Archives For Medicare

OB-TQ981_taxrep_P_20120706123313It’s hard to keep all the new Obamacare taxes straight, but there’s one that some couples won’t see until they file their 2013 taxes next April, and bizarrely it could mean a surprise tax bill or a refund. It’s the 0.9% Medicare surtax on wages and self-employment income (not to be confused with the separate new 3.8% net investment tax on capital gains, dividends and passive income). Continue Reading…


Surtax On Net Investment Income (NII)

Starting in 2013, higher-income taxpayers may be liable for a 3.8 percent NII surtax. The NII surtax on individuals equals 3.8 percent of the lesser of: Continue Reading…

Beginning Jan. 1, 2014 the Affordable Care Act (ACA) will come into full effect. While parts of the law are already in place, 2014 will bring in a whole new set of changes, including dozens of tax provisions, that can be difficult to understand. Thanks to the folks at Block Talk, we’re posting a series of infographics that make it easier to understand the 1,000-plus page ACA.

Below you’ll find a graphic summary of the healthcare exchange programs including how your state is handling them and where to go for more information.

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Noting that there have been a number of cases of unscrupulous behavior by third-party payers of payroll taxes, IRS has issued a series of tips for employers who outsource their payroll duties.

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The Bush Tax Cuts have been the spotlight of fiscal cliff negotiations. Sure, there are plenty of other bargaining chips on the table, but none is more spoken of than what to do with the expiring 2001/03 Bush era tax cuts. It’s not a yes/no debate, either; with President Obama winning re-election only one thing is certain – they will expire for some income earners, or no deal. The question then is for what income thresholds, for how long, and what specific deductions should be rid of and for whom. Amidst this negotiation is the larger question of what effect different plans will have on the economy, and the answer is something both sides use to support their arguments.

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In 2013 some wealthy earners will be subject to a new medicare tax (see Infographic); no, this isn’t the medicare payroll tax (although that too will also increase for some earners), rather it is an additional 3.8% tax applied to Net Investment Income for wealthy earners. To be subject, US earners must have an Adjusted Gross Income of $200,000 for individuals or $250,000 for couples filing jointly. Additionally, they must have some form of unearned income from investments in which they are passively involved, meaning they do not have material participation in the activity. This net investment Income can include earnings from property sales, rents, estates and trusts, annuities, stocks, bonds and more. With the changes, anyone who might be subject to the tax (which, by the way, is less than 4% of Americans), should seek a financial advisor immediately to plan for 2013 and beyond.

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In 2010, the federal government took the hundreds of billions of dollars it received in corporate, income and property taxes from each state and re-spent that money — and then some — on programs in each state.

The states that receive the most money from the federal government each year are, generally, the most populous ones. In 2010, eight of the 10 states with the highest population received the most. California, the most populous state in the country, receives the largest share — more than a third of a trillion dollars. However, when accounting for population and the amount states pay in federal taxes, the breakdown looks very different.

The states that received the most money from the federal government were identified using the most recent data from the U.S. Census Bureau’s Consolidated Federal Funds report, which breaks out how much the federal government spent on various programs, grants and public employee salaries by state. Based on these reports, 24/7 Wall St. identified the 10 states that received the most money from the federal government, relative to how much they paid in income tax.

Some states, including Alaska and Virginia, received more than $15,000 per person from the federal government, even after subtracting the billions the state spent on income tax. This figure is nearly two-and-a-half times the amount received per person after taxes in states like Nevada, one of the poorest states in the country.

A review of the data shows that some very large programs, including defense spending, Medicare and Medicaid, Social Security, and farm subsidies, had major effects on how much money each state received, to the extent that individuals get far more per person than in other states.

In some cases, it was several programs that affected the total amount the government spent on the state per capita, but in others, it may have been just one program.

Often that program was defense spending. States like Virginia, Alaska, Maryland and New Mexico received the most money per capita in federal procurement spending, which includes things like Medicaid and NASA, but the majority of which goes to the Department of Defense.

