The effects of the new healthcare law are different for individuals and business. We’ve compiled the following information for you and provided a succinct explanation of specific changes. This list is certainly not all-inclusive, so please contact our firm for more detail and to inquire how ObamaCare might affect your 2013 year taxes.

For Individuals:

  • An additional 0.9% Medicare tax applies to wages exceeding $250,000 for joint returns, $125,000 for married taxpayers filing separate returns, and $200,000 for all other filing categories (begins in 2013).
  • The additional 0.9% Medicare tax also applies to self-employment income in excess of the thresholds noted above. The deduction for 50% of self-employment taxes does not include this additional tax (begins in 2013).
  • The 3.8% surtax is probably the most significant change in 2013. The surtax applies to net investment income of individuals, estates, and trusts with modified adjustment gross income over $200,000 ($250,000 for married couples filing joint returns). Call our office for a detailed explanation of how this surtax might apply to you.
  • The 3.8% Medicare surtax also applies to trusts and estates that have net investment income in excess of certain threshold amounts unless the income is distributed to beneficiaries.
  • Investment income for 2013 for certain higher income taxpayers will increase as follows (unless Congress extends the Bush tax cuts):

    • Capital gains tax rate: 20% plus the new 3.8% = 23.8%
    • Dividends tax rate: 39% plus the new 3.8% = 43.4%.

For Business/Employers:

  • Starting in 2012, employers who filed at least 250 W-2’s in 2011 must report the cost of employer sponsored health coverage on 2012 W-2’s.
  • Starting in 2013, employers must withhold an additional 0.9% Medicare tax on an employee’s wages in excess of $200,000. No matching tax payment is required employers.

Again, if you have questions, please contact our office.