plan set up. You can repay your children for the money deducted from their paychecks.

If your employers don’t offer an FSA, you may want to try and convince them to do so. Employers get tax benefits from these accounts that are far in excess of the administration costs.

As a self-employed individual, you have the option to hire your spouse and/or your children. By doing so, you may be able to pay all their medical insurance and expenses through your business under section 105 of the Internal Revenue Code.

Of course, they must be legitimate employees and must be doing real work for your business.

Until last year, before deducting our medical expenses, we had to reduce them by 7.5 percent of our adjusted gross income (AGI), which is the number on the last line of Form 1040. Starting this year, we must reduce our medical expenses by 10 percent. Seniors aged 65 and older may use the 7.5 percent rate until December 31, 2016.

For someone with $25,000 worth of medical expenses, it reduces the medical deduction by $625 (2.5 percent).

What can you do to maximize your medical tax deduction?

1. Marry someone age 65 or older. Only one primary taxpayer on a joint return needs to qualify for the deduction.

2. Search out every possible medical deduction to which you’re entitled. Some hospital expenses, insurance premiums, and lab fees may be included. Read IRS Publication 502 for details.

3. Control the year in which you pay expenses. Try to maximize your deductions in alternate years. For example: Move as many of next year’s expenses into this year (i.e., the first month or two of 2014 expenses). Then, in 2014, pay fewer expenses—with your medical care providers’ consent. Finally, move the unpaid balance of 2014 expenses into 2015, and prepay some 2016 expenses.

Finally, here is one last strategy for folks with medical expenses high enough to wipe out your income. Do you have high balances in your regular IRAs or retirement accounts? Draw out as much money as possible from those accounts to cover the medical expenses.

Do the calculations carefully and you could be pulling out that money tax-free, or with a tax rate of only 10 percent. Folks who are very ill may overlook this opportunity, so you must help them.

Eva Rosenberg, EA is the publisher of, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at and tax courses you might enjoy at