Reminder to those earning over $200,000 single, $250,000 jointly
The new Medicare Tax Act adds additional taxes of:
- .9% on earned income
- 3.8% on investment income.
Included:
- Interest
- Dividends
- Capital Gains
- Non-Qualified Annuities
- Royalties
- Rents
- Passive Income from S-Corps or Partnerships
Excluded:
- Muni Bond Interest
- Nontaxable Veterans Benefits
- Nontaxable gains from the sale of a primary home
- Distributions from IRAs, 403(b)s, 401(k)s, 457s, pension, profit-sharing stock bonus and qualified annuity plans
What to do:
- Increase payroll withholding
- Increase estimated taxes
- Harvest capital gains with losses
- Convert IRAs to Roth IRAs
- Defer to a year when income will be below the threshold
- Turn passive into active investments
