The Health Care Reform Bill passed by Congress last year provides for many tax-related changes over the next decade. Here is a rundown (note: it is quite possible that part or all of the reform bill will be changed by the courts or by Congress, but this is a rundown of how things currently are):
- Effective after 2013, large employers are required to report to the IRS whether they offer “minimum essential health care coverage.”
- Starting in 2013, a new 3.8% Medicare tax is imposed on investment income of people whose income exceeds $200,000 ($250,000 for married couples). (See this related Dinesen Tax Times story relating to taxation of home sales.)
- Starting in 2013, the Medicare payroll tax on self-employed people will rise from 2.9% to 3.8% on self-employment income in excess of $200,000.
- Also in 2013, it will be even harder to deduct medical expenses as an itemized deduction — medical expenses will have to exceed 10% of income in order to be deductible. The current percentage is 7.5%. People age 65 and older can continue to use 7.5% for 2013-2016.
- Starting in 2014, taxpayers without health insurance will have an additional tax imposed equal to the greater of $285 or 1% of their household income over the filing threshold.
- And starting in 2017, a 45% excise tax will be imposed on certain health insurance plans where the cost of the insurance exceeds certain amounts. This tax will be imposed on the insurance company, not on individuals.
It is likely that some or all of these provisions will be changed or removed, but as of right now, these are the tax provisions that will be changing over the next few years.
Parts of this article were taken from the “EA Journal” published by the National Association of Enrolled Agents. Check out their website at www.naea.org.
“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”