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Tax Changes for 2013...Obama Care... - Hytrek & Associates

Tax Changes for 2013…Obama Care…

Major Tax Changes Coming in 2013

Lonny Hytrek's Takeaway of Obama Care Tax Implications and Changes

Obama Care Year 2013 Changes

  • Medicare tax, employee portion is increased to 2.35% for the following:
    • MFJ in excess of $250,000
    • MFS in excess of $125,000
    • Single in excess of $200,000
    • Also applies to self-employed persons
  • New 3.8% Medicare tax on net investment income:
    • MFJ in excess of $250,000
    • MFS in excess of $125,000
    • Single in excess of $200,000
    • Also applies to Trusts and Estates
    • Applies to net investment income-interest, dividends, annuities, royalties, rent, income from passive activities, and capital gains.
  • Employee portion of FICA increases to 6.2%
  • Flexible Spending Account Limit, employee portion cannot exceed $2,500.
  • Medical expense deduction will be limited to amounts in excess of 10% previous amount was 7.5%.  Persons over 65 not applicable until 2017.
  • Medical devices will have a new 2.3% excise tax.

Obama Care Year 2014 Changes

  • Requires most Americans to maintain minimum essential health coverage.
    • Penalty for failure to purchase insurance is assessed as part of income tax return.
    • Greater of:
      • Flat dollar amount $95 (2014), $325 (2015), $625 (2016 and after)
      • Percentage of household income less standard deduction and exemptions. 1% (2014), 2% (2015) and 2.5% (2016 and after).
    • If not paid IRS can file liens or levies to collect.
    • There are exceptions and exemptions, review these at IRS.gov
  • Minimum essential coverage:
    • Government sponsored program.
    • Employer sponsored plan.
    • Plan offered in the individual market within a state exchange.
    • Grandfathered health plan.
  •  Premium Assistance Credit:
    • Provide a tax credit to subsidize the cost of health coverage from an exchange.  See IRS.gov for details.
  •  Excise tax on large employers “Pay or Play Mandate”:
    • If large employer does not provide health insurance there is a penalty.
    • Large employer is one who has more than 30 FTE’s.
    • An FTE is an employee who works an average of at least 30 hours a week.
    • The penalty is $2,000 per employee and is indexed after 2014.
    • The rules are very complex and should be researched early.

Cadillac Plans

  • Starting 2018 high cost plans will have an excise tax assessed.
  • Tax is 40% of the excess premium exceeds $10,200 for individual or $27,500 for family coverage.
  • There are several adjustments etc. to this computation.

Other Tax Changes

  • Income tax rate changes:
Old Bracket New Bracket
10% 28%
15% 31%
25% 36%
28% 39.6%
33%  
35%  
  • Long-term capital gains:              

2012 maximum rate 15%

2013 Maximum rate  20%

  • Dividend income:

2012 maximum rate 15%

2013 Taxes as ordinary income possible maximum rate 43.4%

  • Bonus depreciation expires 12-31-12
  • Section 179 expense decreases from $139,000 to $25,000.
  • Phase-out reduced to $200,000.
  • Estate and gift tax:
    • Essentially goes back to old rules.
    • Estate planning will be extremely important.
    • Gifting in 2012 may be critical.

 

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4 thoughts on “Tax Changes for 2013…Obama Care…”

  1. I don’t know how true this is but with the new Obama care plan I have heard that I will no longer be allowed to work more than 29 hours a week unless I maintain health insurance through my job. Now, during summer and winter break from college I can maintain a minimal amount of hours that are required to be eligible for health insurance, but during school months I can not. I’m a single mom, and pissed off. I can barely afford my bills as it is, I need to work extra hours during breaks from school to be able to maintain my bills while I’m in school, because obviously I can not work as many hours. As if I wasn’t stressed out enough already, I’m beyond stressing out at this point. It’s not fair or right to implement a law saying I must obtain health insurance from my work place in order to work more hours, especially when like I said, I am unable to maintain the amount of hours necessary to be eligible for health insurance. This is complete garbage if it is true, how an I suppoSed to support myself, my daughter, and go to school? Thanks Mr. Obama, you’re doing a FANTASTIC job. Not!

    1. Obama care set an arbitrary limit of 30 hours per week to define a full-time employee. Many employers will be reducing their employees hours below 30 to avoid being considered full-time. This will not necessarily save the employer from the penalty. What I am worried about is employers laying off employees trying to make up for the penalties they will be charged. I share your frustration and encourage you to contact your elected representatives and tell them to change the law.

  2. I don’t know how true this is but with the new Obama care plan I have heard that I will no longer be allowed to work more than 29 hours a week unless I maintain health insurance through my job. Now, during summer and winter break from college I can maintain a minimal amount of hours that are required to be eligible for health insurance, but during school months I can not. I’m a single mom, and pissed off. I can barely afford my bills as it is, I need to work extra hours during breaks from school to be able to maintain my bills while I’m in school, because obviously I can not work as many hours. As if I wasn’t stressed out enough already, I’m beyond stressing out at this point. It’s not fair or right to implement a law saying I must obtain health insurance from my work place in order to work more hours, especially when like I said, I am unable to maintain the amount of hours necessary to be eligible for health insurance. This is complete garbage if it is true, how an I suppoSed to support myself, my daughter, and go to school? Thanks Mr. Obama, you’re doing a FANTASTIC job. Not!

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