See Janet Novack, Three Senators Call For Billionaire Estate Surtax, Forbes.com, June 24, 2010.
The 3.8% surtax on investment income for taxpayers, estates and trusts became effective January 1, 2013.
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However, income from muni bonds doesn't count as investment income when calculating the surtax.
It was never more important to harvest any losses to reduce gains with the surtax.
The Democrats suggested their alternative in the way of a millionaire surtax of 1%.
Plus a 0.9% Medicare surtax on earned income is assessed over the same adjusted gross income thresholds.
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By converting, you can keep your income below the threshold where the new 3.8% surtax kicks in.
The 0.9% surtax brings the Medicare rate on earned income to the same 3.8% as on unearned income.
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Any further increases in MAGI beyond that point will not change the amount of 3.8% Medicare Surtax liability.
The lessor of the two is multiplied by 3.8% to determine the 3.8% Medicare Surtax for that taxable year.
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Capital gains rates would top out at 20% from the current 15% (plus the Obamacare surtax as referenced below).
This year he raised the rate to 23.8% with the ObamaCare investment surtax.
For more details on how to beat the 3.8% surtax, click here.
With the Affordable Care Act, they would both be hit with the surtax.
Another way to avoid the surtax is to fall below the income threshold.
What would be the effect of the surtax on millionaires, the economic effect?
In December 2012, Treasury released its proposed regulations, including detailed tax rules for the 3.8% Medicare surtax on unearned income.
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The highest corporate tax rate was raised to 15% in 1936 with a surtax on undistributed profits up to 27%.
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That said, it does not specifically state in the Obama Care law that the surtax does NOT apply to exchanges.
Next year the federal government is set to impose a 2.3 percent surtax on the sales of all medical technology.
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However, NII is not the only important term that is critical when determining the effects of the 3.8% Medicare Surtax amounts.
Oh the other hand, an increase in MAGI does not necessarily always increase the amount subject to the 3.8% Medicare Surtax.
Net Investment Income plays an integral role in determining the effects of the 3.8% Medicare Surtax for a taxpayer and his investments.
The first is that increases in NII will always increase the amount subject to the 3.8% Medicare Surtax by the same quantity.
The 3.8% Medicare Surtax is applied on the lessor of the two.
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It has been anticipated that if a taxpayer met these requirements, any rental income would not be subject to the 3.8% surtax.
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NII, which consists of three parts reducible by certain deduction, plays a critical role in determining the effects of the 3.8% Medicare Surtax.
But this credit cannot exceed the taxes paid in the U.S. on the same income and does not include the 0.9% Medicare surtax.
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This means that for individuals who have little or no net investment income, their 3.8% Medicare Surtax will be minimal if not zero.
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Therefore since for general income tax purposes, income earned from renting real estate should not be included in the calculation of the 3.8% Medicare Surtax.
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