It’s never too early to be thinking about tax planning for 2013… in fact, the sooner the better. Here’s a link to the AICPA’s 2013 tax planning guide.
Will I go to jail for not paying my taxes?
… and other frequently asked questions from the IRS.
Why Should I File My Tax Return as Soon as Possible?
There are two advantages to filing as soon as possible:
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Generally, if a taxpayer is due a refund for withholding or estimated taxes paid, it must be claimed within 3 years of the return due date or risk losing the right to it. The same rule applies to a right to claim a tax credit such as the Earned Income Credit (EIC).
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Self-employed persons who do not file a return will not receive credits toward Social Security retirement or disability benefits. Failure to file results in not reporting any self-employment income to the Social Security Administration.
What If I Owe More Than I Can Pay?
Even if a taxpayer doesn’t have enough money to pay, returns should be filed to avoid further penalties for failure to file. The IRS will assist in finding a solution to the problem.
The IRS has streamlined its policies to offer alternative account resolutions if a taxpayer cannot pay in full with the return:
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The IRS will help to set up an installment agreement when the situation warrants. Installment payments allow taxpayers to pay the tax debt over time.
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The IRS will consider whether an offer in compromise is an appropriate solution.
What If I Don’t File Voluntarily?
The IRS is taking enforcement steps for those who repeatedly choose not to comply with the law. IRS employees will prepare returns when taxpayers do not file. The returns prepared by the IRS might not give credit for deductions and exemptions a taxpayer may be entitled to receive. Bills will be sent to those taxpayers for the tax due, plus penalties and interest.
People who repeatedly don’t comply with the law are subject to additional enforcement measures.
How Can I Avoid Owing Money on Next Year’s Return?
Many people don’t file tax returns because they don’t have enough money to pay the tax they owe. They find out after completing their return that their withholding or Estimated Tax payments do not equal their tax liability.
To help avoid this situation, the IRS can advise taxpayers how to ask an employer to withhold enough tax from their pay. For any income that is not subject to withholding, the IRS can provide information necessary to make quarterly payments to cover any amount to be owed. To make payments electronically, see Payment Options – Ways To Make a Payment or go to the EFTPS Web site.
Changes in financial circumstances could have an impact on taxes. For example, an increase in income, divorce, or selling an asset, may require adjustments to withholding or estimated payments.
By taking these steps, taxpayers will be better able to meet their tax obligations and avoid tax day surprises.
Will I Go to Jail?
A long-standing practice of the IRS has been not to recommend criminal prosecution of individuals for failure to file tax returns, provided they voluntarily file, or make arrangements to file, before being notified they are under criminal investigation. The taxpayer must make an honest effort to file a correct return and have income from legal sources. A letter from the IRS concerning taxes is not a notice that a taxpayer is under criminal investigation.
The IRS helps to get people back into the system as part of its long-term plan to improve voluntary tax compliance. The IRS wants to get people back into the system, not prosecute ordinary people who made a mistake. However, flagrant cases involving criminal violations of tax laws will continue to be investigated.
References/Related Topics
Tax Tips? There’s an App for that
From the USA Today.
Tax time is a chore for many Americans, particularly those who try to save a few bucks and file the paperwork on their own without any help.
But thankfully there are a host of affordable products for tech-savvy taxpayers that can take some of the guesswork out of filing your taxes.
And best of all, some of them come free of charge.
Granted, there are few substitutes for a qualified tax professional with a human touch. Oftentimes the biggest problem for Americans is not even knowing what questions to ask regarding their taxes, and having a certified public accountant or other expert is difficult to match.
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However, a host of high-tech tools do a great job filling in your knowledge gaps and making the filing process simpler and less stressful.
Here are a few worth looking into:
TurboTax SnapTax
Available for iPhone and Android devices, SnapTax claims to do your taxes in 10 minutes or less. Sound too good to be true? Well, there are limitations: You can’t own a home, you have to earn less than $100,000 ($120,000 if you file jointly) and you have to only have W-2, interest or unemployment income.
However, if you are one of the millions of Americans who don’t have to itemize, then filing your taxes right from your smartphone could be very appealing. SnapTax lets you upload your W-2s simply by taking a picture of the form with your mobile device, then asks a few simple questions and you’re all set.
The program is free to download but charges $24.99 to e-file finished returns (state filing is included).
Expensify
In the old days people used to keep shoe boxes of records for qualified expenses. ButExpensify allows you to simplify things by going digital.
