New taxes under the Affordable Care Act

Here are some of the new taxes you're going to have to pay to pay under the Affordable Care Act:

• A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is "investment income?" Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. With the expiration of the Bush tax cuts, taxes on dividends will rise rise from 15% to a shocking 43.8% on January 1st, unless Congress cuts a deal with respect to the fiscal cliff.
• A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). You already pay Medicare tax of 1.45%, and your employer pays another 1.45% for you (unless you're self-employed, in which case you pay the whole 2.9% yourself). Next year, your Medicare bill will be 2.35%.
• Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. Next year, there will be. If you have been socking away, say, $10,000 in your FSA to pay medical bills, you'll have to cut that to $2,500.
• The itemized-deduction hurdle for medical expenses is going up to 10% of adjusted gross income. Right now, any medical expenses over 7.5% of AGI are deductible. Next year, that hurdle will be 10%.
• The penalty on non-medical withdrawals from Healthcare Savings Accounts is now 20% instead of 10%.  That's twice the penalty that applies to annuities, IRAs, and other tax-free vehicles. (ATR.org)
• A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010.
• A 40% tax on "Cadillac Health Care Plans" starting in 2018.Those whose employers pay for all or most of comprehensive healthcare plans (costing $10,200 for an individual or $27,500 for families) will have to pay a 40% tax on the amount their employer pays.
• A"Medicine Cabinet Tax" that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. This started in January 2011.
• A "penalty" tax for those who don't buy health insurance. This will phase in from 2014-2016. It will range from $695 per person to about $4,700 per person, depending on your income.
• A tax on medical devices costing more than $100.  Starting in 2013, medical device manufacturers will have to pay a 2.3% excise tax on medical equipment. This is expected to raise the cost of medical procedures.

Source:  Multiple Sources


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