Supreme Court Ruling Will Affect Taxes

How will the healthcare ruling by the Supreme Court affect taxes?

The individual mandate is not the only thing about the Affordable Care Act. There are tax changes to consider. Because of the three day hearing about the ACA, here at TaxVox, I believe it is time to ponder some of the revenue provisions.

Provisions in the law allow for tax cuts as well as increases. Unless the whole thing is thrown out, these tax changes would likely remain.

If it can be considered a tax at all, the only one would be the mandate penalty for not purchasing insurance. The Supreme Court will have to decide if this is a penalty or a tax.

Included in the ACA are some very important tax cuts; credits for helping small businesses that purchase insurance for their workers. You may not realize that they are there, as over $1 million has been paid by the NFIB to challenge the ACA.

The NFIB will more than likely think that those subsidies should be thrown out if the Supreme Court rejects any of the key parts of the reform.

There are some tax increases in the new law, including an excise tax for high value health plans that are sponsored by the employer. That would begin in 2018 and make it harder to take itemized deductions on their medical costs.

There are a couple of other tax increases of note. The first tax increase of the bill is a .9% increase for higher income workers in the medicare wage tax. This is for supporting the health system for seniors. The second increase, sometimes referred to as a Medicare surtax, is a 3.8% high income tax on households that enjoy income from investments and non-wage sources.

These new taxes, according to a Tax Policy Center study, would increase taxes on those households earning between $500,000 – $1,000,000 by about $4,600 and those earning $1 million+ by $41,000. Those making $250,000+ ($125,000 single) will also be affected.

It would not be wise, then, to forget these tax changes. We may not have seen the end of the tax code modifications.

5 Retirement Planning Myths You Should Be Aware Of

Retirement planning is difficult for everyone. It is even more difficult if you don’t plan accordingly or you lack the right information. Unless you are fabulously wealthy, there is no sure-fire plan that works perfectly. However, you can make your retirement planning a lot easier by avoiding these common myths.

You’ll Have Less Expenses

Even if you pay off your home and cars by the time you retire, that doesn’t necessarily mean that you’ll spend less money comparatively speaking. Remember, you’ll also likely be living on less income than you earned while you were working. So, you may have fewer bills, but you are also likely to have less extra money to deal unexpected expenses. Things like home and car repairs are inevitable, so it’s a good idea to have some kind of financial cushion.

You Can Relocate

Many retirees have a dream that they’ll sell their home and relocate to an area where the cost of living is lower and/or the climate is better. You can’t possibly predict what the housing market will be like when you retire. You may get far less for your house than you anticipated or the kind of home you want in your new location may be beyond your means. Another problem is that retirees who move away often stretch their budgets frequently traveling home to see friends and family.

Medicare Will Help

Medicare coverage changes on a yearly basis. It’s inevitable that your health care costs will go up as you age and you can’t count on the fact that Medicare will cover everything. Even now, there are routine things like eye exams that Medicare doesn’t cover. There are also many expensive prescription drugs that Medicare doesn’t pay for as well.

There is No Perfect Number

No matter how good your financial advisor is, there’s no guarantee that he or she will be able to help you predict the exact amount of you money you’ll need to live to a certain age. For one thing, financial advisors can’t predict inflation. Secondly, people often underestimate how much money they actually spend. The best idea is to save as much for retirement as you can possibly afford.

It Can Wait

Many people put off retirement planning because they don’t think they’ll live that long or they feel like they need the money more now than they will later. This is a slippery slope. The earlier you start planning for your retirement, the more you’ll be able to enjoy your golden years. Experts universally agree that the later you wait to start saving for retirement, the more likely it is that you’ll encounter serious financial difficulties when you get older.

The best plan for saving for your retirement is to start early and save as much as you can. There’s no way to predict the future. Even if you have to make modest cutbacks in your budget now, it will be worth it to know that you’ll have some security when you get older and have less earning potential.



About the Author: Tony Smith is a full-time writer with a great understanding of the need for early retirement planning. He enjoys writing about personal finance, credit repair, and tips for getting bad credit loans for those with poor financial histories.