2013 Taxes Take Effect to Fund Healthcare Law

We keep hearing our politicians talking about the “fiscal cliff” and not raising taxes on the middle class, and whether or not to raise taxes on the top 2% of earners in the United States. What we are not hearing as that the middle class and the top earners are being hit on January one with several new taxes to fund the healthcare law that will be fully implemented a year from now.

Some of the taxes that go into place on January 1, 2013 are an increase in payroll tax on wages, and investment income, including, dividends, interest and capital gains.

Since affluent people tend to be more likely to have health insurance than lower income people, in a sense they will be helping to pay for health insurance for lower income families.

Employers and employees will also not be paying a Medicare tax this will be in the amount of 1.45 % of all wages earned. It will also require an additional.09% for all earners over $200,000.

Here are a list of all of the upcoming taxes that go into effect in 2013

1) Employer reporting of insurance on W-2 (PPACA page 1957)

2) Surtax on investment income (Reconciliation Act pages 87-93, this creates a new 3.8% tax on investment income including the sale of your home.

3) Hike in Medicare payroll tax (PPACA pages 2000-2003, Reconciliation Act pages 87-93)

4) Tax on Medical Device Manufacturers (PPACA pages 1980-1986) this creates a tax on medical equipment retailing over $100.

5) High Medical Bills Tax (PPACA pages 1994-1995) Currently if you have medical bills over 7.5% of your AGI you can get a deduction, now it will be 10%

6) Flex Spending Cap (FSA) (PPACA pages 2388-2389) imposes a cap of $2500

7) Elimination of Tax Deduction for employer provided RX drug coverage in co-ordination of Medicare part D (PPACA page 1994)

8) $500,000 Annual Executive Compensation limit for health insurance executives (PPACA pages 1995-2000). This limits what executives of health insurance companies can make. I find this one interesting because it is OK for the President of the American Red Cross to have a salary of $651,957 and the President of the United Nations Children’s Fund (UNICEF) to have a Salary of $1,200,000 per year.

With the “Bush Tax Cuts” expected to expire compounded with these new taxes, be prepared to pay significantly more in 2013 than you did in 2012.