27 Oct The Patient Protection and Affordable Care Act created a new 3.8% Medicare tax
Posted at 00:00h in Medicare
The Patient Protection and Affordable Care Act created a new §1411, which is effective for tax years beginning after December 31, 2012. This section will impose on high-income households a 3.8% Medicare tax on the lesser of “net investment income” or the excess of modified adjusted gross income over a “threshold amount” (generally $250,000 for taxpayers filing a joint return, $125,000 for married taxpayers filing separate returns, and $200,000 in all other cases). Net investment income is the excess of
interest, dividends, annuities, royalties, rents, income from passive activities, income from trading financial instruments and commodities, and gain from the disposition of certain non-business property over
allowable deductions properly allocable to such income. In determining the amount of net investment income, special rules apply to dispositions of interests in partnerships and S corporations, and distributions from certain qualified plans.