Presidential Tax Return: Obama Gets Hit by Obamacare | AccountingWEB

Presidential Tax Return: Obama Gets Hit by Obamacare

President Obama squeezed under the bar for the highest marginal tax rate on the federal income tax return he recently filed for 2013. But the Commander in Chief, who filed a joint return, couldn't dodge the new 3.8 percent Medicare surtax.

On April 16, the White House released figures on the president's taxes. Barack and Michelle Obama reported an adjusted gross income of $481,098 for 2013, down 21 percent from 2012, resulting in a total federal tax bill of $98,169. They paid tax at an effective rate of 20.4 percent.

Notably, the president was socked with a surtax of $2,310 on "net investment income" (NII) in the first year this new tax was imposed. The NII surtax was included in the controversial health care law (aka Obamacare) spearheaded by the president back in 2010. "In 2013, as a result of his policies, the president was subject to limitations in tax preferences, as well as additional Medicare and investment income taxes, for high-income earners," commented White House Press Secretary Jay Carney on the White House website.

Details on the tax effects of Obamacare are available in an NPR report and analysis of the Obamas' tax status can be found in Forbes.

But the Obamas managed to avoid another tax increase taking effect in 2013. The previous top marginal tax rate of 35 percent on ordinary income was raised to 39.6 percent for joint filers with taxable income above $450,000 ($400,000 for single filers). Because of the itemized deductions and personal exemptions he claimed, Obama was able to whittle down the taxable income to $333,329, landing the first couple in the 33 percent tax bracket. In addition, the Obamas didn't have to reduce their itemized deductions and personal exemptions under other new rules because they were required to pay the alternative minimum tax.

What About the Veep?

The White House also released the 2013 tax returns for Vice President Joe Biden, who filed a joint return with wife, Jill. The Bidens reported an AGI of $407,009, the highest amount for them in more than 15 years. They paid $96,378 in tax, including $1,497 in the NII tax, for an effective rate of 23.7 percent (3.3 percent higher the Obamas). The couple donated $20,523 to charity.

The Obamas donated $59,251 to charity in 2013, down from $150,034 the year before. Thus, their donations declined to 12.3 percent of their AGI, almost half of the 24.6 percent figure registered in the prior year.

The president earned less in 2013 than any year since 2004, when he rose to prominence with his keynote speech at the Democratic National Convention. His AGI crested at $5.5 million in 2009, the first year of his presidency, when he had to ante up $1.8 million in tax—or more than three times his taxable income in 2013. Much of the additional income in Obama's high income years was attributable to book sales.

Related articles:

A Few Nuggets Found in Obama and Biden Tax Returns
Obama and Biden Release Tax Returns—Are They Fair?



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