"Under the Affordable Care Act, eligibility for ...subsidized health insurance through the Exchanges will be calculated using a household’s Modified Adjusted Gross Income (MAGI).
Modified Adjusted Gross Income (MAGI) includes Wages, Taxable interest, Taxable amount of pensions, annuity or IRA distributions, some Social Security benefits, Business income, Capital gains, Ordinary dividends, Alimony received, Real estate rental income, etc...
Modified Adjusted Gross Income (MAGI) deducts 401(k) and 403(b) savings, Certain self-employed expenses, Student loan interest, Educator expenses, IRA deductions, Moving expenses, Penalty on early withdrawal of savings, Alimony paid, Domestic production activities, etc...
http://laborcenter.berkeley.edu/healthcare/MAGI_summary13.pdf
.
.
According to Kaiser's Family Foundation's Subsidiy Calculator, an average US family of four making $88,000 MAGI, would not recieve an Obamacare subsidy for a Silver plan costing $8,290 per year.
http://kff.org/interactive/subsidy-calculator/
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If both parents are over 50 years old, contributing the maximum $6,500 each to a traditional IRA would lower taxable compensation for the above family making $88,000 by $13,000, leaving a MAGI of $75,000, which would create an Obamacare subsidy of $1,165 per year.
.
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If the $13,000 IRA contributions are not taxed at a hypothetical 25% Federal income tax rate, the Federal government would have to pay out $1,165 plus lose $3,250 in taxes that otherwise would have been recieved.
$1,165 + $3,250 = $4,415 net loss to Federal tax revenues.
.
.
If 20 million households do the same thing to qualify for Obamacare subsidies, the Federal government could lose about $88,300,000,000 in tax revenues by the end of 2013's tax season.
Showing posts with label AICPA. Show all posts
Showing posts with label AICPA. Show all posts
11/9/13
12/17/12
Robert S. Keebler on "Charitable Remainder Trust and the 3.8% Medicare Surtax"
"The 3.8% Medicare surtax on net investment income is set to take effect on Jan. 1, 2013.
Charitable Remainder Trust and the 3.8% Medicare Surtax
Surtax etc... Chart/Table
On November 30, 2012, the US Treasury issued treasury regulations
addressing...the new 3.8% healthcare surtax.
...there are two urgent planning opportunities that are important to CPAs and their clients.
First, to the extent that income can be accelerated in 2012, this will save 3.8%.
For example, harvesting gains, triggering accrued interest, income and dividends,
accelerated rents and other royalties will all save on the surtax.
Likewise, deferring investment expenses into 2013
will provide an income tax deduction against the surtax, saving an extra 3.8%.
This savings does not include any savings that would occur
by virtue of any increase in the base tax rate.
...there is an urgent and immediate planning opportunity
for existing charitable remainder trusts.
A CRT is not taxed directly, but distributions from a CRT are taxed to beneficiaries
under ...section 664, often called the WIFO, W-I-F-O, worst-in, first-out method of accounting.
Distributions from charitable remainder trusts will be subject to a 3.8% surtax.
...distributions of net investment income from a CRT will be taxable to the beneficiaries.
...income that was realized and recognized prior to December 31, 2012
will be grandfathered from the surtax.
Deferring loss and expenses into 2013 will also reduce the tax burden on future distributions.
The action steps needed for a charitable remainder trust
are to harvest long-term capital gains in 2012,
accelerate interest, dividends and other income in 2012, defer harvesting losses into 2013,
and defer expenses into 2013.
By taking these important steps
you will likely reduce your clients’ future exposure to the 3.8% healthcare surtax.
On behalf of the PFP Division of the American Institute of Certified Public Accountants,
this has been Bob Keebler."
Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP
Charitable Remainder Trust and the 3.8% Medicare Surtax
Surtax etc... Chart/Table
On November 30, 2012, the US Treasury issued treasury regulations
addressing...the new 3.8% healthcare surtax.
...there are two urgent planning opportunities that are important to CPAs and their clients.
First, to the extent that income can be accelerated in 2012, this will save 3.8%.
For example, harvesting gains, triggering accrued interest, income and dividends,
accelerated rents and other royalties will all save on the surtax.
Likewise, deferring investment expenses into 2013
will provide an income tax deduction against the surtax, saving an extra 3.8%.
This savings does not include any savings that would occur
by virtue of any increase in the base tax rate.
...there is an urgent and immediate planning opportunity
for existing charitable remainder trusts.
A CRT is not taxed directly, but distributions from a CRT are taxed to beneficiaries
under ...section 664, often called the WIFO, W-I-F-O, worst-in, first-out method of accounting.
Distributions from charitable remainder trusts will be subject to a 3.8% surtax.
...distributions of net investment income from a CRT will be taxable to the beneficiaries.
...income that was realized and recognized prior to December 31, 2012
will be grandfathered from the surtax.
Deferring loss and expenses into 2013 will also reduce the tax burden on future distributions.
The action steps needed for a charitable remainder trust
are to harvest long-term capital gains in 2012,
accelerate interest, dividends and other income in 2012, defer harvesting losses into 2013,
and defer expenses into 2013.
By taking these important steps
you will likely reduce your clients’ future exposure to the 3.8% healthcare surtax.
On behalf of the PFP Division of the American Institute of Certified Public Accountants,
this has been Bob Keebler."
Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP
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