I am sure you have all heard that the Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act, affectionately called ObamaCare. Many of the provisions have already been implemented but the big ones are waiting for business infrastructure to be in place in order to track them. So let’s see what goes into effect for 2012.
Form 1099 information reporting was set to take effect in 2012, but it was repealed. This provision would have made all businesses send 1099’s for tangible goods as well as services. (Think office supplies as well as janitorial services). Landlords were also going to have to send 1099’s for services on their rental activities. This provision was repealed in April of 2011. Just one word of caution if you have formed an LLC for your rental activities then you must file 1099’s for services performed on your rentals.
Now let’s look at 2013:
• An additional .9% Health Insurance tax will be imposed on taxpayers with wages (including self employment) in excess of $250,000 for married filing joint taxpayers, $125,000 for married filing separate and $200,000 for all the rest.
• A Medicare contribution tax on unearned income (interest, dividends, stock sales, home sales, rental income) of 3.8%. I’ve told you before this 3.8% in calculated on the total of the items in parentheses if the amount on the last line of page 1 of your 1040 is more than $250,000.
• The medical expense deduction floor increases from the 7.5% it is at now to 10%.
• The maximum amount available for reimbursement as a benefit under an FSA plan will be limited to only $2,500. Currently there is no limit but most employers place a limit that they are comfortable with it is usually in the $2,500 to $3,000 range.
It is not until 2014 that the “penalty” that we now all know, is really a tax, kicks in. Let’s wait and see what the election brings before I tell you about how it will work. Unless you are all really excited and want to hear it now.