health care reform

Fast forward to next year and we are looking at a number of important tax increases on the horizon. The tax increases falls under the the Affordable Care Act (the Patient Protection and Affordable Care Act, P.L. 111-148, and the Health Care and Education Reconciliation Act of 2010, P.L. 111-152), and include higher Medicare taxes for high earners, a 3.8% surtax on unearned income of higher-income individuals and caps on FSA contributions. Companies also get to look forward to compliance issues, along with new health insurance deduction limitations and fees.

Increased Medicare tax for high-earning workers and self-employed taxpayers. For the tax year beginning after 2012, an additional 0.9% hospital insurance tax applies to wages and self employment income in excess of $250,000 for joint returns, $125,000 for married filing separately and $200,000 in all other cases.

Surtax on unearned income of higher-income individuals. Starting in 2013, an unearned income Medicare contribution tax is imposed on individuals, estates, and trusts. The tax is 3.8% of the lesser of either (1) net investment income or (2) the excess of modified adjusted gross income over the threshold amount ($250,000 for a […]