Mark M. Martiak
Managing Director Investments, AIF®

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© 2018 Mark Martiak, AIF®  |Managing Director Investments

New High Net Worth Taxes Coming in 2013

Tuesday, August 14, 2012

What new taxes are coming?
Beginning in 2013, you may face two additional taxes resulting from the Health Care Act*. These new taxes will impact you if you are:

  • Single with modified adjusted gross income†(MAGI) over $200,000

  • Married and filing jointly with MAGI over $250,000

  • Married and filing separately with MAGI over $125,000

  • The owner of a trust in the highest marginal tax bracket ($11,650+ in 2012)

Medicare Contribution Tax
You and/or your trusts will face a 3.8% tax on the lesser of net investment income (NII) or excess MAGI over the thresholds above. Some trusts are excluded or have special considerations.

Medicare High Income Tax
You will face a 0.9% tax on earned income (W-2 for employees or 1099 for self-employed) over the MAGI thresholds above.

What can I do to protect myself?

Identify Opportunities to Reduce Taxes
The new taxes are calculated based on the timing, form and level of income. Therefore, you can reduce the impact of these taxes on your income by working with your financial advisor and your tax professional to reallocate or retime income.

You may also want to consider investing in municipal securities, whose interest is excluded from NII, or converting to Roth accounts, whose distributions are not included in MAGI or NII.

*The Healthcare and Education Reconciliation Act of 2010. †Modified adjusted gross income is adjusted gross income plus foreign earned income adjusted for appropriate deductions.


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