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A New Tax …. Not just on Healthcare ….

Taxpectations | Your TaxJoy has Arrived! / Healthcare  / A New Tax …. Not just on Healthcare ….

A New Tax …. Not just on Healthcare ….

A New Tax  …. Not just on Healthcare ….

Well the country has been a buzz regarding the new Obama Health Care Mandate which is interestingly being referred to as a tax.   In the furor over this, whether you are for this mandate or against it, there were other taxes put into effect by all this.

The one that I think is going to cause more uproar is the new investment tax.  It is to be a 3.8% increase in investment income tax.  Now this tax is dependent upon your adjusted gross income.  So for this to be in effect for you, you must have an adjusted gross income of more than $250,000 or $200,000 if you are a single taxpayer.   Now keep in mind that your adjusted gross income is the income after all your income, including wages, retirement income, and interest/dividend income, is calculated.  This is before you get to the exemptions, deductions, and the like.

The 3.8% increase taxes the minimum capital gains tax that is now at 15% and raises it to 18.8%.  This is the minimum amount.  This capital gains tax is going to be applied to things like rents, royalties, annuity payments (the part subject to tax), and some types of passive income such as real estate income.  It will not increase on things like IRA payouts, pension plans, or social security income, nor on things like life-insurance proceeds or veterans benefits.

Remember that a business you own that is recorded for tax purposes, on a schedule C, is not considered investment income for the sake of this tax.  However, you MAY have to figure this tax in when selling your house, especially if it is a second home.  Also of note, is that trusts and estates can be subject to this tax.

So it is going to especially important to pay attention to those investments and such so that you can properly plan for these increases.  There are many things that you can do to help lower your investment tax including things that can reduce your adjusted gross income so that you are less likely to fall in the prevue of this new tax.   One instance would be to convert your regular IRA to a Roth IRA as the withdrawals from a Roth IRA are tax-free.

Consult with your favorite tax planner to see what you can do to help prepare you for the upcoming tax season and not get a big surprise upon arrival.



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