Medical Withholding - Obamacare

[Nashville]

Now that it looks like Obamacare will be a reality, the questions will eventually come in droves. Our clients are already asking about them, especially the 3.8% tax on selling a home...

Here is mine (for today anyway):

There is a 9.5% ceiling on employee contributions for medical insurance based on income.

Assume Briggs makes $400/wk in gross pay. He is covered by his employer's medical plan. If applicable, his wife has a part-time job making $200/wk and also receives $100/wk in child support from her ex-husbank. Which of the following are true?

1) The most his employer can make him contribute is $38/wk. (9.5% of $400)
2) His employer can make him contribute $57/wk. (9.5% of $600 total family taxable income)
3) His employer can make him contribute $66.50/wk (9.5% of $700 total family income, taxable or not)

[Jiggers]

Now that it looks like Obamacare will be a reality, the questions will eventually come in droves. Our clients are already asking about them, especially the 3.8% tax on selling a home...

Here is mine (for today anyway):

There is a 9.5% ceiling on employee contributions for medical insurance based on income.

Assume Briggs makes $400/wk in gross pay. He is covered by his employer's medical plan. If applicable, his wife has a part-time job making $200/wk and also receives $100/wk in child support from her ex-husbank. Which of the following are true?

1) The most his employer can make him contribute is $38/wk. (9.5% of $400)
2) His employer can make him contribute $57/wk. (9.5% of $600 total family taxable income)
3) His employer can make him contribute $66.50/wk (9.5% of $700 total family income, taxable or not)

Geeeeeeeeeesh!
I think it is time for me to retire! I have enough to do without this added feature to tax preparation.

[DaveO]

Most everytime I talk to someone in the IRS I ask them if they are going to get paid more to be health insurance cops along with everything else. Their usual repsonse indicates to me they are no more excited about this than we are.

[JohnH]

I've been asked a couple of times about the 3.8%. I told them to get back to me when they get ready to put their house on the market and we'll run the numbers at that time (whatever they may be). Until then, no need to think about it since it has no more effect on them than a luxury tax on airplanes or yachts.

[joanmcq]

Yes, since it's only on gains and only if your income is over $200/250,000.

Tons of misinformation being spread about this one.

I have no idea how the employers are supposed to figure out how much they can charge for health insurance. If we had a single payer system, it would be easy. The Canadians have a form on their tax returns and pay through the tax filing based on income.

[JoshinNC]

Your original question is too simple

The percentage that the employee is allowed to be responsible for is a function of the employee's family's total income as a ratio of a multiple of the Federal poverty level for the employee's family size. The employer really has no way to know until after the end of the year if they are even going to be liable for a penalty (assuming they have more than 50 ee's) because they have to wait until the employee tells them how much their family income was, what their family size was and then the employer has to calculate how much the employee paid toward his family's coverage.

FUBAR!!

[Snaggletooth]

Question IS too simple!

Josh, the question IS too simple! Because the answer is not easy, and although defined in the Obamacare
bill, it falls apart when you put the pencil to it.

What is being asked is to put yourself in the shoes of the employer January 1. As I see it, the employer does not have the option of telling the govt "We don't know" or "You haven't told us what to do" or "this is too simple."

We are going to get real questions like this from real clients. It would be nice if we could dismiss it and say "We don't know" but we really don't.

[Bees Knees]

I hate to keep beating a dead horse, but I think it is time to get serious about raising our fees.

BTW, for those who remember that I was going to send a letter to all my clients last December telling them my fees were going up 25% across the board for everyone due to the increased regulation on tax preparers, I lost maybe 2 clients at the most.

How much more regulation needs to be piled on top of us before everyone gets the point tax preparers do not charge enough for their services?

[FEDUKE404]

Not a current issue

re: "the 3.8% tax on selling a home..."

In reality there is no such thing, certainly not in that context. After all the dust has settled, i.e. the taxable "profit" on the home sale is properly determined and other high level investment income is considered, then some exposure to the 3.8% tax might occur.

There are way too many "send this to all your friends!" emails related to this potential tax out there, and the associated scare tactics are not worthy of my time to counter.

This is only August, with an undecided Presidential election staring us in the face, and quite frankly no one at this time should make much more than a good guess as to speculating whatever the tax rules will be for 2013 and beyond.

FE

[AZ-Tax]

Raising fees

I hate to keep beating a dead horse, but I think it is time to get serious about raising our fees.
BTW, for those who remember that I was going to send a letter to all my clients last December telling them my fees were going up 25% across the board for everyone due to the increased regulation on tax preparers, I lost maybe 2 clients at the most.
How much more regulation needs to be piled on top of us before everyone gets the point tax preparers do not charge enough for their services?

I came across this competitor of mine that is about 15 miles from me. First CPA then added EA. Based on her fees, I need to raise mine.

https://www.shoecpa.com/services__fees

[JoshinNC]

Pretty in line with ours

I came across this competitor of mine that is about 15 miles from me. First CPA then added EA. Based on her fees, I need to raise mine.

www.shoecpa.com/services__fees

Looks good to me

[JoshinNC]

Agree Snag, we can't "bury our heads"

Josh, the question IS too simple! Because the answer is not easy, and although defined in the Obamacare
bill, it falls apart when you put the pencil to it.

What is being asked is to put yourself in the shoes of the employer January 1. As I see it, the employer does not have the option of telling the govt "We don't know" or "You haven't told us what to do" or "this is too simple."

We are going to get real questions like this from real clients. It would be nice if we could dismiss it and say "We don't know" but we really don't.

Employers are getting ready to become healthcare police and most don't even know it yet. And, when the individual penalties kick in along with Bees' recommended fee increases the electorate is going to wonder exactly what their "leaders" have signed them up for.

Plan your escape route carefully folks, the path could get crowded!

[veritas]

They do indeed

Yes, since it's only on gains and only if your income is over $200/250,000.

Tons of misinformation being spread about this one.

I have no idea how the employers are supposed to figure out how much they can charge for health insurance. If we had a single payer system, it would be easy. The Canadians have a form on their tax returns and pay through the tax filing based on income.

So does much of Europe and even Israel!

Wonder what would happen if we charged them for paying for most of their defense bills since WW2? I'll bet their single pay would go to no pay pretty quick.