The Affordable Care Act contains complex regulations and ever-changing updates. As your tax advisor, I am responsible to stay on top of these changes in order to best serve you. I will help you understand the Act and the options you have to comply. For middle income earners, there are several law reforms to keep an eye on:
Employees will be required to report the total amount paid by them and their employer for health insurance premiums, flexible spending beyond payroll deductions and other premiums, on their returns. A 3.8 percent tax on net investment income will apply to taxpayers at higher income levels based on filing status. Taxpayers in those same AGI ranges will also pay an additional 0.9 percent Medicare tax on wages and compensation in excess of $200,000. And the biggest issue of all with Obamacare is the penalty for not having healthcare coverage.
The penalty for uninsured individuals starts at $95, or 1 percent of taxable income in 2014, whichever is more. In 2016, it will increase to the greater of $695 or 2.5 percent of taxable income. The majority of those who will be hard hit by increased taxes are those individuals and couples filing their taxes jointly who make more than the annual income threshold allowed.