The proposed regulations would cause them to pay Medicare tax on phantom unearned income.
FORBES: IRS Should Fix Net Investment Tax Proposed Regulations
This will avoid higher capital gains tax and the Medicare tax on unearned income starting next year.
Interest from tax-exempt bonds will remain free of federal taxes and the Medicare tax on unearned income.
The ObamaCare 3.8% Medicare tax on unearned income starts January 1, 2013, too (read my blog).
FORBES: Barack Obama Wants Take Your Money As We Tumble From The Fiscal Cliff
The 0.9% surtax brings the Medicare rate on earned income to the same 3.8% as on unearned income.
FORBES: IRS Should Fix Net Investment Tax Proposed Regulations
Meanwhile, the 3.8-percent tax on unearned income, like capital gains, dividends, and interest, will discourage saving and investment.
FORBES: In 2013, Millions Of Americans Face Obamacare Tax Hikes
In December 2012, Treasury released its proposed regulations, including detailed tax rules for the 3.8% Medicare surtax on unearned income.
FORBES: IRS Should Fix Net Investment Tax Proposed Regulations
To verify the amount of unearned income report to IRS by VA recipients, adjust or terminate benefits and collect overpayments.
Earned income for athletes includes wages and net endorsement income, while unearned income includes interest, dividends, capital gains and royalties.
FORBES: Tax Uncertainty And Fiscal Cliff Affecting Athletes' Decisions
Besides dividends and interest, other sources of unearned income include capital gains, gambling winnings, alimony, Social Security payments, pensions and annuities.
They will pay an additional 0.9% in Medicare tax, and a proposed (additional) 3.8% tax on unearned income (including interest, dividends and capital gains).
Next year taxes on unearned income will increase by 3.8 percent.
Based on our interpretation of the code, in this example all unearned income, loss and expense is zero, and NII matches unearned income or loss calculated in gross income.
FORBES: IRS Should Fix Net Investment Tax Proposed Regulations
Mr Callaghan said Westminster's Department for Work and Pensions provided for certain unearned income such as personal injury payments which included compensation for those injured in the 2005 London bombings.
The kiddie tax law was originally established to prevent well-off families from abusing the strategy of shifting unearned income to their children, where it would be taxed at a lower tax rate than their own.
Capital gain rates are set to increase from 15% to ordinary income tax rates as high as 43.4% if you are in the top tax bracket and factor in the new Medicare tax on unearned income.
FORBES: Fiscal Cliff Strategy: 3 Tips For Investors As Rising Taxes Loom
Currently, if you have transferred enough assets to the child that he can pay (between unearned income and his own earnings) more than half of his own support (including college tuition), he ceases to be your dependent.
When we first read the fairly short section covering the Medicare surtax on unearned income, we found it to be pretty straightforward and assumed all unearned income, loss and expense would be summarized and taxed just like the self-employment tax on earned income is summarized and taxed, now.
FORBES: IRS Should Fix Net Investment Tax Proposed Regulations
But the law also imposes for the first time ever a 3.8 percent Medicare tax on passive, or unearned, income, such as capital gains and dividends, for people in that same tax bracket.
Profits arising from this venture are taxed as unearned (investment) income, subject to income tax, but not payroll tax.
The exclusion has never applied to unearned U.S. source income of expatriates, mainly dividends and interest, although the exclusion frequently allowed these sources to be taxed at a lower marginal rate.
Thatcher reinforced this essential improvement by a revolutionary simplification of the tax system, reducing a score or more "bands" to two and lowering the top rates from 83% (earned income) and 98% (unearned) to the single band of 40%.
应用推荐