Preparing for the 0.9% Obamacare Tax
With all of the talk about signing up for exchange insurance, losing insurance plans, and broken websites, individuals may not be aware of the 0.9% Medicare surtax that will be assessed on 2013 taxes. This surtax will be assessed on wages and self-employment income over a specified amount. For married couples it will be applied to those incomes above $250,000. For individuals the incomes will be above $200,000.
Individual taxpayers who work a corporate job will see this withholding appear on paystubs once their income reaches $200,000. It is important to note that additional Medicare tax goes up as your salary increases. Individuals need to be aware of this withholding and be prepared for the change.
This tax becomes complicated for those who have more than one job or have self-employment as a second income. If these situations place you above the total income threshold you may end up owing taxes come April 2014.
In order to prepare for this additional tax, it is recommended that employees adjust their W-4 withholdings to reflect that more or less income tax is withheld. It is also recommended that individuals who are self-employed defer billing and collections until January or accelerate expense payments into 2013.
It is important to be aware of this new withholding and take appropriate steps to keep from owing more when filing your 2013 taxes.
To read the entire article, please visit Forbes.com.