Issue link: http://www.e-digitaleditions.com/i/105134
floor will rise to 10 percent for all individuals except those 65 years of age and older. This is expected to result in a decrease of the deduction for medical expenses; thus raising taxes. Health Reimbursement Plans Effective 2011, reimbursements will no longer be allowed for any over-the-counter drugs. So anyone with a flexible savings account plan, a health savings account, etc., will not be able to use tax-deductible dollars to pay for over-the-counter drugs or medications. Only prescription items from a doctor will be allowed to be paid from such plans. In addition, a penalty of 20 percent will be imposed on all health reimbursement plans for any funds not used for qualified medical expenses. The new penalty will be effective January 1, 2011. Individuals will now only be allowed to put a maximum of $2,500 per year into health savings plans. This limit goes into effect January 1, 2013. After 2013, the maximum amount will be indexed per inflation. As of March 2010, children under the age of 27 can be included in such healthcare savings plans. Tanning Services In a surprise move, the new law creates an excise tax on all indoor tanning services.The individual who receives the service must pay the tax to the operator, who will collect the tax and remit it to the federal government.The tax is 10 percent. Adoptions Presently, there exists a credit for adoption costs incurred by families. The new law increases the current credit of $12,150 by $1,000.This law is retroactive to January 1, 2010, and extends only until December 31, 2011. In the coming years, several changes are set to take place as a result of the healthcare bill. Not only are there incentives for small businesses to cover employees and new opportunities for individuals to obtain health insurance, a whole host of tax issues have surfaced. Just to name a few, business succession and exit planning will be affected because of the new capital gains rates. C Corporations with retained earnings should at least consider accelerating their payouts to avoid the increased taxes on dividends (2012). Along with these issues, many others exist in the tax world as a result of this law. K About the Authors Bart A. Basi, CPA, Esq. (left) is senior advisor at The Center for Financial, Legal, and Tax Planning, Inc. Marcus S. Renwick, Esq. is director of research. The Center is located in Marion, Illinois, and on the Web at www.taxplanning.com. Component Hardware - Your First Source for Quality Casters Choice of wheels 3" & 5" See us at NAFEM Booth 619 Jan uar y/Febr uar y 201 3 35