February 05, 2014
Michael D'Addio, Tax & Business Services Principal, Quoted in CNBC.com Article, "The Obamacare Tax Deconstructed."
By Dan Mangan
Several developments related to the Affordable Care Act will be hitting many filers in the pocketbook this tax season, but they need to keep an eye on two other issues that could begin affecting millions of people next tax season.
This year's changes include an increase in the minimum threshold for deducting medical costs for people under 65, to 10 percent of adjusted gross income from 7.5 percent of AGI.
"That's going to eliminate medical deductions for lots of people who were taking [them] before," said Michael D'Addio, tax principal in the New Haven, Conn., office of Marcum and a co-chair of the firm's ACA division.
Two new Medicare-related taxes also loom this season for high-income earners.
The first is a 0.9 percent Medicare tax on earnings above $200,000 for single filers and $250,000 for married couples filing jointly. The tax, addressed on IRS Form 8959, is deducted from a high-earner's paycheck even if they will end up filing jointly and being exempt from the tax, D'Addio noted. In that case, he said, they have to file for a refund.
The second tax, a 3.8 percent Medicare surtax on net investment income for high-income filers, is driving preparers and their clients "crazy," D'Addio said, because it is complicated and will affect "lots and lots of taxpayers."