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Keep up with the changes!

Wed, Jan 23, 2013 at 8:25PM

 

 

Surtax on Investment Income

Individuals making more than $200,000 ($250,000 couples) must pay a new 3.8% tax on investment income, possibly including profits on the sale of a home.  This would definitely include capital gains income such as dividends and stock sales.

 

Medicare Tax

No delayed pain on this one.  If your wages exceed $200,000 ($250,000 couples), you will wind up paying an additional 0.9% tax on all income over that threshold.  So as soon as your wages reach $201,000, you will see a slight drop in your take-home pay.  There are a couple of scenarios you need to be aware of so you are not caught owing tax on next year’s return.  An employer is required to withhold the Additional Medicare Tax as soon as your wages exceed the threshold, but if your income is from different sources – multiple paychecks from different employers, self-employment income, or a spouse’s income – you will still be liable for the additional tax without the benefit of having it withheld.  That’s where it could sneak up on you next year when you file.  If you typically fall into that income bracket, be aware of this and plan for it through either increased withholding or estimated tax payments.

Something for employers to be aware of is their liability for this tax.  Not only are employers responsible for withholding the Additional Medicare Tax from wages above the threshold, but if they fail to withhold it, the employer could be responsible for paying it.

 


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