Wondering how or if Obamacare will affect your taxes? Here is an introduction to some of the changes you can expect to see:
The New Surtax
As of January 1 there have been two tax increases for Medicare. The first is a 3.8% surtax on net investment income. Here is who it will affect:
Single taxpayers whose income exceeds $200000.
Married couples filing jointly who earn more than $250000.
Married spouses filing separately who earn more than $125000.
Head of the household (with qualifying person) who earned more than $200000.
Qualifying widow(er) with dependent child who earned more than $200000.
The surtax applies to the net investment income once total income rises above these thresholds. The surtax will be imposed on the lesser of the excess of your modified adjusted gross income over the thresholds or your net investment income.
The New Payroll Tax
Also effective January 1 was an increase to the payroll tax for high-wage earners. Previously Medicare tax was withheld at a rate of 1.45% on all income. If an earner now exceeds one of the thresholds mentioned above they will have to pay an additional 0.9% or a total of 2.35% (1.45% + 0.9%) on the excess income.
Stay tuned to future blogs as we’ll be providing more in-depth explanations about how your taxes might be affected by Obamacare.