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Health Care Reform - Emil Estafanous, CPA : Emil Estafanous, CPA

Health Care Reform


On Mar 23, 2010, President Obama signed into law a Patient Protection and Affordable Care Act that was subsequently mutated by Congress by a Health Care and Education Reconciliation Act of 2010, signed on Mar 30, 2010.  

Soon no fewer than 3 sovereign agencies, a Internal Revenue Service, Health and Human Services and a Department of Labor will start drafting a compulsory regulations that individuals, employers, word carriers and state word commissioners and state exchanges will need to follow. Following is a list of a highlights of a taxation provisions: 

Codification of Economic Substance Doctrine and Penalties
The Economic Substance Doctrine is mutated as requiring that both of a following requirements be met to prove a doctrine: (1) a transaction changes a taxpayer’s mercantile position in a suggestive approach (apart from Federal income taxation effects); and (2) a taxpayer has a estimable purpose for entering into a transaction (apart from Federal income taxation effects). The sustenance is effective for exchange entered into after a date of dramatization (March 30, 2010). 

A territory 6662 chastisement is total for an underpayment attributable to a disallowance of claimed taxation advantages since a transaction lacked mercantile substance. The chastisement is 20 percent (40 percent if a transaction is not sufficient disclosed) and there is no reasonable means exception. 

Increased Threshold for Medical Expense Itemized Deductions

The 7.5 percent of practiced sum income (AGI) threshold for a medical responsibility itemized reduction will boost to 10 percent, effective for taxable years commencement in 2013. An difference relates by 2016 for taxpayers age 65 or older.

Small Businesses Tax Credits

Firms with fewer than 25 employees and normal annual salary of reduction than $50,000 will be authorised for a credit for certain contributions to squeeze health word for employees. The credit phases in from 35 percent of a employers grant to 50 percent by 2014. Smaller firms with 10 or fewer employees and normal annual salary of reduction than $25,000 can get adult to a 100 percent credit. The sustenance is effective for taxable years commencement in 2010.

Not enclosed in a clarification of an worker are anniversary workers, self employed individuals, two percent shareholders of an S Corporation, five percent owners of a tiny business and dependents. Leased employees are authorised for a credit.

W-2 Forms will include Information on Employee Health Benefits

Employers will be compulsory to embody on an employee’s W-2 a value of health advantages supposing to a employee. This will turn effective for taxable years commencement in 2011.

Special Cafeteria Plans for Small Employers

Small employers will be accessible to adopt new “simple cafeteria plans” that will embody protected bay appearance and grant manners identical to those in SIMPLE 401(k) or SIMPLE IRA manners effective for taxable years commencement after 2010. By gratifying a smallest appearance and grant mandate a employer will not be compulsory to accommodate a non-discrimination manners that differently would apply.   

Limitation on Health Flexible Spending Arrangements (FSAs) 
For taxable years after 2012, in sequence for a health FSA to be a competent advantage underneath a cafeteria plan, a limit volume accessible for payment of medical losses incurred by a employee, a employee’s dependents, and other authorised beneficiaries with honour to a worker contingency not surpass $2,500 for a devise year (indexed for inflation).

Increase in Additional Tax on Distributions from Health Savings Accounts (HSAs)
The additional taxation on distributions from an HSA or an Archer MSA that are not used for competent medical losses is increasing from 10 to 20 percent of those distributions, effective for distributions done during a taxation years starting in 2011.

Increased Medicare Tax on Earned Income

An employer is compulsory to secrete from salary a employee’s apportionment of a Medicare taxation now partial of a FICA taxation and equal to 1.45 percent of lonesome wages. Employers will be compulsory to secrete a new .9 percent Medicare surtax on employees whose salary surpass $200,000. However, a employer is not compulsory to take into comment a spouses salary if a total incomes exceeds a threshold. 

New Medicare Tax on Unearned Income
Individuals, estates and trusts will be theme to a Medicare taxation on unmerited income. For individuals, a taxation will be 3.8 percent of (1) net investment income or (2) additional of mutated AGI over a threshold amount, whichever is lower. The threshold is $250,000 for a corner return, $125,000 for married filing separately, and $200,000 for a singular taxpayer. The sustenance is to request for taxable years commencement after 2012.

New Excise Tax on “Cadillac” Group Health Plans
After 2018 a reward dig taxation will request to medical skeleton where a reward threshold is larger than $10,200 for people and $27,500 for families. The dig taxation is 40 percent of a additional and is non-deductible.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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