May 13, 2020

Key Provisions and Individual Tax Provisions You Need to Be Aware Of

Do you know what the key provisions and individual tax provisions are that were recently added to the Health Care Reform in March of 2010? Most people don’t yet understand individual taxes what these different provisions are and it is critical for everyone to understand how it can affect you or your business.

There have been many different provisions made to the Health Care Reform. Here are some of the most important ones that you need to be aware of and how it could affect you as an individual or a business owner.

One: There has been an added tax on wages of high income taxpayers added recently. There are two different taxes that deal with wages, the OASDI tax or Old Age, Survivors and Disability Insurance tax and the HI tax or the Medicate Hospital Insurance tax.

The HI tax is currently at 1.45% for all wages, regardless of the total amount. With the new provisions added another 0.9% is being taken from the employee for their Social Security and Medicate benefits for any amount over the threshold amount.

The threshold amount for married taxpayers is $250,000 that are filing jointly. It is $125,000 for married couples filing taxes separately and it is $200,000 for individuals. So for the first $200,000 the 1.45% will be withheld and any amount above that will have 2.35% withheld.

This also applies to people that are self employed. The thresholds are the same and there will be 0.9% also added. So, for the first $200,000 of your earnings it will be 2.9% and any excess over this amount will be at 3.8%.

This gives you an idea of how each of the following tax provisions will work similarly, but definitely not exactly the same. In order to better understand these provisions completely you must take time to learn about these other provisions and what they mean for you by doing your homework to learn all you can.

Two: There is also a higher tax being added on investment income for higher income earners.

Three: Insurance companies have had provisions added for excise tax for “Cadillac Plans.”

Four: Medical expense deductions will also have an increased threshold.

Now that you understand better what some of the new key provisions and individual tax provisions are you can see how it will affect you or your business. Take time to learn as much as you can about all of the provisions that have been made so you completely understand how it affects you as an individual and as a business owner or you could end up being unpleasantly surprised.

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