FAQ: Taxes

Q: I understand the health-care reform law incorporates some new taxes. Will I be impacted by any of these taxes?

A: You might be. There are a number of tax provisions that apply to individuals and small businesses. Here is a brief description of those provisions:

• Health saving account penalty tax--The tax on distributions from health savings accounts and Archer medical savings accounts increases to 20% beginning in 2011.
• Medicare tax on wages--Starting in 2013, individuals with incomes over $200,000, joint taxpayers with incomes exceeding $250,000, and joint taxpayers filing separately with incomes above $125,000 will pay an additional 0.9% tax (for Part A hospital coverage) on wages exceeding these income thresholds. Self-employed individuals are also subject to the same tax increase based on the same thresholds, except that the applicable threshold amount is reduced by the taxpayer's wages.
• Medicare tax on unearned income--Beginning in 2013, a tax of 3.8% is applied to net investment income for individuals, estates, and trusts. For individuals and joint filers, the taxapplies to some or all of the taxpayer's unearned income based on the amount of modified adjusted gross income that exceeds the same thresholds used to calculate the Medicaretax on wages. There is a different standard for calculation of the tax for estates and trusts.
• Increase in threshold for itemized deduction for medical expenses--Also starting in 2013, the threshold for itemized deduction of unreimbursed medical expenses increases from 7.5% to 10% of adjusted gross income (remains at 7.5% until 2017 for taxpayers age 65 and older).
• Individual insurance mandate tax--A tax applied to individuals who don't have qualified health insurance and are not otherwise exempted, starting in 2014. The minimum tax ranges from $95 in 2014 up to $695 in 2016, and is adjusted for inflation thereafter.
• Employer insurance mandate tax--Also beginning in 2014, employers with more than 50 equivalent full-time employees may be subject to an excise tax if the employer fails to provide qualified health insurance coverage to its employees, or offers coverage that's deemed unaffordable, or offers a plan that covers less than 60% of the cost of plan benefits, and there's at least one employee who is eligible to buy insurance through an Exchange and receive a tax credit or cost-sharing reduction.
  
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  Questions? Call Dwayne at (866) 513-2099!
  
  
  Dwayne Adams, CFP(tm),RFC,CWI
  President
  Adams Wealth Management Group
  (937) 433-6500 (Hqtr's)
  (740) 353-7500 (Portsmouth)
  (740) 289-3500 (Piketon)
  (866) 513-2099 (Toll Free)
  Fax (937) 433-4139
  E-Mail:    dadams@adamswealth.com
  Web Page:   http://www.adamswealth.com
  
  
  
  
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