"Off Season" Tax Moves

It’s not time to stop thinking about taxes and strategic tax planning opportunities during the tax "off" season. Since the start of 2013, there have been many new federal tax developments, which will impact tax planning for this year and beyond. As 2013 unfolds, many changes made to the Tax Code by the American Taxpayer Relief Act of 2012 (ATRA) take effect. Additionally, there are new taxes to take into account because of the health care reform package, along with enhancements to many tax credits and deductions. Here is a brief review of the tax and health care provisions affecting taxpayers for 2013. 

Tax Provisions

• 7.5% floor for deducting medical and dental expenses climbs to 10% (for taxpayers age 65 or older, floor stays at 7.5% until 2016). 
  


• Healthcare flexible spending account contributions are capped at $2,500 per year. 
  


• Hike Medicare tax to 3.8% of earned income above $200,000 (individuals) or $250,000 (joint filers)
  


• Impose Medicare tax of 3.8% on “investment income” for filers with adjusted gross income above $200,000 (individuals) or $250,000 (joint filers)
  

Health Care Provisions


Limit deduction for health insurer’s executive compensation to $500,000


Now is a good time to revisit these developments and explore how they will affect your strategic tax plans. Planning today can help maximize your tax savings going forward.