This may be the most elusive tax break.

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Lately, unlike stocks, medical costs seem to move in just one direction: up. And while belt-tightening employers aren't exactly at the peak of their generosity to their employees, many taxpayers are faced with higher medical bills that they need to pay directly.

It would seem that some relief could be found in the tax code, which allows a wide variety of medical expenses to be deducted -- potentially saving taxpayers a tidy sum on their medical bills. But the deduction for medical expenses is notoriously hard to achieve, because only expenses that exceed 7.5% of your adjusted gross income can be deducted. In other words, if your AGI is $100,000 and you have $10,000 in eligible medical expenses, only $2,500 of that (7.5% of $100,000 is $7,500) can be deducted. Also, only expenses that were not covered by health insurance can be deducted.

Even so, the Internal Revenue Service has made baby steps toward including more expenses under its eligibility requirements. In April the IRS announced that it will consider obesity a disease. That means that the cost of a weight-loss program prescribed by a doctor will qualify. (If you're just looking to shed a few pounds before summer, though, you won't qualify.)

Deductible expenses for medical care fall into four categories: (1) prevention, diagnosis, or alleviation of physical or mental defects or illness; (2) amounts paid to affect any structure or function of the body; (3) transportation primarily for and essential to medical care; and (4) accident and health insurance premiums. Clearly, the expenses don't need to be for catastrophic illnesses. It's also permissible -- indeed, expected -- to tally up a variety of smaller costs to try to exceed 7.5% of AGI.

Even so, there are many oft-overlooked deductible medical expenses that may not exceed 7.5% of your income but can certainly help you reach that goal. The following list is partial. You can find the complete array and more specifics in IRS Publication 502 at

Abortion; acupuncture; birth control pills; chiropractic care; contact lenses, eyeglasses and laser eye surgery; fertility enhancement; lead-based paint removal; stop-smoking programs; vasectomies; and weight-loss programs are all eligible medical deductions.

To that end, now's the time to consider accelerating medical costs into the second half of the year. If you expect to have sizeable eligible deductions but may not reach the 7.5% threshold, you still have six months to make medical and health decisions that could help save some money when it's time to do your 2002 taxes.

When the time comes, there are a few strategies to consider if you think you might be able to deduct your medical expense. If you can defer some income until 2003, for instance, you can lower your AGI and increase your deductible amount.

If you're married, consider filing separately. Most married couples automatically file joint returns, but it often pays to do a little extra math to see if filing separately will help you save more. Filing separately essentially means that you and your spouse file separate returns, reporting only your own income. The tax brackets for those who are married but filing separately are exactly half of the brackets for joint filers. Because each of you will have a lower adjusted gross income, reaching that 7.5% threshold will be easier. One spouse can deduct all of the medical expenses for the other spouse, as well as any dependents.

Though you may switch back to filing jointly the following year, there still could be a few downsides. Some tax credits -- such as the $1,500 Hope credit or the $1,000 Lifetime Learning credit (which can be used to defray higher education expenses), as well as the earned income tax credit (a credit aimed at the working poor) -- cannot be claimed by married couples filing separately; you must file jointly to be eligible.