What Does Obamacare Mean To You?
- The New Taxes Headed Your Way!
To start with, there will be a 3.8% surtax on “investment income”. This includes dividends, interest, capital gains, real estate sales, etc., when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). Taxes on dividends will rise from 15% to 18.8%, assuming the Bush tax cuts are extended. If Congress does not extend the Bush tax cutstaxes on dividends will rise from 15% to an outrageous 43.8% (which I do not think will happen). That is the proverbial “Fiscal Cliff”. The rest I have simply listed below:
- A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). We already pay Medicare tax of 1.45%, while employers pay another 1.45% for you (unless you’re self-employed, in which case you pay the whole 2.9% yourself).
- A “penalty” tax for those who don’t buy health insurance. This will phase in from 2014-2016. It will range from $695 per person to about $4,700 per person, depending on your income. Here’s how it breaks down:
- Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses.
- The itemized-deduction limit for medical expenses rises to $10,000. Currently, medical expenses over $7,500 per year are deductible.
- Starting in 2018, a 40% tax on “Cadillac Health Care Plans”. Those whose employers pay for all, or most of a comprehensive healthcare plan (costing $10,200 for an individual or $27,500 for families), will have to pay a 40% tax on the amount their employer pays.
- A “Medicine Cabinet Tax” that gets rid of our ability to pay for over-the-counter medicines from a pre-tax FSA’s (Flexible Spending Accounts).
- A 2.3% excise tax on medical equipment costing more than $100. This will likely increase the cost of medical procedures.
- Here’s a funny one: A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010.
Collection of these unpaid taxes will fall on the IRS. However, the IRS will not have the power to charge you criminally or seize your assets if you refuse to pay. The IRS will only have the ability to sue you, and even then will only be able to collect twice the amount if they win.
Who will be able to get out of these taxes? Well, only the members of Indian tribes and certain religions that don’t pay Social Security tax, such as Amish, Hutterites or Mennonites. The rest of us working class stiffs will just have to tough it out!
Obamacare is certainly confusing, but I hope this helps. Most importantly, investors will need to prepare, and soon. That’s where we can help! Managing money, especially your own, is a daunting task. Our “Invest for need, not for greed™” approach combined with our hands-on proprietary Top-Down Tactical™ investment management strategy can help you manage risk and deliver returns. If you would like to learn more and/or get a free second opinion on your portfolio, simply reply to this email, click our Appointment Request Form or call for a no-cost no-obligation consultation today at (916) 925-8900.