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Planning for the new Medicare taxes in 2013

As summer quickly passes and we head into the last half of 2013, it is a good time to evaluate your income and deductions for the year and begin working with your CPA on planning strategies to reduce your overall tax burden.

Specifically, upper income individuals should be aware of the additional Medicare Tax which applies to earned income (wages and self-employment income). Prior to this new tax provision beginning in 2013, any wages paid to you by your employer were subject to a 2.9% Medicare payroll tax, which was split equally by you and your employer (1.45% each). Beginning in 2013, wages above $200,000 for individual tax filers, or $250,000 for married taxpayers filing jointly, will be subject to an additional .9% Medicare tax.

For illustrative purposes, this would mean that if you and your spouse file a joint tax return and have combined wages of $350,000, you will end up paying an additional $900 in Medicare taxes. Employers are required to withhold this additional tax for employees with wages in excess of $200,000, and any underpaid or overpaid Medicare taxes will be adjusted for on your income tax return. Individuals with both wages and self-employment income aggregate their earned […]

By Linkenheimer LLP|2020-09-03T20:05:50+00:00July 26th, 2013|2013, 3.8, best, carli ortiz, CPA, Linkenheimer, medicare, planning, Santa Rosa, strategy, tax, upper income|0 Comments

Obama Administration Postpones Large Employer Health Care Mandate Until 2015

The requirement that businesses provide their workers with health insurance or face fines – a key provision contained in President Obama’s sweeping health care law – will be delayed by one year, the Treasury Department said Tuesday.

The postponement came after business owners expressed concerns about the complexity of the law’s reporting requirements and some viewed it to be a potential job killer in an already struggling economy. Under the Affordable Care Act, businesses employing 50 or more full-time workers that don’t provide them health insurance will be penalized. The extra year before the requirements go into effect will allow the government more time to assess ways to simplify the reporting process for businesses.

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By Linkenheimer LLP|2013-07-03T21:53:00+00:00July 3rd, 2013|2015, affordable care act, CPA, Health care, law, Linkenheimer, mandate, obamacare, postpone, Santa Rosa|0 Comments

Beware of the 3.8% Medicare Surtax for Estates and Trusts

Ever since the United States Supreme Court upheld the Affordable Care Act, most of the focus has been on how this increased tax effects individual taxpayers. As determined by this decision, individual taxpayers with modified adjusted gross income over $200,000 (or $250,000 for married taxpayers) are subject to an increased 3.8% Medicare surtax on certain investment income beginning in 2013.

Little focus has been given on how this increased Medicare surtax will increase tax liabilities for trusts and estates. Income in an irrevocable trust is either taxed to the trust or to the trust beneficiaries. If income in the trust or estate is accumulated at the trust or estate level, then the trust or estate pays the income tax. If the income is distributed to the beneficiaries, however, the trust receives an income tax deduction for the amount of the distributable net income (DNI) and the beneficiaries report the taxable income.

In the case of a trust or estate, the 3.8% Medicare surcharge is imposed on the lesser of either undistributed net investment income or the excess of adjusted gross income over the highest estate or trust income tax bracket. For 2013, the highest trust income tax bracket begins at $11,950, […]

By Linkenheimer LLP|2020-09-03T20:05:51+00:00June 3rd, 2013|3.8, affordable care act, carli ortiz, CPA, estate, Linkenheimer, medicare, Santa Rosa, surtax, tax, taxable income, trust|0 Comments

Increase in the Small Business Tax Credit

Under the Affordable Care Act (ACA), some small businesses may qualify for a small business tax credit. To be eligible, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have 24 or fewer full-time equivalent employees and those employees must have average wages of less than $50,000 per year. In 2014, the tax credit goes up to 50 percent and will be available to qualified small businesses that purchase coverage through the new health insurance marketplaces in each state, called the Small Business Health Options Program (SHOP).

The SHOP marketplace will be open in October of 2013 for coverage that takes effect on January 1, 2014, or later.

For more info, click here.

Written by Mike Musson, CPA, Partner LinkedIn Profile

By Linkenheimer LLP|2020-09-03T20:05:51+00:00May 7th, 2013|affordable care act, CPA, linkenehiemer, mike musson, qualified small business, Santa Rosa, shop, single family, small business, small business health options, tax credit|0 Comments

Tax Time: What You Need to Know

Every year the tax codes change and last year was no different. The real questions, as we close in on April 15th, are: What are the significant changes that will have an effect on how I prepare my returns for 2012; and, what planning should I be doing now for the current calendar year.

The biggest news, which we’re hoping our clients have heard about at this point, is the passage of the American Taxpayer Relief Act at the beginning of this year. In addition to changing how the Alternative Minimum Tax is calculated on 2012 taxes, it retained the status quo for a number of temporary tax breaks, extending some retroactively and others into the 2013 tax year. Marginal tax brackets also rose a bit, so even if you made a couple thousand dollars more last year, you’ll probably owe the same percentage as you did last year.

Deductions for 2012
The standard deduction for those who don’t itemize rose by $150 for single filers and $300 for joint filers — to $5,950 if you’re filing solo and $11,900 if you’re filing with your spouse. And the amount you get to deduct for both you and your dependents […]

By Linkenheimer LLP|2020-09-03T20:05:52+00:00March 27th, 2013|adoption credit, alternative minimum tax, american, amt, CPA, deduction, Linkenheimer, Santa Rosa, tax, tax codes, tax time, taxpayer relief act|1 Comment