The health care law has provisions that may affect your personal income taxes. How the law may affect you may depend on your employment status, whether you participate in a tax favored health plan and your age.
Here are three tips about how the law may affect you:
1. Employment Status
If you are employed your employer may report the value o...f the health insurance provided to you on your W-2 in Box 12 with Code DD. However, it is not taxable.
•If you are self-employed, you can deduct the cost of health insurance premiums, within limits, on your income tax return.
2. Tax Favored Health Plans
•If you have a health flexible spending arrangement (FSA) at work, money you put into it normally reduces your taxable income.
•If you have a health savings account (HSA) at work, money your employer puts into it for you, within limits, is not taxable.
•Money you put into an HSA usually counts as a deduction and can lower your taxes.
•Money you take from an HSA to use for qualified medical expenses is not taxable income; however, withdrawals for other purposes are taxable and can even be subject to an additional tax.
•If you have a health reimbursement arrangement (HRA) at work, money you receive from it is generally not taxable.
If you are age 65 or older, the threshold for itemized medical deductions remains at 7.5 percent of your Adjusted Gross Income (AGI) until 2017; for others the threshold increased to 10 percent of AGI in 2013. Your AGI is shown on your Form 1040 tax form.