- This is a year to fear if you are considered the wealthy by the government. I just had a meeting with a couple of owners to go over their tax liabilities. Based upon a number of issues one was catapulted into the top 1% of tax payers for the first year, the other is now in the top 10%.
Needless to say they we surprised and by their classification and stated that they didn’t feel wealthy and were fearful on the coming trends and the impact on their business. They are fearful that one of their larger client’s will be pulling back on production and this would negatively impact their business. But that is not the governments concern, only the owners…
So based upon what is planned to hit the uber-income earners will soon need to pay more in Medicare taxes. A 0.9% surtax on singles with wages exceeding $200,000 and couples earning over $250,000 kicks in. This applies only to the employee’s share, this is something that the employers will not need to kick in on, and the penalty is purely the taxpayers. The surtax also hits the self-employed.
Unearned income (interest, dividends, and capital gains) will be subject to a 3.8% Medicare surtax for singles with a modified adjusted gross incomes (AGI) over $200,000 and married filers over $250,000.
Modified AGI is AGI plus tax free foreign earned income. The levy applies to the lesser of the filer’s net investment income or the excess of modified AGI over the thresholds. Investment income includes interest, dividends, capital gains, annuities, royalties and passive rental income, but not tax free interest or payouts from retirement plans.