SMEED CPA, Inc | 201 Sand Creek Road, Suite F | Brentwood, CA 94513 | Phone: 925-634-2344

       

 

 

Michael Uadiale, CPA

SMEED CPA, Inc.

 

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800-609-9006 extension 3638

 


 

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Feature Articles

- Tax Implications of the Health Care Act
- Paying Off Debt the Smart Way
- Tax Planning for Small Business Owners
- Protect Your Business With The Right Insurance

Tax Tips

- Seven Tax Tips for Students with a Summer Job
- Eight Tips to Determine if Your Gift is Taxable
- Farm Income and Deductions: 10 Key Points
- Failure to File or Pay Penalties: Eight Facts

Financial Planning Tips

- Prepare a Post-Mortem Letter
- Get Your Social Security Statement of Benefits
- Review Your Budget vs Actuals for July
- Estimate Your Tax Liability

 


 

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What Are Your Tax Implications with the Affordable Health Care Act?

 

What Are Your Tax Implications with the Affordable Health Care Act?The July 2012 Supreme Court ruling upholding what's collectively referred to as the "Affordable Care Act" (ACA) or "Health Care Act" has resulted in a number of changes to the US tax code.

As such there are a number of tax implications for individuals and businesses. With that in mind, let's take a closer look at what it might mean for you.

Individuals

Individual Mandate
Starting in 2014, US citizens and legal residents not qualified for Medicare or Medicaid must obtain minimum essential health care coverage for themselves and their dependents or pay a tax penalty that varies based on income level.

In 2014, the basic penalty for an individual (no dependents) is $95, with substantial increases in subsequent years--$325 in 2015 and $695 in 2016, indexed for inflation thereafter.

Refundable Tax Credit
Effective in 2014, certain taxpayers will be able to use a refundable tax credit to offset the cost of health insurance premiums so that their insurance premium payments do not exceed a specific percentage of their income. Qualified individuals are those with incomes between 133 percent and 400 percent of the federal poverty level. A sliding scale based on family size will be used to determine the amount of the credit. In addition, married taxpayers must file joint returns to qualify.

FSA Contributions
FSA (Flexible Spending Arrangements) contributions are limited to $2,500 per year starting in 2013 and indexed for inflation after that.

New Rules for HSAs and Archer MSAs
Tax on non-qualified distributions from HSAs and Archer MSAs that are used to cover the cost of over the counter medicine without a script will increase to 20 percent starting in 2011. Medical devices, eyeglasses, contact lenses, copays, and deductibles are not affected, nor is Insulin even if it is non-prescription.

Medicare Part D
Medicare Part D, the tax deduction for employer provided retirement prescription drug coverage, will be eliminated in 2013.

Increase in AGI Limit for Deductible Medical Expenses
The deduction is currently 7.5 percent of AGI, but next year, in 2013, that increases to 10 percent of AGI. The 7.5 percent threshold continues through 2016 for taxpayers aged 65 and older, including those turning 65 by December 31, 2016.

Health Coverage of Older Children
The cost of employer provided health care coverage for children (through age 26) claimed as dependents on tax returns is excluded from gross income.

Medicare Tax Increases for High Income Earners
Starting in 2013, there will be an additional 0.9 percent Medicare tax on wages above $200,000 for individuals ($250,000 married filing jointly).

Also starting in 2013, there is a new Medicare tax of 3.8 percent on investment (unearned) income for single taxpayers with modified adjusted gross income (MAGI) over $200,000 ($250,00 joint filers). Investment income includes dividends, interest, rents, royalties, gains from the disposition of property, and certain passive activity income. Estates, trusts and self-employed individuals are all liable for the new tax.

Exemptions are available for business owners and income from certain retirement accounts, such as pensions, IRAs, 401(a), 403(b), and 457(b) plans, is exempt.

Businesses

Small Business Health Care Tax Credit
Small businesses and tax-exempt organization that employ 25 or fewer workers with average incomes of $50,000 or less, and that pay at least half of the premiums for employee health insurance coverage are eligible for the Small Business Health Care Tax Credit.

For tax years 2010 through 2013, the maximum credit is 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities. An enhanced version of the credit will be effective beginning Jan. 1, 2014. In general, on Jan. 1, 2014, the rate will increase to 50 percent and 35 percent, respectively.

 

Additional Tax on Businesses Not Offering Minimum essential Coverage
Effective in 2014 an additional tax will be levied on businesses with 50 or more full-time equivalent (FTE) employees that do not offer minimum essential coverage. Employers with fewer than 50 FTE employees are exempt from the additional tax.

Excise Tax on High Cost Employer-Sponsored Insurance
Effective in 2018, a 40 percent excise tax indexed for inflation will be imposed on employers with insurance plans where the annual premium exceeds $10,200 (individual) or $27,500 (family). For retirees age 55 and older, the premium levels are higher, $11,850 for individuals and $30,950 for families.

Excise Tax on Medical Devices
Effective January 1, 2014, a 2.3 percent tax will be levied on manufacturers and importers on the sale of certain medical devices.

Indoor Tanning Services
A 10 percent excise tax on indoor tanning services went into effect on July 1, 2010. The tax doesn't apply to phototherapy services performed by a licensed medical professional on his or her premises. There's also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee.

If you need assistance navigating the complexities of the new health care act, don't hesitate to call us. We're here to help.

If you have any questions about how the Affordable Care Act will effect you or your business, please give me a call at 925-634-2344. We can help guide you in the right direction.
 



Would You Give Me Your
Feedback & Testimonial on Our Hotline?

 

Hello its Michael Uadiale, CPA of SMEED CPA Inc.  Weve just installed a toll-free number that I would like for you to call and tell me how you think we are doing as your CPA firm.

 

Just dial 800-609-9006 extension 3638 and follow the instructions.  If weve done a good job please let me know.  And if we can improve on anything, please mention that too.

 


 

Help Us Be Found on Google!

 

Also as we expand our business, we find more and more people are using the Internet and Google to look for us by searching Brentwood accountant or Brentwood CPA.

 

When they do this we want to be FOUND on GOOGLE.  One way you can help us is to give us an ONLINE REVIEW on our Google Maps/Places listing --->

 

Just click here to go to our Google Listing for SMEED CPA.  Scroll down to the Review area.

 

It may say:  Been here? Rate and review

 

You will click on the Rate and review link and then log into Google, then give us a review!

 

You can choose between 1 and 5 STARS and write in what you think about the tax or accounting work we have done for you.

 

It's that simple.  Thank you in advance for your help and cooperation!

 


 

As always you can call our offices if you have any questions about these or any other accounting related issues, at 925-634-2344. 

 

Regards, Michael Uadiale, CPA, ACA, CGMA

Managing Partner, SMEED CPA, Inc.

 
 

 

SMEED CPA, Inc | 201 Sand Creek Road, Suite F | Brentwood, CA 94513
The Next Frontier CPA Firm | www.SmeedCPA.com | info@smeedcpa.com
Phone: 925-634-2344 | Fax: 925-634-2346 | Cell: 925-207-6771