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Understand how the Health Care Act impacts your taxes, including Medicare tax increases and withholding guidelines. Learn strategies to minimize the additional tax burden and explore key changes affecting individuals. Stay informed to plan effectively for the future.
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Health care actTAX OVERVIEW – INDIVIDUALS Expanded Medicare taxes and other changes make planning critical Presented by: <<Company Name>> [Insert your logo here]
The agenda • The health care act’s tax impact on individuals • Medicare tax increase on earned income • Withholding issues • Minimizing the additional tax • New Medicare tax on investment income • Income subject to the NIIT • Income exclusions • Minimizing NIIT • Other changes: • Increased threshold for medical expense deduction • New FSA limit • Individual mandate [Insert your logo here]
MEDICARE TAX – EARNED INCOME Additional Medicare tax now applies to higher-income earners
Medicare tax increases • FICA wages are subject to 2.9% Medicare tax • 1.45% paid by employer • 1.45% withheld from employee wages • Self-employed pay both portions, but they can deduct employer portion for income tax purposes • Starting in 2013, taxpayers with earned income over $200,000 per year must pay additional 0.9% Medicare tax on excess earnings • $250,000 for joint filers • $125,000 for married filing separately [Insert your logo here]
Withholding issues • 0.9% Medicare tax doesn’t include acorrespondingemployer portion • Employers must withhold additional tax • Beginning in pay period in which wages exceed $200,000 for calendar year without regard to: • Employee’s filing status • His or her income from other sources • Employer could be required to withhold additional tax even if you don’t owe it TIP: You can’t ask your employer to stop withholding the tax, but you can claim a credit for it on your tax return. [Insert your logo here]
