Welcome to Taxation!

Net Investment Income Tax (NIIT) – To partially pay for ACA provisions, a 3.8% surtax was added to various earnings on investments above $250,000. This has subtle implications for wealthier taxpayers. The calculations are not at all straightforward. See the IRS webpage “Questions and Answers on the Net Investment Income Tax“ for details.
Medicare Tax – Further funding for Obamacare is provided by an increase in the Medicare tax on higher-income taxpayers who earn $250,000 with married filing jointly status that took effect in 2013. (Limits are $125,000 if married filing separately or $200,000 if filing single). For those with incomes beyond that mark, a 0.9% tax was added to the employee component of your tax contribution (the employer’s portion does not change).

Other changes are to come, such as the “Cadillac Tax“ on health care spending beyond a prescribed upper end on health insurance plans starting in 2020. The rules change often, so keep an eye out for future tax impacts of the ACA.

Verify your web searches with multiple sources, as the articles at the top of your search may not have the most recent information.

Keep on top of the tax ramifications of the ACA, and you will be less likely to receive nasty surprises at tax time. You wouldn’t want an unexpected tax bill to trigger a need for medical care!

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