New Taxes from New Year for the Wealthy

Last updated on December 12, 2012

With the introduction of increased payroll taxes on wages, and tax on investment income, the new year will bring additional taxes for the rich. Taxes on investment income will hurt the wealthy because it includes interest, dividends and capital gains. Many are already planning to shift their investments to cut down on the taxes. Whether the Obama administration decides to increase taxes on income or not for the rich, the taxes mentioned above will come into effect starting Jan 1st, 2013.

Because the end of the year will see the end of many huge tax breaks, almost all taxpayers will see an increase in taxes. Moreover, apart from the affluent, the middle-income group will also be affected by hospital insurance tax.

Both employers and employees will each be paying a hospital insurance tax equal to 1.4% on all wages beginning January 1st, 2013. Employees will need to pay additional tax equal to 0.9% of wages over $200,000 if they are single. For the married, the threshold is $250,000.

Employers will need to withhold social security and Medicare payroll taxes not only from the wages of the employees, but also from that of their spouse. As the employers don’t know how much the spouse of their employee is earning, it might lead to incorrect filing of taxes. The government suggests filing estimate tax payments or asking employers to withhold more from each paycheck.

A whole lot of changes in taxes still await us. Planning of taxes was never more essential. Make sure you keep yourself up-to-date about the latest changes in tax laws.