ObamaCare taxes are starting to affect traders

Learn how to navigate the minefield, avoid taxes and maximize benefits: Join Robert A. Green CPA and managing member of Green NFH, LLC for a special Webinar on Tuesday Nov. 5 at 1:00to 2:15 pm ET.

We’ll discuss several topics, including:

• The OC 3.8% Medicare surtax on unearned income — including trading gains — for AGIs over $250k married/$200k single started in 2013. IRS proposed regulations disenfranchise many traders from losing trades, only counting their winning trades. That’s ridiculous and hopefully our petition helps fix the proposals.

• The OC health insurance mandate/tax phase-in begins on March 31, 2014. The penalty is the greater of: $95 per uninsured person or 1% of household income over the filing threshold in 2014; $325 per uninsured person or 2% of household income over the filing threshold in 2015; and $695 per uninsured person or 2.5% of household income over the filing threshold in 2016 and beyond. There are some exemptions; learn more about the individual mandate here. Many traders rely on purchasing health insurance in the individual marketplace, while others benefit from employer-provided insurance. President Obama granted a one year delay to the employer mandates and related taxes.

• To avoid the OC individual mandate/tax, traders must purchase “minimum essential coverage” by March 31, 2014. Traders making less than 400% of the federal poverty level on their 2012 tax return filing qualify for tax credit subsidies on the federal and state exchanges. Because traders’ income and loss fluctuates significantly, they face the prospect of claw-backs since actual 2014 household income may be materially higher than their 2012 tax filing. What happens in the reverse case where 2012 income is materially higher than 2014? Can you get subsidies after the fact? Learn how to calculate household income and try out this subsidies calculator tool based on 2014 estimated income. Traders should not overlook qualifying for (free) Medicaid, set at 138% of the federal poverty level.

• The OC individual mandate/tax is not enforceable like other tax liabilities. While the IRS may not levy your bank account to collect it, it will offset a subsequent tax refund with this tax liability. Eventually, it will be very hard to avoid paying the IRS what you owe.

• Make sure to get a 100% AGI deduction for your self-employed health insurance premiums. Traders often need a trading entity to financially engineer “earned income” — administration fees or salaries — otherwise AGI deductions generally can’t be taken against individual trading gains. The same goes for retirement plan deductions.