How to gear up for tax law changes rolling out in 2014 by NYC Tax Advisors
by
Steven Goldburd on Nov. 09, 2013
Tax Tax Litigation Tax Income Tax Tax Corporate Tax
Summary: These changes will have at least some impact on all individual and family policy holders and will also affect grandfathered policies that were effective on or before March 23, 2010.
According to President Barack Obama proposed FY2014 budget, approximately $580 billion dollars in revenue will be raised through new taxes, limits on deductions and other tax proposals. A big part of the revenue proposal is the so called Buffet rule that will make sure that families with annual income over $1million are required to pay at least 3% of their total income in tax excluding charitable donations. The name for the rule was derived from Warren Buffett’s observation that this tax rate is lower than his secretary. According to a press release issued by the White House describes these new changes as a measure to stop millionaires from taking advantage of the special provisions to pay taxes at lower rates than what middle class families do.
The new Buffet rule will apply a new fair share tax which will be equal to 30% of the taxpayer's adjusted annual income, less a charitable donation credit equal to 28% of itemized charitable contributions allowed after the overall limitation on itemized deductions. The implementation of the Buffet law will start in phases starting at adjusted gross incomes of $1 million and eventually will be fully phased in at adjusted gross incomes of $2 million According to an estimate by the Office of Management and Budget, this rule will increase the government’s revenue by $99 billion over the next ten years .
Another proposal in the proposed budget is to limit the value of tax deductions and other tax preferences. This will affect married taxpayers who pay jointly with annually earning over $250,000 and single taxpayers with earning over $200,000, thus limiting the tax rate on which these taxpayers can reduce their tax liability to a maximum of 28%. This limit will implement on all itemized deductions such as retirement contributions ; tax-exempt interest; t; employer-sponsored health insurance; foreign excluded income and certain above-the-line deductions.
The most significant changes implemented by health care
reform legislation will come into force on January 1st of 2014. The positive
changes will be for those who have been rated up or declined for health
insurance in the past, for those who are currently or plan to become pregnant,
and those whose income is less than 400% of the federal poverty level. The
negative changes will be for those who have an average or better than average
health rating and for those on the younger end of the health insurance
spectrum.
By 2014, people with pre- existing health conditions and who do not have medical insurance through an employer can get insurance at the same rates as healthy individuals in the same market. Small businesses and startups which cannot afford health care coverages for their employees may not have to comply with the new rules . Small businesses will be able to provide insurance to their employees. According to the community rating rules, insurance companies will not be allowed to discriminate against small businesses with less healthy workers by charging them more than larger companies or by raising their rates when one of their workers gets sick. As if today small businesses pay pay 18% more for the health care coverage in comparison to large businesses provide to their employees. The new law will give a tax credit of up to 35% of the premiums small businesses pay to cover their workers in the first year.
