Some Real Numbers for Artists on the ACA Repeal

GOP Rep. Jason Chaffetz says that the American people may need to choose between a new iPhone or health care when trying to afford insurance under the new GOP bill that would replace Obamacare. Image via: istockphoto

When I went back to school for accounting, I never thought I’d get an education in healthcare. But the Affordable Care Act (ACA, aka Obamacare) forced tax preparers like me into learning about our healthcare system, because most of the credits and penalties are reconciled on the tax return. As an accountant for artists, I see the direct benefits of the ACA on my clients. I am required, per the ACA, to find out if my clients were covered by health insurance all year, and if not, I calculate the penalty for each month they weren’t. I record the premiums my clients pay, which can be a big deduction for a freelance arts worker. And I see the monthly subsidies that they get, because I reconcile them on the annual tax return (the “Premium Tax Credit”). I also calculate the 3.8% Net Investment Income Tax and the additional .9% Medicare tax for my very highest-income clients – these are the additional taxes on the top income earners that effectively pay for the subsidies provided by the ACA. This amount is only calculated on the very top dollars of their income and it hits a proportionately tiny slice of my clients.

Given this background, I have some insights on what the new Republican proposal, the “American Health Care Act” (ACHA, aka Trumpcare) would do to you, me, and our federal budget. It’s not good.  Read more...

Tax Shelters for the Working Artist

What is a tax shelter?

The term “tax shelter” may conjure offshore accounts and shell companies, but in fact it is just a way of reducing your taxable income. Abusive tax shelters are illegal, but there are many legal ones that are actually set up by the US government to encourage Americans to set aside money for important things, like health care, child care, college, and retirement. I want to discuss a subset of these tax shelters, the Flexible Spending Accounts (FSAs) and the Healthcare Savings Accounts (HSAs) which came up in my previous piece on artist taxes. These accounts allow you to set aside up to a certain dollar amount tax-free to pay for qualified expenses. What you set aside gets subtracted from your taxable income, reducing your overall tax liability. Many of these programs have open enrollment periods in November, so just in time, here is a primer on this group of tax shelters for the working artist.

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