Presentation on theme: "Expanded Medicare taxes and other changes make planning critical Presented by: > [Insert your logo here] Health care act TAX OVERVIEW – INDIVIDUALS."— Presentation transcript:
Expanded Medicare taxes and other changes make planning critical Presented by: > [Insert your logo here] Health care act TAX OVERVIEW – INDIVIDUALS
[Insert your logo here] 2 The agenda The health care act’s tax impact on individuals o Medicare tax increase on earned income Withholding issues Minimizing the additional tax o New Medicare tax on investment income Income subject to the NIIT Income exclusions Minimizing NIIT o Other changes: Increased threshold for medical expense deduction New FSA limit Individual mandate
Additional Medicare tax now applies to higher-income earners MEDICARE TAX – EARNED INCOME
Medicare tax increases FICA wages are subject to 2.9% Medicare tax o 1.45% paid by employer o 1.45% withheld from employee wages Self-employed pay both portions, but they can deduct employer portion for income tax purposes Starting in 2013, taxpayers with earned income over $200,000 per year must pay additional 0.9% Medicare tax on excess earnings o $250,000 for joint filers o $125,000 for married filing separately [Insert your logo here] 4
Withholding issues 0.9% Medicare tax doesn’t include a corresponding employer portion Employers must withhold additional tax o Beginning in pay period in which wages exceed $200,000 for calendar year without regard to: Employee’s filing status His or her income from other sources o Employer could be required to withhold additional tax even if you don’t owe it [Insert your logo here] 5 TIP: You can’t ask your employer to stop withholding the tax, but you can claim a credit for it on your tax return.