Affordable Care Act

New 10% medical itemized deduction threshold for 2013, this new threshold does not take effect for individuals who are over the age of 65. Their threshold remains at 7.5% through the end of 2016. For married filing joint returns, only one spouse needs to be over 65 to allow for the lower 7.5% threshold.

For earned income there is a new mandatory medicare surtax withholding for employees earning more than $200,000 (.9%). This amount is added to box 6 of Form W-2.

For self employed individuals all self employment activities reported on Schedules K-1, Schedule C, Schedule F and guaranteed payments can be netted against each other. However any losses from K-1's, Schedule C, & Schedule F can't be offset against W-2 income to reduce any potential medicare surtax.

Income allocated from Sub-chapter S Corporations is exempt from the medicare surtax.

For individuals with unearned income, tax returns with Modified Adjusted Gross Income above the following thresholds will be subject to 3.8% medicare surtax:

 Filing Status
Threshold Amount
 Married filing joint $250,000
Married filing separately $125,000
Single $200,000
Head of Household $200,000
Qualifying widow(er) w/ dependent child $250,000
(These income thresholds will not be indexed for inflation). 


Items included in unearned income:

Capital gains - net, capital gain distributions, income reported on Form 8814 (Children's Income), distributions from Sub-chapter S Corporation's, LLC's and Partnership's in excess of basis, qualified dividend income, non-qualified dividend income, non-qualified annuities, passive income from Forms K-1, passive income-other sources, rental and royalty income, real estate professional income and self-rental income.

Items not included in unearned income alimony, deferred portion of installment gains, excluded gain on sale of home, excluded gain on like-kind exchange, excluded gain from involuntary conversion, active income from S Corporation's, LLC's, & Partnership's, municipal bond interest, active self-employment income, taxable IRA distributions, sale of active business, sale of assets from active business interest, self-employment income, social security, unemployment income and wages.






























































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