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Old 04-07-2010, 10:26 AM   #21
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Thanks fellows. For taking the time to type enough words that it finally
hit me and I think I understand.
Dan
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Old 04-08-2010, 05:49 AM   #22
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Well, what this thread has taught me is that there can be many different interpretations on what those proposed tax levies mean as well as how they are levied. What I also find interesting is seeing how one modifies their behavior based on those tax levies.....they are magic lines that most will try to stay under....however, in the end, someone needs to be above the line in order for this 'benefit' or 'entitlement' to be paid for. I find it amazing that some people think that penalizing income generation versus incentivizing it will result in more resources on the penalizer's side. What's scary, though, is the lack of 'indexing' like that of the AMT which will smack quite a few more people with an anvil several years down the road. Although the cynic in me wonders if that was done on purpose....
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Old 04-09-2010, 10:03 AM   #23
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I find these interesting because they effectively change the "contract", if there was one, for the users of HSA+HDHP, unless it has provisions that new penalties and conditions only apply to amounts attributable to HSA contributions after 2011. If they can worsen these parts of the contract, I am guessing they can worsen other parts too. E.g. instead of 0% tax for (some or even all) medical withdrawals, they could make it a "low" 5% tax; then maybe 10%, etc.
Keep this in mind all you Roth IRA holders. The govt isn't afraid to change the rules of the game after it has started.
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Old 04-09-2010, 10:10 AM   #24
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Keep this in mind all you Roth IRA holders. The govt isn't afraid to change the rules of the game after it has started.
That is a concern. Then again, this is nothing new; when they started taxing SS benefits (even as money paid to SS was already taxed) this clearly demonstrated the concept.

I know the ban on "ex post facto" laws refers to criminal issues, but it would be nice if legislation was also held to this standard. When you make a long-term commitment based on the tax laws, it's not cool to change the "deal" on the funds you've already committed. At the very least when they change the deal you should be able to yank the money out without penalty. Even cell phone contracts give you an "out" when they change the terms in a way you don't approve of.
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Old 04-10-2010, 01:42 AM   #25
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[QUOTE=FIREdreamer;922798]
What's going to hurt us more is the Bush's tax cuts expiring next year. It's hard to say how much of an impact it's going to have on our FIRE plans because I haven't found a calculator which would allow me to run a simulation but, in my estimations, it could be substantial enough to postpone our plans by a year maybe two.

Actually you can get close if you take your Taxable income, and then go to the tax rate schedule and add 5% to the 28 33 and 35%(4.5 here) brackets and calculate, i.e.
find the bracket you are in, then calcuate the base by taking the base of the 28% and subtract it from Taxable Income, or to the max of 28% which ever, multiply by 33% then add the base amount for the 28% bracket, repeat as necessary. Excel makes it quite easy.
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Old 04-10-2010, 08:05 AM   #26
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Based on this Tax Policy Under President Bush | Chris Edwards | Cato Institute: Daily Commentary
wouldn't you add 3% to the 4 top brackets (actually the highest bracket would add 4.6%). Also you'd have to take into account the favorable rates on CG and Qual Div would disappear. Probably other stuff too.
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Old 04-10-2010, 12:37 PM   #27
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Thanks Meierlde and kaneohe.

I used the following tax rates: 15%, 28%, 31% and 36%. I used the 2010 income cutoffs for MFJ and I also corrected for higher rates on qualified dividends and LTCG. Ouch! We are looking at a nice cut in take home pay starting in January 2011. And I probably failed to take into account a few more things that could boost our tax liability even more like the return of the marriage penalty next year. The party is definitely over.
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Old 04-10-2010, 01:41 PM   #28
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There doesn't seem to be much concern over #3:
"3. A requirement that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with W-2s for 2011."

It doesn't say this would only apply to "Cadillac" plans. Let's say your plan is worth $12,000 which is probably a conservative estimate. And let's say you are in the 25% bracket. If this is included, on your W2, wouldn't that mean a $3,000 higher tax bill?
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Old 04-10-2010, 03:45 PM   #29
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There doesn't seem to be much concern over #3:
"3. A requirement that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with W-2s for 2011."

It doesn't say this would only apply to "Cadillac" plans. Let's say your plan is worth $12,000 which is probably a conservative estimate. And let's say you are in the 25% bracket. If this is included, on your W2, wouldn't that mean a $3,000 higher tax bill?
I just assume that it means there will be an additional box on the W-2 for health plan value. For example, right now there is a box for state taxes withheld, another for social security wage, and so on. None of these are added into the box for your income.
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Old 04-10-2010, 04:26 PM   #30
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There doesn't seem to be much concern over #3:
"3. A requirement that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with W-2s for 2011."

It doesn't say this would only apply to "Cadillac" plans. Let's say your plan is worth $12,000 which is probably a conservative estimate. And let's say you are in the 25% bracket. If this is included, on your W2, wouldn't that mean a $3,000 higher tax bill?
I understand #3 the same way you do, but my paycheck show a much lower amount for healthcare, less than $1000 per year, than your estimate. I don't know if that's the full cost of the coverage—if we as employees are only paying part of the premium, the hit could be as hard as you expect it to be. Also, I am single, and I don't know if employees with family members pay more.
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Old 04-11-2010, 11:25 AM   #31
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When I was working, my employer used to post the value on the paystub of all of its employer-paid benefits starting in 2004. I can see this information being transferred to a W-2 form, just as nearly everything else gets transferred anyway.

And kyounge1956, employees with spouse and/or kids on the policies will pay more for their group health insurance coverage than those covering only themselves.
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Old 04-11-2010, 11:40 AM   #32
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When I was working, my employer used to post the value on the paystub of all of its employer-paid benefits starting in 2004. I can see this information being transferred to a W-2 form, just as nearly everything else gets transferred anyway.
DW's paystubs for the company she worked for always had the value of the benefits, including health care, listed. It was only a few years ago that the benefit from my company provided life insurance started to be a taxable sum, so it is certainly not setting a precedent for taxation of company benefits.
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