Sunday, July 1, 2012
As I have previously discussed, the Supreme Court of the United States upheld the Affordable Care Act on June 28. Now, that the Court has upheld President Obama's historic law, there are several changes in tax law that a person might want take into consideration.
- First, the Medicare tax salary will increase in the coming year. If a person is single and has an income above $200,000, or is a couple that files a married joint couple and has an income above $250,000 ($125,000 for separate filing) then an additional .9% tax will be added to the 2.9% tax. This is assuming that a person is self-employed; otherwise, the additional .9% will be added to 1.45% tax.
- Second, the Capital Gains Tax will increase to 20% from 15%. The maximum tax rate for dividends is set to increase to about 40% from 15%. Additionally, as I just discussed, the law will impose a 3.8% Medicare tax on taxpayers, but only if the taxpayer AGI exceeds $200,000 for single filers and $250,000 for a married joint filers ($125,000 for separate filers).
- Third, the law will set a maximum flexible spending account limit. The limit will be set at $2,500.
- Finally, a taxpayer can only take a Itemized Medical Expense Deduction to the extent that the expenses exceed 10% of the taxpayers AGI.
See Bill Bischoff, What ObamaCare Means for Your Taxes, Wall Street Journal, June 28, 2012.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.