Another program that requires a great deal of funding is the direct payments outside of retirement and disability. Within this category is Medicare. More than 25% of all the funds that Connecticut received from the federal government were for drug benefits under Medicare.

24/7 Wall St. identified the states that get the most money from the federal government by taking the figures for federal expenditures in each state from the 2010 Consolidated Federal Funds report and subtracting from it the income taxes retained, net of refunds, by the federal government for each state for the same year. The values obtained were then divided by state population figures for 2010 from the census bureau to arrive at a per capita figure for each state.

These are the states that get the most federal money.

10) North Dakota
> Amt. per capita net of income taxes: $10,438
> Population: 672,591
> Pct. of U.S. population: 0.22%
> Amt. per capita: $12,930
> Pct. of U.S. funds per person: 0.27%

With the third-smallest population in the U.S., North Dakota’s federal spending per capita was understandably larger than more populous states. What is unusual is the large amount of money that North Dakota farmers received from the federal government — the state ranked second in agricultural assistance in the nation, behind only Texas, which has a population more than 37 times that of North Dakota.

9) Connecticut
> Amt. per capita net of income taxes: $10,506
> Population: 3,574,097
> Pct. of U.S. population: 1.16%
> Amt. per capita: $15,662
> Pct. of U.S. funds per person: 1.73%

Connecticut received almost 50% more government funding per capita than the national average. In 2010, Connecticut was awarded $11.1 billion in military procurement contracts, giving the state the fourth-highest per capita federal defense expenditure — $3,351.88. The Constitution State ranked first for the amount of spending for direct payments other than retirement and disability on a per capita basis. A significant chunk of this amount — almost 60% — was spent solely on medical prescription drug coverage. At $14.1 billion, the amount of federal government expenditures on prescription drugs in Connecticut was more than any other state.

8) West Virginia
> Amt. per capita net of income taxes: $10,568
> Population: 1,852,994
> Pct. of U.S. population: 0.6%
> Amt. per capita: $11,609
> Pct. of U.S. funds per person: 0.67%

West Virginia is the only state in the top 10 where federal spending on defense was not a significant contributor to the total amount of money this state received. In fact, West Virginia ranked 48th for federal defense spending — at only $609 per capita. West Virginians received more federal spending per capita on retirement and disability benefits — which includes Social Security payments, federal retirement and disability benefits, and veterans’ benefits — than any other state.

7) Alabama
> Amt. per capita net of income taxes: $10,656
> Population: 4,779,736
> Pct. of U.S. population: 1.55%
> Amt. per capita: $11,820
> Pct. of U.S. funds per person: 1.75%

Alabama comes in second for the amount of spending per capita — $3,761 — on retirement and disability. The Cotton State also ranks seventh for procurement spending per capita, 78% of which was defense spending, and large parts of which also included the Department of Health and Human Services and the Department of Agriculture. Grant spending encompasses a vast number of federal agencies and departments within each state.

6) Kentucky
> Amt. per capita net of income taxes: $12,129
> Population: 4,339,367
> Pct. of U.S. population: 1.41%
> Amt. per capita: $13,198
> Pct. of U.S. funds per person: 1.77%

The federal government gave Kentucky more than $7,000 per person on direct payments, which included retirement and disability benefits, unemployment benefits and student assistance — all large programs. Medicare benefits accounted for nearly 57% of such payments. Kentucky received almost $1.5 billion more for prescription drug coverage than California, a state with almost nine times its population.

5) New Mexico
> Amt. per capita net of income taxes: $12,399
> Population: 2,059,179
> Pct. of U.S. population: 0.67%
> Amt. per capita: $13,578
> Pct. of U.S. funds per person: 0.87%

New Mexico received the third-highest procurement spending per capita in the U.S. at $3,641.68. A significant component of this spending was under the category of non-defense agency spending for the Department of Energy. New Mexico received more federal funding from the Department of Energy than any other state, with an amount of $4.8 billion. This is due to the three nuclear weapons facilities located within the state. Some 22.53% of the population was on Medicaid — the fourth highest percentage in the nation — which is funded through the Department of Health and Human Services.

