With just days away from 2014, The National Association for the Self-Employed (NASE) – a national advocate and resource for the self-employed and micro-businesses — released a list of new and rising taxes for America’s smallest businesses in the New Year.
“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,” 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.”
PAYING MORE TAXES IN 2014
• MEDICARE SURTAX: Individuals and families will see a little less in their paychecks starting January 1, 2014 – wage earners and self-employed individuals who make more than $200,000 (individual) and $250,000 (couple) will be assessed an additional .9 percent Medicare surtax on top of the existing 1.45 percent Medicare payroll tax as well as a 3.8 percent Medicare tax on unearned income (investment dividends, rental income, interest and capital gains on property).
• MEDICAL EXPENSE RESTRICTIONS: 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 (simple human error!). Additionally, taxpayers who itemize their medical expense deductions will only be able to do so if those expenses exceed 10 percent of adjusted gross income (AGI); previously it was 7.5 percent. 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 percent threshold.
• THE 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 Grandfathered health care plan for 2014. Failure to do so will result in a fine of $95 or 1 percent of your income – whichever is higher – in 2014. That fine increases to $325 or 2 percent of income in 2015 and $695 or 2.5 percent of your income by 2016.
The NASE 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 who are working to help fuel our economy. Access to affordable health care and comprehensive health insurance shouldn’t have a negative tax impact on the self-employed.
The National Association for the Self-Employed (NASE) is a resource for the self-employed and micro-businesses, bringing a broad range of benefits to help entrepreneurs succeed and to drive the continued growth of this vital segment of the American economy. The NASE Small Business Locator helps identify and connect our nation’s smallest businesses. The NASE is a 501(c) (6) nonprofit organization and provides big-business advantages to hundreds of thousands of micro-businesses across the United States. For more information, visit the association’s website at www.NASE.org
