Passive Income Medicare Tax

The medicare tax is a 3 8 tax but it is imposed only on a portion of a taxpayer s income.

Passive income medicare tax. It applies to taxpayers above a certain modified adjusted gross income magi threshold who have unearned income including investment income such as. Posted on oct 31 2013. This year there is a new tax in town the additional medicare tax. Taxpayers who make over 200 000 or 250 000 for married couples are subject to an additional 0 9 percent tax on medicare.

Written by teresa d. You might pay more for your medicare part d. Written by teresa d. New medicare taxes aimed at high passive income earners.

The medicare tax is imposed on only a portion of investment income. Posted on oct 31 2013 share this post. There are two facets to this tax. This 0 9 tax is in addition to the regular 2 9 medicare tax on all self employment income.

One for high income earners and one for unearned income. One for high income earners and one for unearned income. If an individual trust or estate owns rental activities and or trade or business activities that are considered passive under code section 469 then the combined net income from these passive activities would be subject to the 3 8 medicare tax if the taxpayer s modified adjusted gross income is in excess of the appropriate threshold listed. New medicare taxes aimed at high passive income earners.

It s therefore vital to understand the tax rules surrounding passive activity income in order to assess investments in passive activities correctly. The tax is paid on the lesser of 1 the taxpayer s net investment income or 2 the amount the taxpayer s agi exceeds the applicable agi threshold 200 000 or 250 000. There are two facets to this tax. The affordable care act of 2010 included a provision for a 3 8 net investment income tax also known as the medicare surtax to fund medicare expansion.