Every government program requires funding. How does the government pay for these programs? Taxes! With the introduction of the Affordable Care Act came a series of tax law changes to pay for this program. Following is a partial list of what to expect in 2014:
· Additional Medicare Tax for certain high earners ($200,000 for single, $250,000 for MFJ)
· Net investment income tax on interest income, dividends and other passive income for certain high earners ($200,000 for single, $250,000 for MFJ)
· Increased threshold on medical expense deductions from 7.5% of AGI to 10% for most taxpayers
· Phase out of personal exemptions deduction on taxpayers with AGI greater than $150,000
· Phase out of itemized deductions on taxpayers with AGI greater than $150,000
· Elimination of the deduction for state and local sales taxes
· Elimination of the above-the-line deduction for qualified tuition expenses
· Elimination of tax-free distributions from individual retirement plans for charitable purposes
· Elimination of certain above-the-line educator expenses of elementary and secondary school teachers
· Elimination of discharge of indebtedness on principal residence excluded from gross income
· Penalty assessment for individuals without health insurance coverage
· And more!
What can you do? Contact your CPA to schedule an appointment for 2014 tax projections to see how you can prepare for this.