In addition to the Medicaid Surcharge tax (which we will cover separately), below is a list of significant tax changes that will take place January 1st, 2013.
Medicare Payroll Tax Increase – The Medicare tax will increase .9%, from 1.45% to 2.35% on wages and self-employment income above $250,000 for married taxpayers filing jointly and above $200,000 for single taxpayers. For a married couple earning $300,000 in combined income, this will mean an additional $450 in Medicare taxes starting in 2013. There is no cap on this tax, so it applies to whatever amount you earn above the threshold. Beyond the threshold, employers will continue to pay at the 1.45% rate, but self-employed taxpayers will pay at a rate of 3.8%.
Medical Device Manufacturing Tax – This 2.3% tax will be levied on the gross sales of medical device makers (whether or not they make a profit), and will undoubtedly be passed on to consumers who buy their products.
High Medical Bills Tax – Currently, medical expenses that exceed 7.5% of your adjusted gross income are deductible on your Form 1040. On January 1, 2013, the threshold will increase from 7.5% to 10%, increasing the amount you will pay in taxes.
Flexible Spending Account Cap – Flexible Spending Accounts are pre-tax accounts that 24 million Americans use to pay for all kinds of family medical expenses, including tuition for children with special needs. Currently, these accounts have no federal limit, but beginning January 1, 2013, they will have a $2,500 annual cap.
If you have questions on how any of the pending tax law changes will impact your estate, please call us or e-mail Liz at email@example.com to schedule an appointment.