Obamacare and Your Taxes
The ACA raises taxes in dozens of ways, what do you get in return?
Two Categories:
Individual Mandate — Get an exemption, pay a per month fine, or obtain minimum essential health coverage by 2014.
Employer Mandate — By 2015, large employers must insure full time employees or pay a per employee fine.
Tax Changes for Everyone:
Premium Tax Credits
Checklist:
1.) Are you within %400 of the Federal Poverty Level?
Family Size/%100 FPL/%400 FPL
1/$11,490/$45,960
2/$15,510/$62,040
3/$19,530/$78,120
4/$23,550/$94,200
5/$27,570/$110,280
6/$31,590/$126,360
7/$35,610/$142,440
8/$39,630/$158,520
2.) Are you ineligible for:
Medicare, Medicaid, or the Children’s Health Insurance Program
3.) Are you ineligible for health insurance through:
An employer or government plan?
4.) Did you buy health insurance through the marketplace?
Either online, by mail, or in person
Then you can take your premium tax credit
(a) up front, effectively lowering monthly insurance payments
Or, (b) as a tax return
Individual Shared Responsibility Payments
Not getting insurance? Pay the fine.
Not getting insurance: $60,000 a year with two children.
2014: penalty = 1% of your income per uninsured person
(half per children)
2014: 1% of income, .5% per child:$1200 fine (600 for adult, 300 each for children)
Note: if 1% of your salary is <$95, you pay $95
2015:1% of income, .5% per child: $1200 fine (600 for adult, 300 for each child)
2016:2.5% of income, 1.25% per child: $3000 fine (1500 for adult, 750 for each child)
Note: if 2.5% of your income is less than $695, you pay $695
Medical Bill Deductions
Previously Deductible:
Medical expenses > 7.5% of Adjusted Gross Income
Currently Deductible:
Medical expenses > 10% of Adjusted Gross Income
For High Earners:
Medicare Tax Increase for High Earners
High earners:
Are you a high earner?
Married filing singly, >$125,000 a year
Married filing jointly, >$250,000 a year
Or any other filer, >$200,000 a year
(single, head of household, dependent)
???
–>
Then add the new .9% additional medicare tax
To amounts over the threshold (125,000/250,000/200,000)
–>
Sample Profiles:
Married filing singly: $150,000 a year
equals: .9% of $25,000
Or, $225 in new additional taxes
–>
Married filing jointly: $500,000 a year
equals: .9% of $250,000
Or, $2,250 in new additional taxes
–>
Any Other filer: $220,000 a year
equals: .9% of $20,000
Or, $180 in additional taxes
Increased Taxes on Investment Income
Do you have:
Capital Gains
Dividends
Sale of primary residence in excess (of $250,000 for singles, $500,000 for married)
Gain from sale of investment real estate
Gross income from trade or passive business
Income from financial instrument or commodities trades
Interest
Net gains from stock, bond, or mutual fund sales
Non-qualified annuities
Royalties or rental income
???
Threshold:
Married filing singly, >$125,000 a year
Married filing jointly, >$250,000 a year
Or any other filer, >$200,000 a year
(single, head of household, dependent)
medicare tax increase for high earners
Whichever is less:
Income over threshold
Or
Earnings from Above [investment income]
Is taxed by the new 3.8% Medicare Tax
–>
Married filing singly $160,000 wages
$25,000 stock sale income
$25,000 < $35,000 over threshold Tax equals 3.8% of $25,000 Or, $950 in new taxes –>
Married filing jointly $350,000 wages
$80,000 in royalties
$80,000 < $100,000 over threshold Tax equals 3.8% of $80,000 Or, $3,040 in new taxes –>
Head of household filer $205,000 wages
$5,000 rental property income
Tax equals 3.8% of $5,000
Or, $190 in new taxes
And for the real special folks:
40% excise tax on high end, premium health insurance plans
$500,000 limit on Annual Executive Compensation Limit for Health Insurance Executives
Not everyone’s affected, but with scores of new taxes attached to the ACA, make sure to plan ahead, and consult a tax professional.
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