What’s that New Tax?

New taxes you may first notice in 2014 include a Medicare surtax. The Net Investment Income Tax (NIIT) is "a 3.8 percent surtax” that will be due on the lesser of your net investment income for the year, or the amount by which your “modified adjusted gross income” – or MAGI – exceeds those income thresholds. And yes, if you're a high earner, you might get hit with both the 0.9 percent Additional Medicare Tax and the 3.8 percent NIIT surtax. Note that the Additional Medicare Tax applies to your earned income and the NIIT applies to investment income. What investment income is subject to this? Generally interest, dividends, capital gains, rental and royalty income, nonqualified annuities, businesses that are taxed on your return as “passive activities” and income from businesses involved in the trading of financial instruments or commodities are affected. Please call or email for more information on this.