Reminder: 2013 Tax Law Changes Resulting from the Affordable Care Act

affordable care act taxesAs different provisions of the Affordable Care Act (also known as “Obamacare”) continue to roll out and go into effect, our small business accountants in Raleigh would like to take this opportunity to remind you of some of the ways the new legislation will impact tax laws for 2013.

ACA Updates Affecting Tax Preparation

Although there are a number of important tax ramifications stemming from Obamacare, we anticipate that only a handful of changes will affect how our clients’ tax preparation. The issues we suggest paying the most attention to include the following.

  • Medical expense itemized deduction: Taxpayers under the age of 65 will now be bound by a 10% AGI threshold for deducting unreimbursed medical expenses. Taxpayers who are 65 or older will remain at the current 7.5% medical expense deduction floor through the 2016 tax year.
  • Flexible spending account (FSA) contributions: Employers will no longer be allowed to set their own annual FSA contribution limits. Instead, a federal mandate that caps contributions to healthcare FSAs at $2,500 per taxpayer will now take effect.
  • Medicare tax on earned income: For single taxpayers, there will be a 0.9% Medicare surtax on wages, self-employment income, and other types of earned income exceeding $200,000 in the 2013 fiscal year. For married taxpayers filing a joint return, the surtax will be imposed on earned income exceeding $250,000.
  • Medicare tax on unearned income: For single taxpayers with an AGI over $200,000, a new Medicare tax of 3.8% will be assessed on dividends, interest, capital gains, and other forms of unearned income. This new tax also comes into play for married taxpayers filing a joint return with an AGI over $250,000.

The tax changes precipitated by the Affordable Care Act might affect the amount of estimated taxes you pay each quarter, your withholdings, or your overall tax liability for 2013, so it’s important to evaluate where you stand with regard to the new rules and regulations prior to making any payments or filling out any returns.

Schedule a Consultation with Our Small Business Accountants in Raleigh

If you’re unsure as to whether or not the Affordable Care Act will affect either your personal taxes or your small business’s taxes, we can help. Our team of experienced and certified CPAs can take on the task of tax preparation so you can feel confident that they are done accurately and your payments are minimized as much as possible. Reach out to us today to set up a consultation and learn how we can save you time and minimize your tax burden by calling us at 919-420-0092 or fill out our contact form.