Now that we have the supremely confusing US Supreme Court ruling regarding the 2010 Health Care Bill, there are a few unanswered questions about taxes. Well, some of them we can answer. But there is one big one we can’t answer yet.
We know that the 2013 surtaxes are still in play. That means if you make more than $200,000 ($250K if married) in wages you have an additional tax after Social Security tax phases out. You’ll also be subject to a new tax on unearned revenue such as rent, capital gains and royalties. That all stays the same.
By the way, that’s not quite as simple as you might have thought either. The Health Care bill did not address what happens to that surtax on capital gains income if there is a like-kind exchange. Is it still due? Or do you roll it too?
We don’t know (nor did we expect to know) whether the Bush tax cuts will be allowed to expire. We don’t know if there will be another bandaid fix on AMT (alternative minimum tax) or maybe this time they will actually fix it for good. (I think that’s highly unlikely.)
And now we have more things that are uncertain. The Supreme Court ruled that the mandatory health insurance was Constitutional because it really wasn’t a mandate to buy private insurance. (Which, although I am far from a Constitutional scholar, I think would be unconstitutional.) Instead the Supremes said that it is a tax.
And that just made my world go tilt. If it’s a tax, it isn’t going to be deductible. Or at least, federal tax in and of itself is not deductible. There are exceptions, and I’m sure this is going to be one of those. I just wish they would have told us.
And now I’m going to firmly climb on my soap box. Congress is passing irresponsible bills without thoughtful consideration of practical applications. The US Supreme Court just threw a wrinkle in that they didn’t need to by answering a question that wasn’t really asked.
In school, I was taught there were three branches of government. That’s the Executive, Legislative and Judicial. But when they can’t work together with any semblance of order and because things still need to get done. There seems to be a 4th branch of government asserting itself, at least in my tax world. That 4th branch is the IRS.
The most recent example was the new rule for Form 1099-K. Congress required that Merchant Service Providers gave this form to all.