Major Tax Changes Coming in 2013
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.
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!
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.
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!