Health Care Bill and Expiring Tax Cuts

By Christine Parker, CFP

High-income earners will likely face a mounting tax burden in coming years due to the federal tax increases related to the health care bill
and the expiring Bush Administration tax cuts in 2011.

Beginning 2013, the health care reform bill piles on new and additional Medicare taxes for
individuals earning more than $200,000 a year
or $250,000 for married couples. At the same
time, President Obama has proposed a 2011
federal budget to increase the top two income
tax rates and increase both capital gains and
dividends tax rates for high-income earners.
The Patient Protection and Affordable Care
Act (PPACA) that became law on March 23,
2010 (amended on March 30) increases
Medicare taxes for high income earners meeting
the income threshold above; including an additional Medicare HI tax (commonly referred
to as the Medicare payroll tax) on earnings
and a new “Unearned Income Medicare Contribution” tax on investment income.

Specifically, these high-income earners are subject to an increased Medicare Hospital Insurance (HI) tax rate of .9 percent up from 1.45 to 2.35 percent on earnings above $200,000 for individuals and $250,000 for married couples. Also, the same high income earners are subject to an “Unearned Income Medicare Contribution” tax rate of 3.8 percent on investment income from interest, dividends,
capital gains, annuities, royalties, and rental
income. The new tax also applies to estates
and trusts at the 39.6 percent tax bracket subject to specific rules.

These additional Medicare taxes coupled
with the proposed increases to income and investment income tax rates will likely hike the
tax burden of top earners for years to come.
Accordingly, it’s very important to talk your tax professional such as a Certified Public Accountant and a financial expert such as a
CERTIFIED FINANCIAL PLANNER professional to make informed decisions on how these
changes will impact your financial goals and objectives. Learn more and view examples in Part 2 of this article featured in the next issue of Southern Maryland Woman Magazine. If you have immediate questions, call Parker Financial, LLC at 866-681-PLAN begin_of_the_skype_highlighting              866-681-PLAN      end_of_the_skype_highlighting begin_of_the_skype_highlighting              866-681-PLAN      end_of_the_skype_highlighting.

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About Christine Parker, CFP

Christine Parker is a CERTIFIED FINANCIAL
PLANNER certicant and president of Parker Financial, LLC; an independent fee only registered investment adviser in the state of Maryland. Her professional associations include President of the Financial Planning Association of the National Capital Area Chapter,
member of the Charles County Chamber of Commerce. Her community service
associations include Board member of Civista
Health Foundation, Past President of Zonta Club of Charles County, Board Member of the Charles County Conversancy, and Past Chair
of the Charles County Commission
for Women. Before implementing any
financial planning and investment strategy, please consult your CERTIFIED FINANCIAL
PLANNER certicant, professional tax adviser
or legal counsel. The information provided here is for general informational purposes
only and should not be considered an individualized recommendation or personalized investment advice. Investments and strategies
mentioned here may not be suitable for everyone.