When we went to print, it wasn’t known whether Congress and the president would take America off the so-called fiscal cliff. To reiterate, the tax rates that every American individual, homeowner and business owner paid were scheduled to expire on Dec. 31, 2012. While they were extended past their original expiration date of 2010, the president and Congress were on a collision course up through Christmas to allow the top two rates to rise.
No matter the outcome of the fiscal cliff talks, the IRS is certain to be busier in 2013 due to new taxes in the Affordable Care Act. Business owners and their human resources offices should be reviewing draft regulations working their way through the regulatory maze. But to pay for the law, new taxes are effective now and owners and HR departments should be reviewing with their accounting team. Some of which include:
- 2.3% tax on medical devices goes into effect;
- Threshold at which medical expenses as a percentage of income are deductible, increases from 7.5% to 10%;
- Medicare payroll tax on wages and self-employment income in excess of $200,000 ($250,000 joint)
- will increase;
- Medicare investment tax imposes 3.8% tax on investment income for taxpayers making more than
- $200,000 ($250,000 joint);
- Flexible spending accounts (FSA’s) will be limited to a maximum of $2,500.