4) Hawaii
> Amt. per capita net of income taxes: $13,709
> Population: 1,360,301
> Pct. of U.S. population: 0.44%
> Amt. per capita: $15,331
> Pct. of U.S. funds per person: 0.65%

The Hawaiian Islands have 11 military bases, contributing to the country’s highest per capita federal expenditure from the Department of Defense in 2010. Along with a large number of military personnel on the government payroll, Hawaii also had the highest federal salaries and wages. Some 77% of the salaries and wages paid are for active military personnel. Since 2006, federal expenditure on salaries and wages in Hawaii has more than doubled.

3) Maryland
> Amt. per capita net of income taxes: $13,723
> Population: 5,773,552
> Pct. of U.S. population: 1.87%
> Amt. per capita: $16,673
> Pct. of U.S. funds per person: 2.98%

Maryland had the fifth-highest federal spending per capita from the Defense Department — the state has 11 military bases. In addition, the state received more spending per capita in nonmilitary programs than any other. The state’s proximity to the capital is likely a major factor in this. Of the 50 states, Maryland has the second-lowest percentage of people living below the poverty line.

2) Virginia
> Amt. per capita net of income taxes: $14,201
> Population: 8,001,024
> Pct. of U.S. population: 2.59%
> Amt. per capita: $17,008
> Pct. of U.S. funds per person: 4.21%

Virginia received more than $136 billion in federal funds in 2010. This state received more than 12% of the total Department of Defense procurement spending — the second-highest proportion in the country, behind California. The state received the highest per capita procurement funding and the third-highest per capita federal expenditures for salaries and wages. The state’s proximity to the capital is a factor in the high government expenditures. Despite receiving the second-most federal funds per capita, Virginia was very low in terms of the grant funding it received.

1) Alaska
> Amt. per capita net of income taxes: $15,197
> Population: 710,231
> Pct. of U.S. population: 0.23%
> Amt. per capita: $17,762
> Pct. of U.S. funds per person: .39%

No state in the U.S. received more money per person from the federal government than Alaska. One contributing factor is that the state had the second-highest figure for defense spending in 2010, at $7,337.59 per capita. The federal government also allocated a great deal toward wages and salaries in Alaska — $5,709.52 per capita. This was more than any state other than Hawaii, which spent $5,805.78 per person.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

Accessible Maryland Elder Law Attorney located in Bethesda, Montgomery County, MD
Helping Seniors with Their Legal Needs

JDKatz has provided personal attention to assisted seniors and their families with their unique legal issues in the following areas, including:

Medicaid eligibility
Appeals of adverse Medicaid rulings
Guardianship and alternatives
Medicare issues
Powers of attorney
Medical directives and living wills
Nursing home and assisted living care


JDKatz guides many of our clients through the long-term care maze. At JDKatz we can help determine how you or a family member can pay for the cost of long term care, whether in a nursing home, assisted living or at home.

Costs Associated with Care

Nursing care is expensive, with nursing home care costing as much as $10,000 a month and assisted living more than $5,000 a month. When considering whether to apply for Maryland Medical Assistance Long Term Care, JDKatz attorneys will analyze all available payment options, including private pay, long-term care insurance, reverse mortgages, Veteran’s benefits, Medicare, and Medicaid. Where appropriate we will map out a financial strategy in Excel, and model financial spend downs using sophisticated computer software, to make your decisions easier.

We can provide options to protect assets, even if long-term care is imminent, especially where one spouse needs care and the other spouse remains independent. These are typically the most difficult cases to plan and reach an approval from Medicaid. Jeffrey D. Katz, lead Medicad can lead you though the complicated and ever-changing eligibility rules to qualify for Medicaid and help you to successfully apply for Medicaid.

What happens if my Medicaid application is denied?

A person who has denied Medicaid eligibility or is otherwise unhappy with how benefits were calculated can appeal the decision. We have successfully represented many applicants who have filed such appeals.

Useful Links:
Medicaid Wiki
Medicare WIKI
JDKatz Elder Care