With the Supreme Court’s recent decision to uphold the Affordable Care Act many Americans are wondering what tax implications this has on their own accounts. Most of the changes only occur to those making over $200000 a year ($250000 if married and filing jointly). However everyone who pays taxes is sure to see some adjustments to their taxes. How severe the added expenses are to individuals is up to a variety of factors.
For starters the most significant tax implication is a tax penalty for not obtaining health insurance by the year 2014. A government-provided insurance or a private insurance policy are both acceptable but without coverage an individual will receive the tax hit on their personal income.
Deducting medical expenses as an itemized deduction is increasing starting in the year 2013. The percentage of one’s total income is now increasing from 7.5 percent to 10 percent. Along with this the penalty for withdrawing funds from a health savings account is increasing to 20 percent as it attempts to push individuals away from making such a deduction.
For individuals making over $200000 ($250000 for married filing jointly) there’s an additional .9 percent Medicare hospital insurance tax starting in the year 2013 and another 3.8 percent of Medicare hospital insurance tax on investment income.
There are some perks for tax implications on the new health bill. One option is a business tax credit of up to 28 percent of the covered drug costs for employees when the business provides health plans for prescription drug coverage. There’s also an increase in a tax credit for small businesses ranging from 25 to 50 percent when providing health insurance coverage to employees effective starting in the year 2010 and lasting through 2015.
We’re sure to see more changes take place before all said and done. If you’re curious about how the Affordable Care Act will affect your taxes specifically contact Lindemeyer and schedule a first consultation.