Trumpcare Update - 3 Tax Changes
posted on Thu, Jul 13, 2017
Another week and yet another update to the Better Care Act (BCRA) or as known to most Trumpcare. Here are the most up to date tax impacts (most likely to change 100 more times before this thing goes for a vote).
1) Capital Gains and Medicare Wage Surtax - Remember that last blog post I had about eliminating the 3.8% tax on investment earnings and the 0.9% surtax for all wages for high income earners? Well yeah, never mind all that. They both now remain under the current version of the BCRA. Here is a quick refresher:
Capital Gains Tax - You are assessed an extra 3.8% surtax on capital gains, dividends, and interest income for families earning $250,000 or more (individuals $200,000 or more).
Medicare Wage Surtax - You are assessed a 0.9% surcharge for all wages or self-employed income greater than $200,000 for individuals and $250,000 for married couples.
2) Health Savings Accounts (HSA) - Under the new amendment of the BCRA, HSA dollars can be used to pay for your health insurance premiums. Previously, the rules were that HSA funds, which are pre-taxed dollars, could only be used to pay for out-of-pocket medical expenses.
3) Tax Credits - Under the BCRA, subsidies will be gone and replaced with tax credits that are provided to people based on their age and income level. Under Obamacare, you could only use financial assistance to pay for a Platinum, Gold, Silver or Bronze level plan, but under the BCRA, you can now use the tax credits to also pay for Catastrophic plans or Lower-Premium Health Insurance Plans.
The punchline from my previous blog stays the same. If you earn more than $200,000 as an individual or $250,000 as a family it would be a good time to talk to your CPA and/or financial advisor to discuss any changes in your tax strategy.
Please feel free to contact me anytime to discuss this topic or any other in more detail.