The Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010 phases in tax changes over a span of eight years and contains key provisions of importance to both individual and business taxpayers. Below is an expected timeline for when certain tax-related provisions will become effective. Please call our offices (412-816-2228) for details of how the new changes may affect your specific situation.
2010
- 10 percent excise tax on indoor tanning services begins July 1.
- Adoptions tax credit is made refundable, effective Jan. 1, 2010; the thresholds for qualifying expenses are increased; and the adoption credit is extended through 2011.
- Forgiven student debts for certain medical professionals are excluded from taxable income beginning in the 2009 tax year.
2011
- Businesses must begin reporting the value of health care benefits on employees’ W-2 statements.
- Money in flexible spending arrangements, health savings accounts, and other health reimbursement arrangements cannot be used for over-the-counter medicines unless they are prescribed by a doctor.
- The penalty for using health savings account funds for nonqualified uses will rise to 20 percent from 10 percent.
2012
- New information reporting is required for businesses making payments in excess of $600 over the course of a calendar year to corporations.
2013
- A new 0.9 percent surtax will be added to the 1.45 percent Hospital Insurance payroll taxes paid by individuals earning more than $200,000 per year or joint filers earning more than $250,000 per year.
- A 3.8 percent tax will be imposed on unearned income of individuals earning more than $200,000 per year ($250,000 for joint filers).
- The threshold for claiming medical expense deductions rises from 7.5 percent of adjusted gross income to 10 percent, but will remain at 7.5 percent of income for individuals 65 or older until 2016.
- Contributions to health care flexible spending arrangement will be limited to $2,500 as of Jan. 1, 2013.