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New, Higher Taxes for Smallest Businesses
YOUNGSTOWN, Ohio -- With 2014 just days, the National Association for the Self-Employed (NASE) warns of new and rising taxes for America’s smallest businesses.
“As the new year approaches, America’s smallest businesses – the self-employed and micro-businesses – must factor in to their bottom lines additional taxes they will face in 2014,” says Katie Vlietstra, vice president for government relations and public affairs at NASE. “It is important small business owners educate themselves about these rising taxes for their 2014 planning. While the small business community continues to struggle with a growing list of unequal taxes and penalties, these additional taxes will make it harder for them to grow and expand in the new year.”
- Medicare surtax: Individuals and families will see a little less in their paychecks starting Jan. 1. Wage earners and self-employed individuals who make more than $200,000 (individual) and $250,000 (couple) will be assessed an additional .9% Medicare surtax on top of the existing 1.45% Medicare payroll tax as well as a 3.8% Medicare tax on unearned income (investment dividends, rental income, interest and capital gains on property).
- Medical expense dedications: Individual and families falling below the $200,000 will experience new restrictions on medical expense deductions and flexible spending accounts, including penalties for spending money on non-qualified medical expenses. Additionally, taxpayers who itemize their medical expense deductions will only be able to do so if those expenses exceed 10% of adjusted gross income (AGI); previously it was 7.5%. One carve-out, individuals and/or your spouse who are 65 or older will be exempted from the increase and will still be able to use the 7.5% threshold.
- Affordable Care Act penalty: The biggest tax hit will be faced by those individuals and families that fail to show proof of a qualified health care plan or a grand-fathered health care plan for 2014. Failure to do so will result in a fine of $95 or 1% of your income -- whichever is higher -- in 2014. That fine increases to $325 or 2% of income in 2015 and $695 or 2.5% of your income by 2016.
The National Association for the Self-Employed aims to educate small business owners about the tax code, including working with policymakers to mitigate the financial impact of the law on the 23 million self-employed Americans.
Published by The Business Journal, Youngstown, Ohio.
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