Self Made: NASE's Blog


Welcome to the Self Made.  This is a blog focused primarily on the self-employed and micro-business and full of fantastic posts by not only our team of experts but by YOU!  We realize that there are many ways to help the small businesses out there which is why we invite other business minded individuals to post here and help the rest of the community as well.

Happy New Year! You Get To Pay More Taxes.

Dec 17, 2013
Posted by Katie Vlietstra

Individuals and families will see a little less in their paychecks starting January 1, 2014- wage earners and self-employed individuals who make more than $200,000 (individual) and $250,000 (couple) will be assessed an additional .9% Medicare surtax on top of the existing 1.45% Medicare payroll tax as well as a 3.8% Medicare tax on unearned income (investment dividends, rental income, interest and capital gains on property).

Individual and families falling below the $200,000 will experience new restrictions on medical expense deductions and flexible spending accounts, including penalties for spending money on non-qualified medical expenses (simple human error!).

Additionally, tax payers who itemize their medical expense deductions will only be able to do so if those expenses exceed 10% of adjusted gross income (AGI); previously it was 7.5%.  One carve-out, individuals and/or your spouse who are 65 or older will be exempted from the increase and will still be able to use the 7.5% threshold.

The biggest tax hit will be faced by those individuals and families that fail to show proof of a qualified health care plan or a Grandfathered health care plan for 2014.  Failure to do so will result in a fine of $95 or 1% of your income – whichever is higher – in 2014. That fine increases to $325 or 2% of income in 2015 and $695 or 2.5% of your income by 2016.

Clearly challenges persist as it relates to the Affordable Care Act and its implementation; the NASE continues to work with lawmakers to mitigate the financial impact of the law on the 23 million self-employed who are working hard every day to fuel our economic recovery.  Access to affordable and comprehensive health insurance shouldn’t have a negative tax impact on the self-employed.

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