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 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

Married filing jointly $350,000 wages

$80,000 in royalties

$80,000

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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