written by Patti Stoner
Since the passage of the Affordable Care Act in 2010, there have been many changes to health insurance coverage requirements and a few minor items were effective soon after. The 2013 and 2014 effective dates for tax aspects of the Act are the most crucial to keep in mind.
Small Employers Health Insurance Tax Credit
You may qualify for this credit but doubtful that you will be entitled to the full 35%. For more details see our article on the basic details for qualifying for this credit. It is effective 1/1/2010 through 12/31/2013 at 35%. It increases to 50% credit beginning 1/1/2014.
Medical Device Excise Tax
Though this 2.3% tax on medical devices applies to dental appliances, equipment and supplies, it is not a tax that dentists must pay. However, you will be paying an increase in all these applicable items that you purchase from your vendors. This tax was designed to be assessed to manufacturers and importers NOT to individual consumers, but their operating costs just went up and so will their sales prices. For more details, click here to view our article on the basics of this excise tax. It is effective 1/1/2013.
New Medicare 0.9% Payroll Tax
If you have organized your dental practice as a C corporation, you may have a larger tax liability. In addition to the 1.45% Medicare tax already being withheld (without limit) on your pay, you will need to withhold another 0.9% Medicare tax once your wages exceed $200,000 during the year. There is no employer match to this tax, however. This is required for any employee exceeding $200,000 during a calendar year. Click here to view previous article on new Medicare taxes.
You’ll actually compute this tax again on your individual income tax returns by including your spouse’s wages as well. So if your W2 (from an S or C corporation) was less than $200,000 but your aggregate wages for you and your spouse exceed $250,000, you’ll be liable for this tax anyway. It is effective 1/1/2013.
Click here to read part 2 of this series. Contact us today if you have any questions 417-881-0145.