This simple program can be downloaded to any mobile device with a camera and is a must-have for anyone bogged down with receipts. Whether you’re self-employed and taking a business trip or managing the local soup kitchen, Expensify allows you to take a picture of receipts and file them away for review. You can then sort by expense category, trips or other reports that you set up.
The app is free and available on all smartphones.
Bloomberg BNA Quick Tax Reference
The Bloomberg BNA Quick Tax Reference app for smartphones won’t file your returns for you, but it is a powerful resource if you have questions about any item in the tax code, no matter how small.
Of course, the depth may only confuse you if you don’t itemize your return. But for those who have multiple income streams and multiple deductions, this Bloomberg app is easy to navigate and has a wealth of info.
The app is free and available on iPhone, Android and BlackBerry. It also already has 2013 tax info loaded up to inform your financial decisions for the current tax year.
IRS2Go
This mobile app doesn’t allow for filing of your return but plugs you into the IRS so you can access your existing tax records on the go as well as check the status of your 2012 return after it’s filed.
There’s also easy access to tax tips, instructional videos and other educational stuff from the IRS if you’re interested in that kind of thing.
The app is free and, according to the IRS website, should be updated with new features soon.
Ask A CPA
Confused about a specific part of your tax returns, such as whether gains from selling an antique car are treated the same as capital gains from a stock investment? Well, thankfully, Ask A CPA has an archive of frequently asked tax questions and tips from certified public accountants to help you.
Best of all, if previously asked questions aren’t good enough, you have the ability to ask your own questions via the app or to locate a CPA in your area who is knowledgeable about your kind of situation.
The app is free, but responses are not always guaranteed and keep in mind the tips are commonly general in nature and not specifically tailored to you and the exact dollar amounts on your return.
USA Today: Start of 2012 Tax Filing Season Delayed
As previously posted, the start of the 2012 tax filing season has been delayed. See here.
Start of Tax Filing Season Delayed (AICPA Article)
The IRS announced on Tuesday that it plans to open the 2013 filing season and begin processing many individual income tax returns on Jan. 30 (IR-2013-2). However, not all taxpayers will be able to start filing tax returns on that date.
The IRS says it will be able to begin accepting tax returns on Jan. 30 after updating forms and completing programming and testing of its processing systems to account for most of the tax law changes enacted Jan. 2 by the American Taxpayer Relief Act of 2012, H.R. 8. The IRS says that this will allow “the vast majority of tax filers—more than 120 million households” to start filing tax returns on Jan. 30. The delayed start of tax season applies to both electronic and paper returns. The IRS had originally planned to open electronic filing of tax returns on Jan. 22.
The IRS says that on Jan. 30 it will be able to accept tax returns affected by the late change in the alternative minimum tax (AMT) exemption amount as well as three other major extended provisions: The state and local sales tax deduction (Sec. 164(b)), the higher education tuition and fees deduction (Sec. 222), and the deduction for certain expenses of elementary and secondary schoolteachers (Sec. 62).
Some returns delayed
Because of the need for more extensive form and processing systems changes, many taxpayers will not be able to file returns until February or March. For example, the IRS says taxpayers who claim residential energy credits or general business credits or who depreciate property will not be able to file starting Jan. 30. However, the IRS in its press release downplays this delay, claiming that most of these taxpayers “typically file closer to the April 15 deadline or obtain an extension.”
Forms that will require more extensive programming changes include Form 5695, Residential Energy Credits, Form 4562, Depreciation and Amortization, and Form 3800, General Business Credit. The IRS is promising to post a full list of the forms that it will not accept until later on its website. The list was not yet available as this item went to press.
The IRS will announce a specific date when it will start accepting these forms in the near future.
—Alistair M. Nevius (anevius@aicpa.org) is the JofA’s editor-in-chief, tax.
Link to the full article here from the AICPA.
A summary of the Fiscal Cliff deal
From the American Institute of Certified Public Accountants (AICPA):
Congress passes fiscal cliff act
BY PAUL BONNER AND ALISTAIR M. NEVIUS
Shortly before 2 a.m. Tuesday, the Senate passed a bill that had been heralded and, in some quarters, groused about throughout the preceding day. By a vote of 89 to 8, the chamber approved the American Taxpayer Relief Act, H.R. 8, which embodied an agreement that had been hammered out on Sunday and Monday between Vice President Joe Biden and Senate Minority Leader Sen. Mitch McConnell, R-Ky. The House of Representatives approved the bill by a vote of 257–167 late on Tuesday evening, after plans to amend the bill to include spending cuts were abandoned. The bill now goes to President Barack Obama for his signature.
