Health care law includes big tax changes

The U.S. Supreme Court will soon issue its ruling on the two health care laws passed back in 2010. States are challenging the constitutionality of the law’s requirement that individuals must obtain minimum health insurance coverage. The law could be upheld or overturned, or the court could strike down select provisions.

Although the health care insurance mandate has received the most attention, other provisions in the law could have a major impact on your taxes. If these provisions are allowed to stand, they will take effect in 2013.

Here’s a quick summary.

*The amount that you can contribute to your flexible spending account will be limited to $2,500.

*If you’re under age 65, your medical expenses will have to exceed 10% (rather than 7.5%) of your adjusted gross income to be deductible.

*A Medicare surtax of .9% will be assessed on earned income in excess of $250,000 for joint filers and $200,000 for single filers.

*A new 3.8% Medicare tax will apply to unearned income such as interest, dividends, capital gains, annuities, royalties, and rents. This new tax will kick in when your adjusted gross income exceeds $250,000 if you’re married filing a joint return or $200,000 if you’re single.

Take these scheduled changes into account in your midyear tax review. Contact our office for additional information and planning assistance.

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