By Stacie Clifford Kitts, CPA
Okay so earlier this week I talked about the passing of HR 3590 aka the Patient Protection and Affordable Care Act which is now a law known as P.L. 111-148.
However, the new law was amended yesterday by the passing of HR 4872 aka the Health Care and Education Reconciliation ACT. This new bill is on its way to the president’s desk for approval.
As the Journal of Accountancy points out, this new bill adds stuff that was not built-in to the Patient Protection Act.
If you need to get up to speed, you can check out my previous post which outlines the original tax provision here Outline of Health Care Act – Tax Provisions of HR 3590.
The following is a list of things that were changed or added. For a complete analysis, check out the J of A’s article.
- Premium Assistance Credit – Updated
- Excise Tax on Uninsured Individuals – Updated
- Adult Dependent - Updated
- Excise Tax on High Cost Employer-Sponsored Coverage Updated
- Medicare Tax on Investment Income ( I thought this one might be of particular interest to taxpayers so I have included the J of A’s analysis here- my take, this provision is likely to tick some folks off)
The Reconciliation Act added a new IRC § 1411 that imposes a tax on individuals equal to 3.8% of the lesser of the individual’s net investment income for the year or the amount the individual’s modified adjusted gross income exceeds a threshold amount. For estates and trusts, the tax equals 3.8% of the lesser of undistributed net investment income or adjusted gross income over the dollar amount at which the highest trust and estate tax bracket begins.
For married individuals filing a joint return and surviving spouses, the threshold amount is $250,000; for married taxpayers filing separately, it is $125,000; and for other individuals it is $200,000.
Net investment income is defined as income from interest, dividends, annuities, royalties and rents, other than such income derived in the ordinary course of a trade or business (however, income from passive activities and from a trade or business of trading in financial instruments or commodities is included in the definition of net investment income).
This provision applies to tax years beginning after Dec. 31, 2012.
- Economic Substance Doctrine - New
Here is a calendar of dates related to the Act to know:
|Dates to follow|
|January 1, 2010||Small Business Tax Credit - For tax Years Beginning on or after 1/1/10|
|July 1, 2010||Tax on Indoor Tanning Services – For services on or after 7/1/2010|
|January 1, 2011||Tax on HSA Distributions - For tax years beginning on or after 1/1/2011|
|January 1, 2011||SIMPLE Cafeteria Plans for Business - For tax years beginning on or after 1/1/11|
|January 1, 2011||Charitable Hospitals – For payments made on or after 1/1/2011|
|January 1, 2012||Medicare tax on Investment Income – for tax years beginning on or after 1/1/2012|
|October 1, 2012||Fees on Health Plans - Beginning for plan years on or after 10/1/12|
|January 1, 2013||Medical Care Itemized Deductions Threshold -Beginning on 1/1/13|
|January 1, 2013||Additional Hospital Insurance Tax on High Income Taxpayers - For tax years beginning on or after 1/1/13|
|January 1, 2013||Flexible Spending Account - Tax years beginning on or after 1/1/13|
|January 1, 2014||Premium Assistance Credit - For years beginning on 1/1/14|
|January 1, 2014||Excise tax on Uninsured Individuals - Tax years beginning on or after 1/1/14,|
|January 1, 2014||Reporting Requirements - Beginning on 1/1/14|
|January 1, 2014||Cafeteria Plans - Starting 1/1/14|
|January 1, 2014||Employer Responsibility - Beginning on 1/1/14|
|January 1, 2018||Excise Tax on High-Cost Employer Plans – For tax years beginning on or after 1/1/18|