As many of you are aware, the Supreme Court has ruled that the Affordable Health Care Act is constitutional. Due to this ruling, there will many tax hikes beginning in 2013 that you need to be aware of. The Supreme Court has decided that the law requiring people without health coverage to buy insurance or pay a fee as a tax. The Republicans will probably repeal the entire health reform law. Her are the major increases in a nutshell:
- Upper income earners will pay more in Medicare taxes. There is a 0.9% surtax on single taxpayers with wages exceeding $200,000 and couples earning over $250,000. This is only for the employee share and self employed individuals.
- Unearned income will be subject to an additional 3.8% Medicare surtax. If single, modified adjusted gross income over $200,000 and married over $250,000. This includes AGI PLUS FOREIGN IEARNED INCOME. So if you are entitled to the foreign exclusion you are still liable for the additional surtax. Investment income will include interest, dividends, capital gains, annuities, royalties, and passive rental income. It does not include tax free interest or payrouts from retirement.
- The 7.5% limit on medical expenses increases to 10%
Beginning in 2014, individuals who have no health insurance will owe a penalty tax equal to the larger of $ 95 or 1% of income above the filing threshold. For families there is a cap of $285. In 2016, when fully implemented, the penalty is $,2,085.
If you have a business that has 50 or more full time employees but no health plan, the penalty is $2000 times the number of employees with a 30 employee offset. Best part…..the penalty tax is NOT DEDUCTIBLE.