I am getting sick of all the bogus emails that are being spread around about the tax laws in the new Health Care Reform. People keep sending me this stuff and I have to keep answer them.
For those who are also receiving these, here is the answers that I am giving:
Bogus email #1 says:
Answer: False, there is no sales tax under the new law.
There is a new 3.8% Medicare tax on investment income when a single taxpayer’s income exceeds $200,000, or a married couple’s income filing jointly exceeds $250,000. Investment income includes the sale of real estate. However, the 3.8% tax applies to the net gain from the sale of investment real estate, not the gross sale, as implied in the email. Thus, if the taxpayer has a cost basis of $300,000 in that $400,000 sale, the 3.8% applies to the $100,000 gain, not the $400,000 sale price.
Also, the 3.8% tax only applies to TAXABLE gains. Non-taxable income is not subject to the 3.8% tax. If the real estate is the sale of your principal residence, as implied in the email, up to $250,000 of gain for a single person, or $500,000 of gain for a married couple is excluded from income. Thus, if that $400,000 sale of your home has been your principal residence for at least 2 out of the last 5 years, you are married, and you only paid $10,000 for the house 40 years ago, the $390,000 gain is not subject to any tax, even if your other income is high enough to be subject to the 3.8% Medicare tax.
Bogus email #2 says:
Answer: False, the law quoted says nothing about including health insurance benefits in taxable income on the W-2.
The requirement to report the health benefits on the W-2 is for information purposes, similar to the way non-taxable 401(k) contributions are required to be reported. The law does NOT require the benefits to be included in income. Section 105 and 106 of the Internal Revenue Code exclude employer provided health benefits from an employee’s income. The new Health Care Reform law did not amend these code sections.
For those who are also receiving these, here is the answers that I am giving:
Bogus email #1 says:
Under the new health care bill - did you know that all real estate transactions are now subject to a 3.8% Sales Tax? The bulk of these new taxes don't kick in until 2013 (presumably after Obamas re-election). If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes.
There is a new 3.8% Medicare tax on investment income when a single taxpayer’s income exceeds $200,000, or a married couple’s income filing jointly exceeds $250,000. Investment income includes the sale of real estate. However, the 3.8% tax applies to the net gain from the sale of investment real estate, not the gross sale, as implied in the email. Thus, if the taxpayer has a cost basis of $300,000 in that $400,000 sale, the 3.8% applies to the $100,000 gain, not the $400,000 sale price.
Also, the 3.8% tax only applies to TAXABLE gains. Non-taxable income is not subject to the 3.8% tax. If the real estate is the sale of your principal residence, as implied in the email, up to $250,000 of gain for a single person, or $500,000 of gain for a married couple is excluded from income. Thus, if that $400,000 sale of your home has been your principal residence for at least 2 out of the last 5 years, you are married, and you only paid $10,000 for the house 40 years ago, the $390,000 gain is not subject to any tax, even if your other income is high enough to be subject to the 3.8% Medicare tax.
Bogus email #2 says:
Should you want to verify this, go to http://www.thomas.gov/, enter "HR 3590" in the search box, highlight "Bill Number" and look for "CRS Summaries." This is what you'll find.
Title IX Revenue Provisions-Subtitle A: Revenue Offset "(Sec. 9002) Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee's gross income (excluding the value of contributions to flexible spending arrangements)."
Starting in 2011-next year-the W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are provided.
It doesn't matter if you're retired. Your gross income WILL go up by the amount of insurance your employer paid for. So you'll be required to pay taxes on a larger sum of money that you actually received. Take the tax form you just finished for 2009 and see what $15,000.00 or $20,000.00 additional gross income does to your tax debt. That's what you'll pay next year.
For many it puts you into a much higher bracket. This is how the government is going to buy insurance for fifteen (15) percent that don't have insurance and it's only part of the tax increases, but it's not really a "tax increase" as such, it a redefinition of your taxable income.
Title IX Revenue Provisions-Subtitle A: Revenue Offset "(Sec. 9002) Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee's gross income (excluding the value of contributions to flexible spending arrangements)."
Starting in 2011-next year-the W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are provided.
It doesn't matter if you're retired. Your gross income WILL go up by the amount of insurance your employer paid for. So you'll be required to pay taxes on a larger sum of money that you actually received. Take the tax form you just finished for 2009 and see what $15,000.00 or $20,000.00 additional gross income does to your tax debt. That's what you'll pay next year.
For many it puts you into a much higher bracket. This is how the government is going to buy insurance for fifteen (15) percent that don't have insurance and it's only part of the tax increases, but it's not really a "tax increase" as such, it a redefinition of your taxable income.
The requirement to report the health benefits on the W-2 is for information purposes, similar to the way non-taxable 401(k) contributions are required to be reported. The law does NOT require the benefits to be included in income. Section 105 and 106 of the Internal Revenue Code exclude employer provided health benefits from an employee’s income. The new Health Care Reform law did not amend these code sections.
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