Info on tax changes in 2013 under the affordable care act (jk lasser ltr aug 2012)

[Edward]

1. ADDITIONAL MEDICARE TAX (0.9% - on top of basic M/Care tax you are already paying); AND IT'S BASED ON EARNINGS, REPEAT EARNINGS (NOT AGI), above the following threshold:

$250,000 for MFJ - $200,000 for SINGLE AND $125,000 FOR MFS

EMPLOYERS must withhold the additional M/Care Tax once wages (including tips, bonuses, and other taxable compensation) exceed the applicable threshold.

2. ADDITIONAL MEDICARE TAX (3.8%) ON UNEARNED INCOME: The tax applies to the lesser of NET INVESTMENT INCOME OR MODIFIED AGI exceeding the applicable limits as shown in para 1 above.

INVESTMENT INCOME includes taxable interest, dividends, annuities, rents and royalties, capital gains, and passive income from partnerships and S Corporations. A HOMEOWNER who sells his or her principal RESIDENCE has INVESTMENT INCOME for purposes of the additional M/Care tax ONLY to the extent that gain exceeds the applicable home sale exclusion (usually $250,000 for singles and $500,000 for MFJ.

3. Certain types of income are excluded from the INVESTMENT INCOME category: distributions from IRAS and qualified retirement plans, income from partnerships and S Corporations in which you materially participate, tax exempt interest, and nontaxable veterans benefits.

ADDITIONAL ITEM (not part of the Affordable Care Act): 'ITEMIZED MEDICAL DEDUCTION FLOOR: The current floor for claiming an itemized medical deduction for out-of-pocket medical costs is 7.5%. This will rise to 10% in 2013. Hoswever, THOSE AGE 65 AND OLDER can continue to use the old floor (7.5%) until 2017.

[FEDUKE404]

However...

While your information is correct, I would not bet much more than a stale peanut butter sandwich that these "changes" will actually take effect in 2013 and beyond.

With a pending lame duck Congress, and a potential change in the White House, just about anything can happen between now and the filing season for 2012 income taxes.

Quite frankly, I see a rerun of the "if you have form X your tax return cannot be processed by the IRS until date Y" scenarios.

FE

[ChEAr$]

1. ADDITIONAL MEDICARE TAX (0.9% - on top of basic M/Care tax you are already paying); AND IT'S BASED ON EARNINGS, REPEAT EARNINGS (NOT AGI), above the following threshold:

$250,000 for MFJ - $200,000 for SINGLE AND $125,000 FOR MFS

EMPLOYERS must withhold the additional M/Care Tax once wages (including tips, bonuses, and other taxable compensation) exceed the applicable threshold.

W4 forms (at present) have only two stati on them: single or married. How would employer know employee will be claiming MFS?

[Burke]

They won't. What is going to happen, however, is that the employer must WITHHOLD from anyone's individual wages once the threshold of $200K is met with that employer, regardless of marital status indicated on the W-4. So if a husband makes in excess of $200K, he will have addl medicare tax withheld. If his spouse makes $100K, she will not have addl tax withheld. If neither spouse makes over $200K individually, no tax will be withheld. But they very well may be subject to the tax. And there will be the inevitable situation where someone changes jobs during the year, and may not meet the threshold with the 2nd employer, even though he may have with the first.