“The AICPA is pleased that Congress has reached an agreement,” said Edward Karl, vice president–Tax for the AICPA. “The uncertainty of the tax law has unnecessarily impeded the long-term tax and cash flow planning for businesses and prevented taxpayers from making informed decisions. The agreement should also allow the IRS and commercial software vendors to revise or issue new tax forms and update software, and allow tax season to begin with minimal delay.”
With some modifications targeting the wealthiest Americans with higher taxes, the act permanently extends provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, P.L. 107-16 (EGTRRA), and Jobs and Growth Tax Relief Reconciliation Act of 2003, P.L. 108-27 (JGTRRA). It also permanently takes care of Congress’s perennial job of “patching” the alternative minimum tax (AMT). It temporarily extends many other tax provisions that had lapsed at midnight on Dec. 31 and others that had expired a year earlier.
The act’s nontax features include one-year extensions of emergency unemployment insurance and agricultural programs and yet another “doc fix” postponement of automatic cuts in Medicare payments to physicians. In addition, it delays until March a broad range of automatic federal spending cuts known as sequestration that otherwise would have begun this month.
Among the tax items not addressed by the act was the temporary lower 4.2% rate for employees’ portion of the Social Security payroll tax, which was not extended and has reverted to 6.2%.
Here are the act’s main tax features:
Individual tax rates
All the individual marginal tax rates under EGTRRA and JGTRRA are retained (10%, 15%, 25%, 28%, 33%, and 35%). A new top rate of 39.6% is imposed on taxable income over $400,000 for single filers, $425,000 for head-of-household filers, and $450,000 for married taxpayers filing jointly ($225,000 for each married spouse filing separately).
Phaseout of itemized deductions and personal exemptions
The personal exemptions and itemized deductions phaseout is reinstated at a higher threshold of $250,000 for single taxpayers, $275,000 for heads of household, and $300,000 for married taxpayers filing jointly.
Capital gains and dividends
A 20% rate applies to capital gains and dividends for individuals above the top income tax bracket threshold; the 15% rate is retained for taxpayers in the middle brackets. The zero rate is retained for taxpayers in the 10% and 15% brackets.
Alternative minimum tax
The exemption amount for the AMT on individuals is permanently indexed for inflation. For 2012, the exemption amounts are $78,750 for married taxpayers filing jointly and $50,600 for single filers. Relief from AMT for nonrefundable credits is retained.
Estate and gift tax
The estate and gift tax exclusion amount is retained at $5 million indexed for inflation ($5.12 million in 2012), but the top tax rate increases from 35% to 40% effective Jan. 1, 2013. The estate tax “portability” election, under which, if an election is made, the surviving spouse’s exemption amount is increased by the deceased spouse’s unused exemption amount, was made permanent by the act.
Permanent extensions
Various temporary tax provisions enacted as part of EGTRRA were made permanent. These include:
- Marriage penalty relief (i.e., the increased size of the 15% rate bracket (Sec. 1(f)(8)) and increased standard deduction for married taxpayers filing jointly (Sec. 63(c)(2));
- The liberalized child and dependent care credit rules (allowing the credit to be calculated based on up to $3,000 of expenses for one dependent or up to $6,000 for more than one) (Sec. 21);
- The exclusion for National Health Services Corps and Armed Forces Health Professions Scholarships (Sec. 117(c)(2));
- The exclusion for employer-provided educational assistance (Sec. 127);
- The enhanced rules for student loan deductions introduced by EGTRRA (Sec. 221);
- The higher contribution amount and other EGTRRA changes to Coverdell education savings accounts (Sec. 530);
- The employer-provided child care credit (Sec. 45F);
- Special treatment of tax-exempt bonds for education facilities (Sec 142(a)(13));
- Repeal of the collapsible corporation rules (Sec. 341);
- Special rates for accumulated earnings tax and personal holding company tax (Secs. 531 and 541); and
- Modified tax treatment for electing Alaska Native Settlement Trusts (Sec. 646).
Individual credits expired at the end of 2012
The American opportunity tax credit for qualified tuition and other expenses of higher education was extended through 2018. Other credits and items from the American Recovery and Reinvestment Act of 2009, P.L. 111-5, that were extended for the same five-year period include enhanced provisions of the child tax credit under Sec. 24(d) and the earned income tax credit under Sec. 32(b). In addition, the bill permanently extends a rule excluding from taxable income refunds from certain federal and federally assisted programs (Sec. 6409).
