If you haven’t already heard the news, taxes went up this year! For some, they went up a lot. The tax increases are from a combination of the American Taxpayer Relief Act of 2012 (ATRA) and provisions in the Patient Protection and Affordable Care Act (PPACA), which became effective in 2013.
While both of these tax laws have had their share of time in the limelight, I have found that many business owners and key employees are not fully aware of the impact of the changes, let alone taking action on what the changes mean.
A recent study finds that many key employees are ignoring these tax increases. It may be because they don’t know about the tax law changes, or it may be because they don’t know what to do about them. I recently talked with a friend who is an executive and she told me she just found out from her accountant that she’s subject to, “some kind of extra 3.8% tax.” When I asked what she intended to do about the fact she’s subject to the new Medicare Surtax, her comment was, “Nothing. You can’t fight City Hall!”
Key employees are not the only ones ignoring these changes. Some business owners are as well. They too may be in for a real surprise when their advisors prepare their tax returns this year.
What to do?
View my column on Forbes.com for a good first step to take in preparing your taxes for this year, and to understand why it’s important to plan now for tax year 2014.