Upper-income taxpayers could face a potential tax nightmare in 2013 due to a new 3.8% Medicare surtax on net investment income.
Strategy: Wake up to reality. If you take tax action now, you might be able to reduce, or even eliminate, your liability for the new 3.8% surtax. However, if you wait until the end of the year, it may be too late.
Don’t think this surtax is small potatoes. When you combine it with the new top federal income tax rate of 39.6%, your effective top tax rate could be a whopping 43.4%. And, if you add in state and local taxes, more than half of your highest-taxed dollars could go to the authorities!
Here’s the whole story: Under a provision in the 2010 health care law, a 3.8% Medicare surtax applies to the lesser of your “net investment income” (NII) or the amount by which your modified adjusted gross income (MAGI) exceeds $200,000 for unmarried filers and $250,000 for married joint-filing couples (see b...(register to read more)