April 15th is in the past. The hand wringing and sweating, while glaring glassy-eyed at Turbo Tax is over and you can all breathe a sigh of relief, unless of course you filed an extension!
There are some interesting changes to the tax code that were passed in the healthcare bill. These changes won’t take effect until 2013, so voters won’t feel the hit until after the 2012 elections. In 2013, upper incomers will pay more in Medicare taxes. First there will be 0.9% surtax on single filers that earn over $200,000. If you are happily married filing jointly, the threshold is $250,000. The EMPLOYEE will pay the whole tax.
The second issue to address for 2013 is that there will be a Special Medicare Tax of 3.8%. Singles with adjusted gross income over $200,000 and married filers with $250,000 of adjusted gross income will be affected. The adjusted gross income includes earned income, income from interest, dividends, capital gains, annuity payments, royalties and passive rental income. Still excluded from the special 3.8% tax is municipal bond interest and retirement plan payouts. There will be a few more changes to the tax code that will begin in 2013; however, we feel the Special Medicare Tax has the greatest ability to affect our clients.
The programmers at Turbo Tax will be quite busy for the next several years. Who knows — maybe they are hiring!
Gregory D. James, CFP®
227 W. Trade Street
Charlotte, NC 28202
(704) 334-0894 phone
(704) 334-9323 fax