John Henegar presented this PowerPoint at the 2012 RocketCity GovCon Conference hosted by Solvability in Huntsville, Ala. on September 20, 2012.

1. New Tax Provisions of the
Healthcare Law
John Henegar, CPA, CMA
Tax Director, Decosimo

2. WHERE WE HAVE BEEN
• Top individual tax rate 35%
• Does Congress really get it?
• Long term capital gains/qualified dividends- 15%
• 50% bonus depreciation
• $139,000 first year expensing (179 expense)
• Full deduction for itemized deductions and
dependents
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3. WHAT IT BECOMES
TAX ITEM 2012 2013
Qualified
15%/15% 43.4%/23.8%
Dividends/LTCG
Ordinary Income 10,15,25,28,33,35% 15,28,31,36,39.6%
50% of qualified
Bonus Depreciation No provision
property
First Year Expensing $139,000/$560,000 $25,000/$200,000
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4. WHAT IT BECOMES
• No more 10% tax bracket
• Expansion of brackets for married filing joint reduced
from 200% to 167%
• Itemized deductions and exemptions subject to high
income phase out
• Increased AMT exemption expired
• 2 point cut in payroll tax expired
• Medical expense threshold increased from 7.5% to
10% of AGI (65 or older starts in 2016)
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5. WHAT SAY THE CBO?
• Tax increases that result from the sunset of the
“Bush” tax cuts would probably lead to economic
conditions that would be considered a recession
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6. WHAT SAY MR. OBAMA?
• Extend the “Bush” tax cuts only to individuals with
income :
• <$200,000 single
• <$250,000 married
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7. WHAT SAY MR. ROMNEY?
• Limit home mortgage and charity for high income
• End exemption for municipal bonds
• Tax employer provided health insurance
• Tax inside build up of life insurance
• Keep “Bush” cuts in place, cut rates by 20%
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8. HEALTH CARE AND EDUCATION RECONCILIATION
ACT OF 2010
• Raises revenue for Medicare in two ways:
1. Additional .09% imposed on earned income
2. Additional 3.8% imposed on investment income
• First time in history employment tax has been
levied on investment type income
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9. TAX ON EARNED INCOME
• Additional .09% due on:
• Wages
• Self employment income that exceeds
• $200,000 single
• $250,000 married
• $125,000 married-separate
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10. EARNED INCOME
• Employers must withhold the additional tax once
wages are >$200,000
• Self employed individuals get no deduction for any
portion of the additional tax
• Alert!! Married taxpayers with wages under $200K
but >$250K when combined. NO WITHHOLDING!
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11. TAX ON INVESTMENT INCOME
What is investment income?
• Interest
• Dividends
• Annuities
• Royalties
• Net rents
• Net capital gains
• Passive business income
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12. TAX ON INVESTMENT INCOME
What is NOT investment income?
• Distributions from qualified plans
• Income from self employment
• Gain from sale of business assets
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13. TAX ON INVESTMENT INCOME
How does it work?
• Additional 3.8% tax applied to the lesser of:
• Investment income, or
• Modified Adjusted Gross Income (MAGI) that
exceeds the appropriate threshold:
• $200,000 single
• $250,000 married-joint
• $125,000 married-separate
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14. TAX ON INVESTMENT INCOME
How to manage this additional tax?
• Harvest capital gains in 2012, repurchase
positions
• Shift to growth investments vs. current income
• Tax exempt securities
• Maximize investment in qualified plans
• Life insurance contracts
• S corporations
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15. SINGLE INDIVIDUAL WAGE EARNER
TAX ITEM 2012 2013 TAX INCREASE
WAGES $275,000 $275,000 0
INCOME AND
$73,500 $79,917 $6,417 (8.7%)
AMT
ADDITIONAL
0 $675 $675
MEDICARE TAX
TOTAL TAX $73,500 $80,592 $7,092 (9.6%)
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16. MARRIED WAGE EARNER
TAX ITEM 2012 2013 TAX INCREASE
WAGES $380,000 $380,000 0
INCOME AND
$102,900 $109,358 $6,458 (6.3%)
AMT
ADDITIONAL
0 $1,169 $1,169
MEDICARE TAX
TOTAL TAX $102,900 $110,527 $7,627 (7.4%)
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17. BUSINESS OWNER
• Self employment income $350,000
• Net investment income $75,000
• AGI and MAGI $413,000
• Married-joint return
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18. BUSINESS OWNER
TAX ITEM 2012 2013 TAX INCREASE
ADJUSTED
$413,000 $413,000 0
GROSS INCOME
INCOME, AMT
$132,960 $144,642 $11,682 (8.8%)
AND SE TAX
ADDITIONAL
0 $3,509 $3,509
MEDICARE TAX
TOTAL TAX $132,960 $148,151 $15,191 (11.4%)
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19. RETIRED COUPLE
• Dividends $55,000
• Net rents $25,000
• Pensions $200,000
• LT cap gain $175,000
• AGI (MAGI) $455,000
• Net investment income $255,000
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20. RETIRED COUPLE
TAX ITEM 2012 2013 TAX INCREASE
ADJUSTED
$455,000 $455,000 0
GROSS INCOME
INCOME AND
$94,000 $108,639 $14,639 (15.6%)
AMT
ADDITIONAL
0 $7,790 $7,790
MEDICARE TAX
TOTAL TAX $94,000 $116,429 $22,429 (23.9%)
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21. WORKING COUPLE, TWO CHILDREN < 14 YRS
TAX ITEM 2012 2013 TAX INCREASE
WAGES $80,000 $80,000 0
INCOME AND
$9,100 $9,100 0
AMT
CHILD TAX
$2,000 $1,000 ($1,000)
CREDIT
TOTAL TAX $7,100 $8,100 $1,000 (14%)
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22. Questions?
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23. CONNECT WITH ME
John E. Henegar, CPA, CMA
Tax Director
423.756.7100
johnhenegar@decosimo.com
On LinkedIn:
http://www.linkedin.com/pub/john-
henegar/26/86a/291
Disclaimer:
The contents of this presentation are for informational purposes only. The information is not intended to be a substitute for
professional accounting counsel. Always seek the advice of your accountant or other financial planner with any questions you
may have regarding your financial goals or specific situations.

24. You Are Invited!
• 2012 Decosimo Tax Seminar
• Chattanooga Convention Center
• Oct. 30th | 8:15 a.m. to 5:00 p.m. EST
• $99 | Eligible for up to 8 hours CPE
• Topics: Half-day Federal Tax Update, Various Afternoon Breakout
Sessions
• Register: www.decosimo.com/TaxSeminar2012
• 2012 Decosimo Business Leaders Series
• Chattanooga Convention Center
• Oct. 30th | 1:00 to 5:00 p.m. EST
• $49 | Eligible for up to 4 hours CPE
• Topics: Effective PR, Employment Law Updates, Fraud Red Flags
• Register: www.decosimo.com/October2012Series
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