Individual provisions expired at the end of 2011
The act also extended through 2013 a number of temporary individual tax provisions, most of which expired at the end of 2011:
- Deduction for certain expenses of elementary and secondary school teachers (Sec. 62);
- Exclusion from gross income of discharge of qualified principal residence indebtedness (Sec. 108);
- Parity for exclusion from income for employer-provided mass transit and parking benefits (Sec. 132(f));
- Mortgage insurance premiums treated as qualified residence interest (Sec. 163(h));
- Deduction of state and local general sales taxes (Sec. 164(b));
- Special rule for contributions of capital gain real property made for conservation purposes (Sec. 170(b));
- Above-the-line deduction for qualified tuition and related expenses (Sec. 222); and
- Tax-free distributions from individual retirement plans for charitable purposes (Sec. 408(d)).
Business tax extenders
The act also extended many business tax credits and other provisions. Notably, it extended through 2013 and modified the Sec. 41 credit for increasing research and development activities, which expired at the end of 2011. The credit is modified to allow partial inclusion in qualified research expenses and gross receipts those of an acquired trade or business or major portion of one. The increased expensing amounts under Sec. 179 are extended through 2013. The availability of an additional 50% first-year bonus depreciation (Sec. 168(k)) was also extended for one year by the act. It now generally applies to property placed in service before Jan. 1, 2014 (Jan. 1, 2015, for certain property with longer production periods).
Other business provisions extended through 2013, and in some cases modified, are:
- Temporary minimum low-income tax credit rate for non-federally subsidized new buildings (Sec. 42);
- Housing allowance exclusion for determining area median gross income for qualified residential rental project exempt facility bonds (Section 3005 of the Housing Assistance Tax Act of 2008);
- Indian employment tax credit (Sec. 45A);
- New markets tax credit (Sec. 45D);
- Railroad track maintenance credit (Sec. 45G);
- Mine rescue team training credit (Sec. 45N);
- Employer wage credit for employees who are active duty members of the uniformed services (Sec. 45P);
- Work opportunity tax credit (Sec. 51);
- Qualified zone academy bonds (Sec. 54E);
- Fifteen-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements (Sec. 168(e));
- Accelerated depreciation for business property on an Indian reservation (Sec. 168(j));
- Enhanced charitable deduction for contributions of food inventory (Sec. 170(e));
- Election to expense mine safety equipment (Sec. 179E);
- Special expensing rules for certain film and television productions (Sec. 181);
- Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico (Sec. 199(d));
- Modification of tax treatment of certain payments to controlling exempt organizations (Sec. 512(b));
- Treatment of certain dividends of regulated investment companies (Sec. 871(k));
- Regulated investment company qualified investment entity treatment under the Foreign Investment in Real Property Act (Sec. 897(h));
- Extension of subpart F exception for active financing income (Sec. 953(e));
- Lookthrough treatment of payments between related controlled foreign corporations under foreign personal holding company rules (Sec. 954);
- Temporary exclusion of 100% of gain on certain small business stock (Sec. 1202);
- Basis adjustment to stock of S corporations making charitable contributions of property (Sec. 1367);
- Reduction in S corporation recognition period for built-in gains tax (Sec. 1374(d));
- Empowerment Zone tax incentives (Sec. 1391);
- Tax-exempt financing for New York Liberty Zone (Sec. 1400L);
- Temporary increase in limit on cover-over of rum excise taxes to Puerto Rico and the Virgin Islands (Sec. 7652(f)); and
- American Samoa economic development credit (Section 119 of the Tax Relief and Health Care Act of 2006, P.L. 109-432, as modified).
Energy tax extenders
The act also extends through 2013, and in some cases modifies, a number of energy credits and provisions that expired at the end of 2011:
- Credit for energy-efficient existing homes (Sec. 25C);
- Credit for alternative fuel vehicle refueling property (Sec. 30C);
- Credit for two- or three-wheeled plug-in electric vehicles (Sec. 30D);
- Cellulosic biofuel producer credit (Sec. 40(b), as modified);
- Incentives for biodiesel and renewable diesel (Sec. 40A);
- Production credit for Indian coal facilities placed in service before 2009 (Sec. 45(e)) (extended to an eight-year period);
- Credits with respect to facilities producing energy from certain renewable resources (Sec. 45(d), as modified);
- Credit for energy-efficient new homes (Sec. 45L);
- Credit for energy-efficient appliances (Sec. 45M);
- Special allowance for cellulosic biofuel plant property (Sec. 168(l), as modified);
- Special rule for sales or dispositions to implement Federal Energy
- Regulatory Commission or state electric restructuring policy for qualified electric utilities (Sec. 451); and
- Alternative fuels excise tax credits (Sec. 6426).
