Tax Tips by Kelly Bulis: Long-range tax consequences of 'Obamacare'

With all the attention on the medical issues related to the recently passed health care bill, not much has been focused on tax related details and the timeline for when they begin.

2010 - Mostly give money away ... before next Congressional midterm election

• Small employer tax credit: Temporary sliding scale tax credit to help offset the cost of employer-provided coverage. Generally, a qualified small employer is one with no more than 25 employees and average annual wages of no more than $50,000. The qualified small employer must contribute at least one-half of the cost of health insurance premiums for coverage of its participating employees. Actual credit ends up being a maximum of 35 percent of the actual cost of insurance premiums. (There is a complicated limit to this that mostly doesn't apply at this time.) The 35 percent is reduced on a sliding scale based upon the average wages: 35 percent maximum at average of $25,000, down to 0 percent when average hits $50,000.

• Indoor Tanning Tax: Starting July 2, 2010, a 10 percent tax on certain indoor tanning services. Nobody has heard how the Feds plan on reporting and collecting this tax. This may turn out to be a bit stressful for businesses operating tanning services due to very late breaking information, forms, rules, etc. I expect a possible delayed reporting process. Logistically, this is a "feel good" tax that was not thought through. Enforcing this will be a challenge.

2011 - Just new reporting requirement

• New W-2 Reporting: Employers must start reporting the value of health benefits for each qualified employee on their W-2s. This means that starting in 2011, you will need to start tracking each employee's health benefits as part of their payroll records in order to produce the W-2s at the end of the year.

2013 - Now we get to taking money away ... after next presidential election

• Medicare Tax Increase: 0.9 percent increase in Medicare taxes for wages over $200,000 (single) or $250,000 (married). Not indexed for inflation.

• New High Income Surtax: 3.8 percent tax on Net Investment Income or Modified Adjusted Gross Income over $200,000 (single) or $250,000 (married). Not indexed for inflation. (Also, notice the built-in "marriage penalty" for both of these?)

• Itemized Deduction Limit: Increase on threshold for itemized medical expense deduction from old 7.5 percent to new 10 percent.

2018 - "Cadillac" Plan Penalty

• 40 percent excise tax on high-cost insurance (inflation adjusted $10,200 for singles and $27,500 for families) unless you are a union member.

All this leads me to think, Uncle Sam gives and Uncle Sam takes away. Cheers!

• Kelly Bullis is a Certified Public Accountant with over 30 years of experience. Contact him at 882-4459.