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Two new taxes on the rich via “Obama-care”.

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The “poor” will be exempt from the Affordable Care Act aka “Obama-care”. The “middle class” will get some subsidies for it. But what happens to the “rich”? Who is going to pay for the subsidies? These are questions that I wanted answers to. So I found them. The “rich” are going to have two extra taxes, the Additional Medicare Tax and the Net Investment Income Tax (NIIT).

 

Net Investment Income Tax (NIIT)

This tax will apply an additional 3.8% on certain investments to families who make over the following thresholds. This tax will show up on your upcoming 2013 tax form.

NIIT Thresholds

Married filing jointly – $250,000

Married filing separate – $125,000

Single – $200,000

Head of Household (with qualifying person) – $200,000

Qualifying Widow(er) (with qualifying child) – $250,000

 

Additional Medicare Tax

This one is a little more complicated. This tax is an additional 0.9% that will be owed for Medicare taxes by families over the following thresholds. Even if you are under these thresholds it may still affect you.

Additional Medicare Tax Thresholds

Married filing jointly – $250,000

Married filing separately – $125,000

Single – $200,000

Head of Household (with qualifying person) – $200,000

Qualifying Widow(er) (with qualifying child) – $200,000

 

If you make over $200,000, your employer will automatically deduct this tax from your paycheck. If you make less than that, they won’t. So here are a few issues involved with this.

 

Q: What happens if you are married and you make $200,000 and your spouse makes $0?

A: Your company will take the additional 0.9% out of your check, but you will not end up owing it. Therefore, you will end up with a nice refund when you file your taxes.

 

Q: What happens if you are married and both you and your spouse makes $125,000 each?

A: Your employer will not take the Additional Medicare Tax out of your paychecks, but you will end up owing it when you file your taxes. If you don’t deal with this now, you will have a very unpleasant surprise this coming Spring. I would suggest that you either make quarterly estimated payments or talk to your employer about withholding extra money from your paycheck.

 

Q: This affects me, why hasn’t my employer said anything?

A: They are not required to. Either they chose to let you be surprised or they don’t actually know about it yet.

 

If you have any questions about how to deal with either the Additional Medicare Tax or the Net Investment Income Tax, contact me at www.TashaPreisner.com.