Several provisions in the 2010 health care reform legislation go into effect this year. Here are some of the tax provisions that may affect you.
* FSA limits
The amount that can be contributed to a health flexible spending account (FSA) is limited to $2,500 per year, indexed annually for inflation.
* Medical expense deduction
The 7.5% income threshold for deducting unreimbursed medical expenses increases to 10% for those under age 65. Those 65 and older may continue to take an itemized deduction for medical expenses exceeding 7.5% of adjusted gross income through the year 2016.
* Medicare tax increase
The payroll Medicare tax will increase from 1.45% of wages to 2.35% on amounts above $200,000 earned by individuals and above $250,000 earned by married couples filing joint returns. The income threshold levels are not indexed for inflation.
A new 3.8% Medicare tax will be imposed on unearned income for single taxpayers with income over $200,000 and married couples with income over $250,000. Examples of unearned income: interest, dividends, royalties, rental income.
Use adjusted tax numbers in your 2013 planning
Each year the IRS adjusts certain tax numbers for inflation and tax law changes. Here are some of the adjusted numbers you’ll need for your 2013 tax planning.
* STANDARD MILEAGE RATE for business driving increases to 56.5¢ a mile. Rate for medical and moving mileage increases to 24¢ a mile. Rate for charitable driving remains at 14¢ a mile.
* SOCIAL SECURITY taxable wage limit increases to $113,700. Retirees under full retirement age can earn up to $15,120 without losing benefits.
* KIDDIE TAX threshold increases to $2,000. The tax applies up to age 19 (up to age 24 for full-time students).
* NANNY TAX threshold remains at $1,800.
Tags: health care reform
Written by: Doug Rodrigues