The biggest tax stories of 2012 - MarketWatch

Reuters

1. Pro-Tax Obama Wins Re-election

For the past four years, it?s been clear that President Barack Obama would like to raise taxes ? especially on ?rich? folks with incomes above about $250,000. Due to the lousy economy, however, the president was forced in 2010 to go along with a two-year extension of the so-called Bush tax cuts. That extension runs out at the end of this year, but the tax rates for next year and beyond remain up in the air. At this point, the only thing we know for sure is the tax increases that will automatically kick in ? unless Congress and the president can agree on something different.

The most important scheduled federal income tax increases for individuals. See What End of Bush Tax Cuts Would Mean for You

The scheduled federal estate and gift tax increases. See Preparing for ?Taxmageddon?

To a large extent, pro-tax President Obama is now in the driver?s seat, so I think the ?rich? will almost certainly face higher rates starting next year. But the exact definition of ?rich? will apparently be decided as part of the fiscal-cliff negotiations that are currently moving at the speed of glacier (more on the fiscal cliff later).

2. Supreme Court Upholds Obamacare and Its Tax Hikes

The president?s signature health-care legislation was enacted back in 2010. It included a number of tax increases, but the most important ones for individuals were not scheduled to take effect until next year. In addition, the legislation?s constitutionality was in question until June of this year when the Supreme Court upheld the law. The Supreme Court?s decision combined with President Obama?s re-election ensured that the following Obamacare tax hikes will kick in next year.

New 0.9% Medicare tax on unmarried individuals with wages and/or self-employment income in excess of $200,000. Married joint-filing couples will face the new tax if their combined income from wages and/or self-employment exceeds $250,000. The new tax will only hit wages and/or self-employment income in excess of the applicable threshold, so only higher-income folks will be affected.

New 3.8% Medicare surtax on unmarried individuals with positive investment income and modified adjusted gross income (MAGI) above $200,000. Married joint-filing couples will face the new surtax if they have positive investment income and MAGI in excess of $250,000. The new surtax will only hit the lesser of: (1) net investment income or (2) the amount of MAGI in excess of the applicable threshold, so only higher-income households will be affected. Here are more details on the expansive definition of investment income and how the new surtax will work. See Prepare for the New Investment Tax

Source: http://articles.marketwatch.com/2012-12-21/finance/35944139_1_tax-increases-income-bush-tax-cuts

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