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Family 411: Healthcare reforms impact on tax deductions
CINCINNATI (Sheila Gray) -- The Affordable Care Act remains a hot button issue in the US and it's rearing its head as Americans prepare their tax returns.
Two new taxes and a big change in medical deductions are surprising some filers who didn't plan ahead. Deducting medical and dental bills is harder this year. In the past, filers have been able to take the deduction if it totals 7.5 percent of their income. But now those bills have to total 10 percent for Americans younger than 65.
Carrie Bray, a senior wealth manager, said, "It's an additional way to pay for the Affordable Care Act, and it's a way for people to take fewer deductions and so a few more taxes going to the government."
Americans who make more than 200,00 a year, or a married couple making 250,000, also have to pay a new 3.8 percent unearned income tax.
Bray continued, "It's not the money we earn by working. It's through interest, dividends, capital gains, rents, things like that."
There's also a new Medicare Payroll Tax for those income levels. If you only hit the total as a married couple filing jointly, make sure you're setting aside the extra .9 percent.
The government also placed new limits on flexible spending accounts last year to push Health Spending Accounts for high deductible medical plans. Americans who choose an HSA never have to pay taxes on the money, and unlike a Flex plan, it rolls over from year to year.
Tax experts say if you got one of these surprises, it's not too late to plan for next year. You can start saving for your 2014 tax return or reduce your taxable income with an HSA or with your 401K at work.
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