The Healthcare Act & New Taxes in 2013 (Part 1)
THE HEALTHCARE ACT AND NEW TAXES IN 2013
By: Don Thomas
The hot topic in the news today is the new Affordable Healthcare Act or some in the news media refer to it as “Obamacare” which is scheduled to go into effect in 2014. This legislation was originally signed on March 23, 2010 by President Obama and was called the Patient Protection and Affordable Healthcare Act.
An interesting bit of information is that the IRS is hiring 16,500 new IRS agents to work on the tax reporting and enforcement of the various taxes and penalties associated with this Healthcare Act.
Many of you are probably not aware that the Healthcare Act or Obamacare is expected to raise about $800 billion in new revenue over the next 10 years by increasing the following taxes and imposing penalties.
B. $111 Billion from a tax on insurers offering high cost “Cadillac Plans” starting in 2014.
D. $102 Billion from a fee on health insurance providers, starting in 2014.
F. $29 Billion from a 2.3% tax on manufacturers and importers of medical devises effective 2013.
H. There are other sources of income not listed in this report.
Are you aware that this Healthcare Act or Obamacare contains 20 new taxes or tax hikes starting in 2013? There are actually five new taxes that occur in 2013. Those five new taxes are listed below:
B. Net Investment Income Tax
D. Limit on Flexible Spending Accounts
So you may be wondering how does this affect me if I have this income level and how will it be reported to the IRS in 2013. This information will be shown in Box 5 on a year end W-2. There are 3 tiers for reporting your Box 5 Medicare Wages as shown below:
1. Tier 1 – From $0 to $113,700 is at 7.65% x employees earned income.
2. Tier 2 – From $113,700 to $200,000/$250,000 is at 1.45% x employees earned income.
3. Tier 3 – Above $200,000/$250,000 of earned income is at 2.35% x employees earned income.
Nevertheless they would still owe $450 (($175,000 + $125,000 – $250,000) x .9%) in Medicare surtax when they file their Form 1040 for 2013.
I will be discussing the additional 2013 and future taxes and penalties resulting from the Healthcare Act in my next blogs. Thanks.
(Information provided courtesy of Health Care Taxes By Hasselback)