• Turner's Tax Service
  • Contact Us
  • Directions
  • Recent Tax Updates
  • Fees and Policies
  • Forms

UPDATE ON THE AFFORDABLE CARE ACT

9/24/2013

0 Comments

 
In March 2010, President Obama signed the Patient Protection and Affordable Care Act (otherwise known as the Affordable Care Act or Obamacare) into law.  While some provisions of the ACA have already gone into effect, a number of new provisions are scheduled to take effect January 1, 2014 so I thought this would be a good time to look at some the of the provisions that might affect you.

Most Americans who can afford coverage will be required to purchase health insurance or pay a tax penalty that starts at $95 ($285 per family) or up to 1% of income, whichever is greater.

Up to 17 million Americans under age 65 could be eligible for Medicaid.  States that choose to expand their program will receive federal financial aid for the increased payment rates.  California will expand its program.

Depending on which state you live in, you will have access to a Health Insurance Marketplace(formerly called an exchange) administered by your state or by the federal government acting for
your state.  California's marketplace, Covered California, is scheduled to open on October 1st.  You'll be able to shop for coverage by phone or online.  Covered California's website -
www.coveredca.com - is already up and running and has lots of detailed information about how the program will work.  Other states have similar websites and there is also information available at the IRS website - www.irs.gov/aca.

Four different options, called Metal Plans (Bronze, Silver, Gold and Platinum) will be offered through the Marketplaces.  Subsidies and tax credits will be available based on age, income and geographic location.

Starting in 2014, the law makes it illegal for any health insurance plan to use pre-existing conditions to exclude, limit or set unrealistic premium rates on coverage for adults.  The requirement to cover children under age 19 for pre-existing conditions began in 2010.

The provision that required employers with 50 or more workers to provide health care
coverage or face fines has been postponed until 2015.  This action was taken to allow payroll companies and providers of payroll software adequate time to modify systems in order to provide information required by the
ACA.

More and more information will become
available about the details of the ACA once the Marketplaces open and I will
post updates as I become aware of them. 
0 Comments

TWO NEW MEDICARE TAXES FOR 2013

9/9/2013

0 Comments

 
Two new Medicare taxes on high income taxpayers were included in the Affordable Care Act enacted in 2010, but didn't go into effect until January 1, 2013 - a 3.8% surtax on investment income and a 0.9% surtax on earned income.  

The 3.8% tax on net investment income will be imposed on the lesser of your net investment income or the amount by which you income exceeds the "threshold amount" for the year.  For 2013 the threshold for married filing jointly is $250,000, $125,000 if you are married filing separately, and $200,000 for everyone else.

Although the IRS issued more than 100 pages of regulations to define "net investment income" the term basically includes interest, dividends, annuities, rents, royalties and capital gains.  Interest on tax-exempt bonds and distributions from qualified retirement plans are not included and any gain excludable from income on the sale of your primary residence is not included.

This new tax makes it even more important than ever to discuss the tax implications of major changes to your investment plans with me before taking action so that you are not surprised by an unexpected tax bill come April 15th.

The 0.9% tax on earned income applies to wages and self-employment income.  The income thresholds are the same as the tax on net investment income - $250,000 for couples filing jointly, $125,000 for married but filing separately and $200,000 for other filers.  The surtax applies only to the employee's portion of the Medicare tax.  There is no increase to the employer-paid portion, but employers are required to withhold the surtax once  an employee's wages exceed $200,000 in a calendar year.

Caution - If filing jointly, each spouse could earn less than the $200,000 threshold and have no extra withholding on their wages during the year but have combined wages of more than $250,000 on their tax return and have to pay the surtax at tax time.  On the other hand, if one spouse's wages are over $200,000 and the additional tax is withheld by their employer but combined income is less than $250,000 the extra surtax will come back as a credit on their tax return.

If you have questions about whether the 0.9% surtax will apply to you, please give me a call.

0 Comments

     

    Federal and state tax laws and regulations change regularly.  As we become aware of changes, we will post them here and, if you are a client who has provided us with an email address, we will also email them to you.

    Archives

    January 2025
    June 2023
    December 2022
    July 2021
    January 2021
    December 2020
    April 2020
    March 2020
    October 2019
    January 2019
    November 2018
    June 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    July 2017
    May 2017
    April 2017
    January 2016
    June 2015
    May 2015
    July 2014
    March 2014
    December 2013
    November 2013
    October 2013
    September 2013
    February 2013
    January 2013
    August 2012
    January 2012
    June 2011
    August 2010
    January 2010
    September 2009

    Categories

    All

    RSS Feed

Proudly powered by Weebly