It’s hard to believe there are only 5 days left in 2012. As usual, with the new year, come new tax law changes. While we probably will not know the extent of all changes for a while, there are some that are tied in with the Affordable Healthcare Act that we do know will take effect on January 1, 2013. Here are a couple:
Flexible Spending Accounts (FSA) – Currently pre-tax contributions into FSA’s are unlimited under federal law (although some employers impose limits). These funds are used for qualified medical expenses and must be used by the end of the year or they are forfeited. Beginning in 2013, federal law sets a $2,500.00 cap on FSA contributions.
Medicare Payroll Tax – Currently the Medicare payroll tax is 2.9%. The employer withholds 1.45% from the employee’s wages and matches 1.45%. Self employed individuals are responsible for the entire 2.9% when they pay their self employment taxes. Effective 1/1/13 the Medicare tax will increase for those individuals making over $200,000.00 ($250,000.00 for couples) to 3.8%. The employee will be responsible for 2.35% and the employer 1.45%. Self employed individuals will be responsible for the entire 3.8%.
Check the IRS website for more information and to find out other tax changes to expect.