Every year, as the leaves begin to fall, we see key changes to federal tax law, changes to which all individuals and businesses should be aware. This year is no different, and some of these changes are significant.
Starting in healthcare, the Affordable Care Act (ACA), despite becoming law six years ago, continues to bring with it challenges to which people need to adjust and adapt. All companies with at least 50 full-time equivalent employees must offer health coverage, and beginning this year, the fines for not providing coverage have increased.
Companies who fail to provide coverage now have to pay $2,160 per employee over 30 employees, which can add up to significant losses. Companies which provide coverage deemed unaffordable must now pay $3,240 for each full-time employee receiving a tax credit for buying coverage on one of the health care exchanges.
On the individual side, people without health insurance now must pay $695 per adult and $347.50 per child, with a ceiling of $2,085 – this could be a significant increase to many people. Additionally, income levels to qualify for health premium tax credits have increased from $11,770 to $47,080 for singles and $24,250 to $97,000 for a family of four. All of these are changes of which people should be aware.
On the tax side, not only have all tax brackets been slightly widened, but standard and itemized deductions have risen. Standard deductions are now up to $6,300 for those filing single, $9,300 for head of household filers and $12,600 for married couples filing jointly. With itemized deductions, available write-offs have risen to 3% of excess of Adjusted Gross Income (AGI) for $249,400 for those filing single, $285,350 for head of household filers and $311,300 for married couples filing jointly. What’s more, personal exemption amounts have increased to $4,050.
All of these are changes have the potential, to varying degrees, to affect the bottom line of both businesses and individuals. The key is to be aware and start to make the necessary adjustments now. As always in both business and personal finance, those who plan ahead and keep up with the many changes in federal tax law will benefit much more than those who do not.
Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.