Foreign provisions
The IRS’s authority under Sec. 1445(e)(1) to apply a withholding tax to gains on the disposition of U.S. real property interests by partnerships, trusts, or estates that are passed through to partners or beneficiaries that are foreign persons is made permanent, and the amount is increased to 20%.
New taxes
In addition to the various provisions discussed above, some new taxes also took effect Jan. 1 as a result of 2010’s health care reform legislation.
Additional hospital insurance tax on high-income taxpayers. The employee portion of the hospital insurance tax part of FICA, normally 1.45% of covered wages, is increased by 0.9% on wages that exceed a threshold amount. The additional tax is imposed on the combined wages of both the taxpayer and the taxpayer’s spouse, in the case of a joint return. The threshold amount is $250,000 in the case of a joint return or surviving spouse, $125,000 in the case of a married individual filing a separate return, and $200,000 in any other case.
For self-employed taxpayers, the same additional hospital insurance tax applies to the hospital insurance portion of SECA tax on self-employment income in excess of the threshold amount.
Medicare tax on investment income. Starting Jan. 1, Sec. 1411 imposes a tax on individuals equal to 3.8% of the lesser of the individual’s net investment income for the year or the amount the individual’s modified adjusted gross income (AGI) exceeds a threshold amount. For estates and trusts, the tax equals 3.8% of the lesser of undistributed net investment income or AGI over the dollar amount at which the highest trust and estate tax bracket begins.
For married individuals filing a joint return and surviving spouses, the threshold amount is $250,000; for married taxpayers filing separately, it is $125,000; and for other individuals it is $200,000.
Net investment income means investment income reduced by deductions properly allocable to that income. Investment income includes income from interest, dividends, annuities, royalties, and rents, and net gain from disposition of property, other than such income derived in the ordinary course of a trade or business. However, income from a trade or business that is a passive activity and from a trade or business of trading in financial instruments or commodities is included in investment income.
Medical care itemized deduction threshold. The threshold for the itemized deduction for unreimbursed medical expenses has increased from 7.5% of AGI to 10% of AGI for regular income tax purposes. This is effective for all individuals, except, in the years 2013–2016, if either the taxpayer or the taxpayer’s spouse has turned 65 before the end of the tax year, the increased threshold does not apply and the threshold remains at 7.5% of AGI.
Health flexible spending arrangement. Effective for cafeteria plan years beginning after Dec. 31, 2012, the maximum amount of salary reduction contributions that an employee may elect to have made to a flexible spending arrangement for any plan year is $2,500.
FULL POSTING HERE.
We are over the “Fiscal Cliff”… even with the Senate Deal
The House of Representatives has yet to vote on the deal reached in the Senate and the bill will then need to be signed by the President. Here’s a summary of the deal as it stands… Fiscal Cliff Deal Highlights – USA Today.
Year End Checklist for businesses
Closing Your Books
As you are cleaning up your accounting records for year-end, here are some steps you can take now to make tax-time easier:
- Verify that you have W-9 forms for each of your independent contractors or at least have their Tax Identification Number on file. You will need this information in order to prepare 1099 forms in January. Going forward, it’s a good practice to obtain a completed W-9 form from each new vendor before you pay them.
- Review your Accounts Receivable. Are all of them collectible? If you have any bona fide bad debts on your hands, it is time to write them off before year-end. You should also review your receivables to reconcile them against your customer accounts, confirming the balance of each.
- Review your Accounts Payable. Wherever possible, you should reconcile your vendor accounts against a statement from that vendor.
- Reconcile all of your bank accounts using the year-end bank statements. When reconciling your bank account, be careful to review any “Uncleared” transactions, as they may be duplicate entries, checks that were lost in the mail, or simply entries that should have been deleted.
- Reconcile all of your credit card accounts, lines of credit and outstanding loans.
- If you carry inventory, it’s time to do a physical count of your inventory and reconcile it against the inventory reported on your balance sheet. Take this opportunity to adjust your inventory for shrinkage, spoilage, or obsolescence.
- Make a list of all new equipment and other fixed assets acquired during the year, including the purchase date, amount and description. If you’ve disposed of any old equipment, whether by selling it or by putting it in the dumpster out back, make a note of that, too.
- Review your payroll liability balances (941, Michigan Withholding, unemployment, etc.) and adjust if necessary. Also double-check that all payroll tax forms have been filed as necessary.
- Similarly, review your sales tax liability balance and confirm that your sales tax filings are up-to-date.
- For paper records, prepare to archive any records that you need to retain. For any records considered vital, make a copy that can be kept off-site.
- Finally, make a backup of your QuickBooks file or accounting records file to be kept off-site.
W-2s and 1099s
1. If you have employees, you must send W-2s to your employees by January 31st.
2. If you make payments to non-corporate taxpayers in excess of $600 for services or rent, you must file form 1099 to your subcontractors and/or landlord. If you have not already obtained the tax ID of the subcontractor or landlord, use form W-9. 1099s are also due to the recipients on January 31st.
If you would like me to fill out your W-2s or 1099s, please contact me with the appropriate information. If I have already been preparing your payroll and payroll tax returns, I will automatically prepare your W-2s, but will most likely need the information to prepare any 1099s you are required to issue.
Fiscal Cliff 101
Here’s a great article on what the Fiscal Cliff is from the Washington Post.
The term “fiscal cliff” is Washington shorthand for a series of automatic spending cuts and tax increases set to take effect in January. If enacted, they would amount to the largest spurt of deficit reduction in more than 40 years but could also push the country back into a recession. The cuts include about $100 billion in automatic cuts to defense and domestic government spending. The plan also includes about $400 billion in tax hikes, caused primarily by the expiration of a temporary payroll tax cut and other income tax breaks adopted during the George W. Bush administration. In addition, more than 26 million households will for the first time face the alternative minimum tax, which threatens to tack $3,700, on average, onto taxpayers’ bills for the current tax year. Leaders from both parties say they are determined to head off the fiscal cliff. But some Democrats and policy analysts have suggested it might be better to actually go over the cliff. Once the tax hikes have kicked in, these “cliff divers” argue, Republicans would be hard-pressed to roll them all back and would have to accept a deal on taming the deficit that contains more new tax revenue than GOP lawmakers want.
Continue reading here.
New Taxes in the Affordable Care Act (“Obama Care”)
Here are some of the new taxes you’re going to have to pay to pay for Obamacare:
- A 3.8% surtax on “investment income” when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is “investment income?” Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%–if Congress extends the Bush tax cuts. If Congress does not extend the Bush tax cuts, taxes on dividends will rise from 15% to a shocking 43.8%. (WSJ)
- A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). You already pay Medicare tax of 1.45%, and your employer pays another 1.45% for you (unless you’re self-employed, in which case you pay the whole 2.9% yourself). Next year, your Medicare bill will be 2.35%. (WSJ)
- Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. Next year, there will be. If you have been socking away, say, $10,000 in your FSA to pay medical bills, you’ll have to cut that to $2,500. (ATR.org)
- The itemized-deduction hurdle for medical expenses is going up to $10,000. Right now, any medical expenses over $7,500 per year are deductible. Next year, that hurdle will be $10,000. (ATR.org)
- The penalty on non-medical withdrawals from Healthcare Savings Accounts is now 20% instead of 10%. That’s twice the penalty that applies to annuities, IRAs, and other tax-free vehicles. (ATR.org)
- A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010. (ATR.org)
- A 40% tax on “Cadillac Health Care Plans” starting in 2018.Those whose employers pay for all or most of comprehensive healthcare plans (costing $10,200 for an individual or $27,500 for families) will have to pay a 40% tax on the amount their employer pays. The 2018 start date is said to have been a gift to unions, which often have comprehensive plans. (ATR.org)
- A”Medicine Cabinet Tax” that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. This started in January 2011. (ATR.org)
- A “penalty” tax for those who don’t buy health insurance. This will phase in from 2014-2016. It will range from $695 per person to about $4,700 per person, depending on your income. (More details here.)
- A tax on medical devices costing more than $100. Starting in 2013, medical device manufacturers will have to pay a 2.3% excise tax on medical equipment. This is expected to raise the cost of medical procedures. (Breitbart.com)
Source: http://finance.yahoo.com/blogs/daily-ticker/taxes-going-pay-pay-obamacare-145413745.html